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Third Wealth-Tax Officer Vs. State Bank Of India Officers' - Court Judgment

LegalCrystal Citation
CourtIncome Tax Appellate Tribunal ITAT Madras
Decided On
Judge
Reported in(1982)2ITD505(Mad.)
AppellantThird Wealth-Tax Officer
RespondentState Bank Of India Officers'
Excerpt:
.....assessment made in this case by the aac is not justified. it is argued that the assessee being a trade union registered under the indian trade unions act, 1926, is chargeable to wealth-tax as an 'individual' and the fact that the status has been wrongly mentioned by the wto as an aop does not invalidate the charge.the correct status according to law, it is claimed, in this case is individual and, accordingly, the assessee is chargeable to wealth-tax and, therefore, the assessments made should be sustained. in this connection, the learned departmental representative relied on the decision of the andhra pradesh high court in cwt v. hyderabad race club [1978] 115 itr 453 and of the supreme court in wto v. c.k. mammed kayi [1981] 129 itr 307. he further submitted that the decision of the.....
Judgment:
1. These appeals are by the department, objecting to the order of the AAC cancelling the assessments to wealth-tax for the years 1972-73 to 1975-76 made on the assessee, the State Bank of India Officers' Association (Madras Circle), Madras. The assessments have been made by the WTO with the status of the assessee as an AOP. In the appeals preferred by the assessee, the AAC accepted the assessee's contention that no assessment to wealth-tax on the assessee as an AOP is possible, following the decision of the Gujarat High Court in Orient Club v. WTO [1980] 123 ITR 395. Aggrieved by his finding, the department has come up in appeal before the Tribunal.

2. The learned departmental representative submitted that the cancellation of the assessment made in this case by the AAC is not justified. It is argued that the assessee being a trade union registered under the Indian Trade Unions Act, 1926, is chargeable to wealth-tax as an 'individual' and the fact that the status has been wrongly mentioned by the WTO as an AOP does not invalidate the charge.

The correct status according to law, it is claimed, in this case is individual and, accordingly, the assessee is chargeable to wealth-tax and, therefore, the assessments made should be sustained. In this connection, the learned departmental representative relied on the decision of the Andhra Pradesh High Court in CWT v. Hyderabad Race Club [1978] 115 ITR 453 and of the Supreme Court in WTO v. C.K. Mammed Kayi [1981] 129 ITR 307. He further submitted that the decision of the Gujarat High Court in Orient Club (supra) relied on by the AAC is distinguishable and its ratio is not applicable to the facts of this case.

3. The learned representative for the assessee on the other hand, strongly relied on the decision of the Gujarat High Court in Orient Club (supra). He further submitted that the decision of the Supreme Court in Mammed Kayi (supra) is distinguishable. It is also pointed out by him that the income of the assessee is exempt under Section 10(24) of the Income-tax Act, 1961, as held by Bench 'A' of the Tribunal in IT Appeal Nos. 1150 to 1156 (Mad.) of 1978-79, dated 31-3-1980. It was further contended that the decision of the Andhra Pradesh High Court was concerned with the claim of exemption under Section 5(1) of the Wealth-tax Act, 1957 ('the Act') and not with Section 3 of the Act, which is the charging section, and therefore, the decision cannot be said to support the department's case. Lastly, it was argued that Rule 2 of the Wealth-tax Rules does not prescribe the method of valuing property in this case and, therefore, charge to wealth-tax is not possible.

4. On a consideration of the facts and the contentions of the parties, we find substantial merit in the department's stand, that the assessee is exigible to wealth-tax assessments and charge. The assessee, as already stated, is an association registered as a trade union under the Indian Trade Unions Act, bearing Registration No. 2/Mds. The objections of the association, inter alia, are (a) to organise and unite all officers of the State Bank of India and to regulate their relations with their employers, (b) to secure to the members fair conditions of life and service, (c) to try to redress their grievances, (d) to try to prevent any reduction of salaries, wages and allowances and if possible, to obtain an advance thereof whenever circumstances allow, and (e) to endeavour to settle disputes between employers and employees amicably so that a cessation of work may be avoided, etc.

Its membership is open to any person employed as officer in the State Bank of India in Madras Circle, who subscribes to the objects of the Association, making necessary application in this behalf. The Indian Trade Unions Act provides for registration of such associations and also for issue of certificate of registration. It also contemplates such registered trade unions having a separate registered office, and regulations as to its management of fund, etc. Two important provisions governing the registered trade union under the Indian Trade Unions Act, which, according to us, are relevant in this connection are Sections 13 and 14. Section 13, states that every registered trade union shall be a body corporate by the name under which it is registered and shall have perpetual succession and a common seal with power, to acquire and hold both movable and immovable property and to contract, and shall by the said name sue and be sued. Section 14 states that the Societies Registration Act, the Cooperative Societies Act and the Companies Act shall not apply to any registered trade union and the registration of any such trade union under any such Act shall be void. The above provisions show that a registered trade union is a body corporate having an independent legal existence and cannot be an association or a society under the Societies Registration Act, or a co-operative society under the Co-operative Societies Act or a company under the Companies Act. The status of the assessee, having regard to these provisions, in our view, can only be an 'individual'. There is ample authority for the proposition that the 'individual' contemplated under the Wealth-tax Act is not necessarily natural human being and can include any person, including an idol which has an artificial juridical status and which can constitute an entity-CIT v. Sodra Devi [1957] 32 ITR 615 (SC) and Sri Sri Sridhar Jiew v. ITO [1967] 63 ITR 192 (Cal.). The decision of the Supreme Court in Matnmed Kayi (supra) also affirm this position in law. Although the case was concerned with the applicability of the Act to Mapilla Marumakkathayam Tarwads of North Malabar, the Supreme Court considered the expression 'individual' as comprehending every person or entity, including a group of individuals, who can form a unit. It was observed in this case that in the light of the scheme of the Act, the enactment was intended to provide for the levy of wealth-tax and to assess all persons who happen to possess or earn wealth beyond a particular limit fixed by the statute. It is further observed that 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 and, the specific mention of HUF in the section does not result in the exclusion of group of individuals, who only form a unit by reasonof their birth like a mapilla tarwad, from the operation of the section. As regards the Gujarat High Court decision in Orient Club (supra) relied on by the assessee in this case, it is to be noticed that apart from the fact that the decision has to be read in the light of the later Supreme Court decision in Mammed Kayi (supra), the facts in that case are also distinguishable from the facts in the assessee's case before us. In that case, the petitioner before the High Court was the Orient Club, an unregistered AOP, acting through its Honorary Secretary. In the case of the assessee before us, we have already pointed out that it is an independent juristic entity by virtue of its registration under the Indian Trade Unions Act with a perpetual succession and a common seal with power to acquire and hold both the movable and immovable properties and to enter into contract and also entitled to sue and to be sued in its name. We are, therefore, satisfied that the assessee is chargeable to wealth-tax and the assessments made by the WTO have to be sustained, if necessary with the status modified as 'individual'. The order of the AAC cancelling the assessments is, therefore, set aside and the assessments made by the WTO are restored.


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