THIRUMANI MUDALIAR M Vs. COMMISSIONER OF WEALTH TAX

JUDGEMENT

(1.) ONE Palaniappa Mudaliar owned considerable movable and immovable properties. He died on June 14, 1937, leaving behind him his only son Pichai alias Shanmugasundaram. The deceased had executed a will on 4th March, 1936, under which the following persons have been appointed as executors :

(2.) THE will, after providing for certain specific legacies, directed the executors to divide and distribute equally the residue among the aurasa of Pichai living at the time of his death. Up to the assessment year 1959-60 income-tax assessments had been made on the executors, hereinafter referred to as the assesses, in the status of an " association of persons ". In respect of the assessment years 1957-58 to 1961-62, a notice under Section 14(2) of the Wealth-tax Act, hereinafter referred to as the Act, was served on the assesses, calling for a return of wealth. A return was duly filed by them in respect of each of the said years declaring that there was no net wealth chargeable to tax under the Act as the executors constituted an association of persons, that an association of persons was not a " person " within the meaning of the Act and as such outside the scope of Section 3 of the Act and that Section 19 of the Act dealing with "liability of legal representatives " had no application to the facts of the case.

(3.) SO far as the third question is concerned, it has to be answered in the affirmative and against the assessee in view of the decision in Banarsi Dass v. Wealth-tax Officer, and Gordhandas Govindram Family Charity Trust v. Commissioner of Income-tax, . In the first case the Supreme Court held that the word " individuals " in entry 86 of List I of Schedule VII to the Constitution of India takes within its sweep groups of individuals like Hindu undivided families and that, therefore, Parliament was competent to levy a tax on the capital value of the assets of the Hindu undivided families and that Section 3 of the Wealth-tax Act, 1957, was, therefore, valid in so far as it purports to levy wealth-tax in respect of the net wealth of a group of individuals such as a Hindu undivided family. The main contention in that case was that the word "individuals" in entry 86 meant only individuals and not a group or groups of individuals. The Supreme Court, however, construed the word " individuals " as including a group of persons forming a unit. In the second case, the Supreme Court has construed the word " individuals " occurring in Section 3 of the Wealth-tax Act and held that it would include individuals, and that the trustees of the trust as a group of individuals constituted an assessable unit under the Act. The third question is, therefore, answered accordingly.