H.H. LAKSHMI BAI AND ANR. ETC. ETC.versusCOMMISSIONER OF WEALTH TAX ETC. ETC.

                     H.H. LAKSHMI BAI AND ANR. ETC. ETC.                              A
                                            v.
                  COMMISSIONER OF WEALTH TAX ETC. ETC.

                                  FEBRUARY 2, 1994

                 [B.P. JEEVAN REDDY AND B.L. HANSARIA, JJ.)                           B

              Wealth Tax Act, 1957: Section 5(1-A}-Exemption of investments in
        National Defence Certificates, Defence Deposit Certificates etc.-Whether
        could be granted over and above the limit of R.s.1,50,000 prescribed by the
        main provision viz. S. 5(1).                                                  c
              The controversy in these appeals arose on the interpretation of
        Section 5(1A) of the Wealth Tax Act, 1957. The question referred to the
        High Court was whether the appellant-assessee would be entitled to exemp-
        tion of Rs.70,000 invested by her in National Defence Certificates and
        Defence Deposit Certificates, which were Part of net wealth under clause D
        (xv)/(xvi) of section 5(1) of the abovesaid Act, in addition to the overall
        exemption of Rs.1,50,000 granted to her under Section 5(1) of the Act. The
        High Court held th.lt exemption under S. 5(1A) in respect of such invest-
        ments could not be granted over and above Rs.1,50,000 which was the limit
        prescribed by the main provision viz. S.5(1) of the Act because the require- E
        ment of the proviso to section 5(1A) was not satisfied. Against this, the
        assessee preferred the present appeals.

              Respondent-Revenue contended that as the assets referred to in the
        main provision of sub-section (lA) exceeded in the cases at hand
- -t-   Rs.1,50,000 in the aggregate, the exemption limit could have been raised F
        only if the value of assets referred to in clause (xv) or (xvi) held prior to
        the 1st day of March, 1970 would have exceeded Rs.1,50,000 and that in
        such a case only, the limit of exemption provided by the main provision of
        sub-section(lA) could have been raised by the amount the assets men-
        tioned in the proviso would have exceeded the sum of Rs.1,50,000.             G

              Dismissing the appeals, this Court

· -+-         HELD: 1.1. On the language of the proviso to S. 5(1A) of the Wealth
        Tax Act, 1957 there cannot be two answers. It is settled law that taxation
        statute in particular has to be strictly construed and that there is no equity H
                                              537
    538                    SUPREME COURT REPORTS                (1994] 1 S.C.R.

A in a taxing provision. Though it may be true that strict interpretation of
    the proviso would cause hardship to small depositors as against the richer    J--
    ones, it has no relevance. [541-D]

          1.2. Where the assets to be included be one referred in clause (xv)
    or (xvi) of S. 5(1) of the Wealth Tax Act, 1957, the value of the asset "so
B   included" has to exceed the limit of Rs.1,50,000, in which case alone the
    limit mentioned in section 5(1A) would be raised by the amount the value
    of such asset exceeds ~.1.S,0,000. [541-A]

          K.S. Ayodhyanath v. Commissioner of Wealth Tax, 141 I.T.R. 309
C Karnataka; KS. Digvijaysinghji v. Commissioner of Wealth Tax, 141 I.T.R.
    313 Gujarat and Saroja Ravindran v. Commissioner of Wealth Tax, 177
    I.T.R. 302 Madras, approved.

         CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 2399-
    2400 of 1978.
D
         From the Judgment and Order dated 21.2.1978 of the Kerala High
    Court in I.T.R. Nos. 37 & 28/76.

                                      WITH

E        C.A. Nos. 543(NT), 545, 544/94 C.A. Nos. 2303/80, 1370179, 2076179,
    SLP. (C) Nos. 6768/79, 8002/79 and 7537/82.

             From the Judgment and Order dated 9.2.1979, 6.11.1978, 5.10.1978
    & 9.2.1979 of the Kerala High Court in I.T.R. Nos. 60/77, 61177, 62177 &
    36 of 1977.
F
             Ms. Janki Ramachandran for the Appellants.

             B.B. Ahuja, Ms. A. Subhashini and Ranbirchandra for the Respon-
    dents.

G            The Judgment of the Court was delivered by

             HANSARIA, J. Leave granted in the S.L.Ps.

          1. These appeals arise out of judgments of the High Court of Kerala
    rendered in I.T.R. Case Nos. 28 and 37 of 1976; 30, 60 and 63 of 1977 and
H   141 of 1979 by which the High Court answered the questions referred to
(

             H.H. LAKSHMI BAI v. COMMR. OF W. T. [HANSARIA, J.]                   539

    it at the behest of the Department under the provisions of Wealth Tax Act, A
    1957, hereinafter the 'Act', in favour of the Department. On being satisfied
    that the questions answered by it raise a substantial question of law of
    general importance on which a pronouncement by this Court is necessary,
    it certified the cases as fit for appeal to this Court on prayer being.made
    by the counsel of the assessee.
                                                                                        B
          2. The question referred lo the High Court read as follows:

                "Whether on the facts and in the circumstances of the
             case and on the interpretation of section 5(1A) of the
             Wealth-tax Act, 1957, the Appellate Tribunal is right in
             law in holding that the assessee is entitled to exemption
                                                                                        c
             of Rs.70,000 invested by her in National Defence Certifi-
             cates and Defence Deposit Certificates in addition to the
             overall exemption of Rs.1,50,000 granted to her by the
             Wealth-tax Officer, under section 5(1) of the Act".
                                                                                        D
          3. The aforesaid was the question which came up for consideration
    of the High Court in l.T.R. Cases 28 and 37of1976. Similar questions were
    subject matter of other cases referred above. The High Court took the view
    that as investment in National Defence Certificates and Defence Deposit
    Certificates attracted, on the facts before it, the proviso to sub-section (lA)     E
    of section 5, exemption for the amounts in question (which was Rs.70,000
    in the aforesaid two cases, and was below Rs. 1,50,000 in all the cases),
    could not be granted over and above Rs.1,50,000 which was the limit
    prescribed by the main provision. It may be stated that investment in
    aforesaid Certificates would have fallen in clause (xv) of sub-section (1) of
    section 5 of the Act.                                                               F

          4. The learned counsel for the assessee has assailed the view taken
    by the High Court whereas the Department's counsel supports the same.

          5. The controversy lies within a narrow compass and the answer                G
    depends upon the interpretation of Section 5(1A) of the Act. The material
    part of the section as it stood at the relevant time read as follows:

                "Nothing contained in sub-section (1) shall operate to
            exclude from the net wealth of the assessee any assets
            referred to in clauses (xv), (xvi), (xxii), (xxiii), (xxiv), (xxv),         H
    540                    SUPREME COURT REPORTS                      [1994] 1 S.C.R.

A            (:xxvi), (xxvii), (:xxviii), (xxix), (xxxi) and (xxxii) not being
             deposits under the Post Office Savings Bank (Cumulative
             Time Deposits)'Rules, 1959, to the extent the value thereof
             exceeds, in the aggregate, a sum of one hundred and fifty
             thousand rupee.s:

B            Provided that where ·assets include any assets referred to
             in clause (xv) or clause (xvi) not being deposits under the
             Post Office Savi.Dgs Bank (Cumulative Time Deposit)
             Rules, 1959, which have been held by the assessee con-
             tinuouly from a date prior to the 1st day of March, 1970
c            and the value of assets so included exceeds the limit of
             one hundred and fifty thousand rupees by any amount,
             such limit shall be raised by the said amount".

                                                   · {Emphasis supplied) I

D          6. Department's case is that as the assets referred to in the main
    provision of sub-section (lA) exceeded in the cases at hand Rs.1,50,000 in
    the aggregate, the exemption limit could have been raised only if the value
    of assets referred to in clause (xv) or (xvi) held prior to the 1st day of
    March, 1970 would have exceeded Rs.1,50,000. Jn such a case only, the limit
E   the exemption provided by the main provisio_n of sub-section (lA) could
    have been raised by the amount the assets mentioned in the proviso would
    ilave exceeded the sum of Rs.1,50,000.

        7. To clear the ground, it may be stated that there is no dispute
  before us that the net wealth of the assessee as regards the assets referred
F in the clauses specified in the main provision of sub-section (lA) had
  exceeded Rs.1,50,000. Shri Ahuja, appearing for the Department, brings to
  our notice (to satisfy our mind in this regard) that even the investment in
  share in joint stock companies (which would have attracted clause (xxiii)
  which is one of the clauses specified in respect of (lA) of section 5) was
G to the extent of Rs.52,93,007, as would appear from the assessment order
  relatable to the year 1973-74. (In other assessment years also investment
  by the assessees qlia specified assets 'was in excess of RsJ,50,000.) In such
  a case the proviso to sub-section (lA) would come into play. We have,
  therefore, to find out the purport of this provjso.

H         8. Shri Ahuja refers to the expression "so included" used in the
             H.H.LAKSHMIBAI v. COMMR.OFW.T.[HANSARIA,J.]                      541

     proviso and contends that where the asset to be included be one referred       A
     in clause (xv) or (xvi), the value of the asset "so included" has to exceed
     the limit of Rs.1,50,000, in which case alone the limit would be raised by
     the amount the value of this asset exceeds Rs.1,50,000. No effective answer
     to this submission has been advanced by Ms. Ramachandran. Shri Ahuja,
     on the other hand, submits that Kerala High Court is not the only one to
     interpret section 5(1A) as above inasmuch as the same view has been taken      B
     by other High Court in (1) KS. Ayodhyanath v. Commissioner of Wealth
     Tax, 141 l.T.R. 309 Karnataka; (2) KS. Digvijaysinghji v. Commissioner of
     Wealth Tax, 141 I.T.R. 313 Gujarat; and (3) Saroja Ravindran v. Commis-
     sioner of Wealth Tax, 177 I.T.R. 302 Madras.

          8. On the language of the proviso, as it is, there cannot be two
                                                                                    c
     answers, according to us also. It is settled law that taxation statute in
     particular has to be strictly construed and that there is no equity in a taxing
     provision. It is because of this that the submission of Ms. Ramachandran
     that strict interpretation of the proviso would cause hardship to small
     depositors as against the richer ones, even if true, has no relevance.          D
           9. In the aforesaid view of the matter, we do not read any legal
     infirmity in the impugned judgments of the High Court. The appeals are,
     therefore, dismissed. No order as to cost5.

     G.N.                                                     Appeal dismissed.




-+