Judgment:
K. Shivashankar Bhat, J.
1. In respect of the assessment year 1982-83, the following question has been referred for our consideration under section 27(1) of the Wealth-tax Act, 1957 :
'Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the exemption under section 5(1)(xviia) of the Wealth-tax Act is available to the Hindu undivided family in respect of the amount of Rs. 1,50,000 belonging to the Hindu undivided family deposited by its karta in public provident fund in his individual name ?'
2. The question is referred at the instance of the Revenue, because, its claim was negatived by the Appellate Tribunal. A sum of Rs. 1,50,000 was standing in the name of a member of a Hindu undivided family in the provident fund account. While computing the assessable wealth of the Hindu undivided family, this sum was sought to be excluded under section 5(1)(xviia) of the Wealth-tax Act by the assessee. This claim was not accepted by the Wealth-tax Officer on the ground that the language of the clause did not permit such exclusion; clause (xviia) specifically refers only the 'individual'.
3. The Appellate Tribunal relied on the decision of the Supreme Court in WTO v. C. K. Mammed Kayi : [1981]129ITR307(SC) to opine that the term 'individual' would include a group of individuals which in turn would attract the Hindu undivided family and, therefore, the term 'individual' in question would cover the case of a Hindu undivided family also.
4. Mr. Raghavendra Rao, learned counsel for the Revenue, contended that, under section 3 which is the charging section, three entities are brought into the tax net - (1) individual, (2) Hindu undivided family and (3) company and section 5(1) provided for the exemption of assets belonging to an 'individual', Hindu undivided family or the company, as specified in its various clauses.
5. It was argued that some clauses simply referred to the term 'assessee,' in which case, all the three categories will be covered : some of the clauses refer to 'individual' and such clauses would govern the case of the assessee who is an individual; some of the clauses refer to 'individual' and 'Hindu undivided family,' in which case, such a clauses would govern the case of an individual or Hindu undivided family as the case may be and there are a few clauses which do not refer to the assessee in any manner but just refer to the nature of the assets and such assets would be excluded under section 5(1) irrespective of the status of the assessee as individual, Hindu undivided family or company. Since clause (xviia) specifically governs the case of an individual, it is contended that he benefit of the said clause cannot be extended to the case of the Hindu undivided family, even though the provident fund was actually created by the contribution made by the Hindu undivided family. Mr. Hemaraj, learned counsel for the assessee, relied on the opening clauses of section 5(1) and contended that the exclusion is in respect of the enumerated assets. In other words, if a particular asset belongs to an assessee, the said asset will have to be excluded in case such an asset falls within the purview of any of the clauses enumerated under section 5(1).
6. The charge is on the net wealth of an assessee under section 3. The term 'assets' is defined under section 2(e). Under Section 4, certain assets are included in the net wealth of an assessee. The scheme of the Act as well as the purport of the charging section is to assess the net wealth of an assessee. But some assets are exempted from the levy and theses assets are not to be included in the 'net wealth'. What is to be excluded is an asset falling under any of the clauses in section 5(1), which otherwise would be included in the 'net wealth' of an assessee. The Revenue, in the instant case, seeks to rope in the provident fund amount standing in the name of a member of the Hindu undivided family by treating it as an asset of the Hindu undivided family. If so, the question is whether such an asset is exempted under section 5(1). The answer should be that, under clause (xviia) of section 5(1), such an asset is excluded. If the Revenue could contend that, if a necessarily follows that it will have to be excluded. The provident fund account could normally stand only in the name of an individual or individuals and it is not possible to have a provident fund account in the name of a Hindu undivided family. In fact, under the provisions of the Income-tax Act, the Hindu undivided family is entitled to an appropriate deduction or rebate of tax, in respect of the contribution made by the Hindu undivided family to the provident fund account of a member of the Hindu undivided family.
7. In the decision of the Supreme Court in WTO v. C. K. Mammed Kayi : [1981]129ITR307(SC) , it was held that the term 'individual' includes a group of individuals like Mappilla Marumakkathayam towards : if so, the Hindu Undivided family also could be brought under the said concept. At page 312, the Supreme Court observed :
'The enactment is intended to provide for the levy of wealth-tax; the general scheme thereof is to assess all person who happen to possess or earn wealth beyond a particular limit fixed by the Statute to wealth-tax and since the Act imposes a general tax on the entire wealth of the community the presumption would be of equality of incidence rather than exemption of a few. Secondly, the term 'individual' under section 13(2) of the General Clauses Act, 1897, can be read in the plural and, as such, would include a body or group of individuals like a Mappilla tarward. Thirdly, there is no warrant for suggesting that the two terms 'individual' and 'Hindu undivided family' have been used in antithesis with each other, for, section 3 being the charging provision, is merely concerned with specifying different assessable units for purposes of assessment of wealth and imposition of the levy; it cannot be disputed that the Legislature can select persons, properties, transactions and objects for the imposition of a levy and for that purpose classify as many different assessable units as it could reasonably think necessary and this is how three assessable units, namely, 'individual', 'Hindu undivided family' and 'company' (which was later omitted) have come to be specified in section 3. In our view, the specific mention of a Hindu undivided family in the section does not result in the exclusion of a group of individuals who only form a unit by reason of their birth like Mappilla tarward from the operation of the section. It is difficult to accept the argument that if the term 'individual' was intended to include joint families or undivided families it was redundant to specify Hindu undivided families.'
8. The above observation supports the contention of learned counsel for the assessee.
9. In the result, we agree with the conclusion of the Appellate Tribunal and the question referred to us is answered in the affirmative and against the Revenue.