B.J. Divan, C.J.
1. The petitioner is the Orient Club, an unregistered association of persons, thorough its honorary secretary, and in this petition the petitioner club has challenged the notice dated January 5, 1979, issued by the respondent herein, the WTO, Circle IV, Ward-K, Ahmedabad, under s. 14(2) of the W.T. Act for the assessment year 1978-79. The petitioner prays that this notice of January 5, 1979, should be quashed and set aside and the respondent should be permanently restrained from taking any proceedings or making any assessment against the petitioner in pursuance of the said notice.
2. It is the case of the petitioner that it is a members' club which has been running in Ahmedabad since 1935. The primary objects of the petitioner-club are to organise, promote, encourage and provide all facilities and convenience for various sports for the use of the members and for such purpose to have a club house and to afford various facilities to its members. The petitioner is not registered under any enactment and it is, therefore, an unregistered association of its members being managed by the managing committee constituted under its constitution. It is a mutual association for the benefit of the members of the club and, at the time when this special civil application was filed, the number of members of the petitioner-club was more than 2,400. It is the case of the petitioner that prior to January 1, 1977, the club was carrying on its activities under its rules as then in force adopted by the members. Under clause 67 of those rules, all properties of the club were to remain vested in the club as represented by the managing committee or such other committee as the said committee or the general body might appoint and members were to have an interest in the club property only so long as they continued to be members. Such interest was to be incapable of specific apportionment or enforcement except in a winding-up of the club decided by the members in a general meeting specifically summoned for that purpose. By a resolution passed at the extraordinary general meeting of the club members, a new constitution was adopted by the petitioner club with effect from January 1, 1977. Since that time the new constitution is in force. Under the new constitution is in force. Under the new constitution, the petitioner-club has different kinds of members as set out in para. 3 of the petition. These different categories of members pay different amounts by away of entrance fees except the members falling within the first three categories of honorary members who do not pay any entrance fees. All the members of whatever category enjoy equal rights in the management of the club and in the enjoyment of the facilities and privileges as members. Temporary members, service members and playing members are not entitled to receive any notice of or attend or vote at any general meeting of the club or to be elected as office bearers or members of the managing committee of the club.
3. Since the commencement of the W.T. Act, 1957, not notice of any kind under the Act has been served on the petitioner-club. However, a notice dated January 5, 1979, was issued by the respondent under s. 14(2) of the W.T. Act, 1957, for the first time in connection with the assessment year 1978-79, and the petitioner-club was called upon to deliver a correct statement of assets and debts on the relevant valuation date within thirty-five days of the notice. The petitioner has not filed any return in response to the said notice and has in the present proceedings challenged the notice under s. 14(2).
4. It is the contention of the petitioner that under the W.T. Act the only assessable entities are individual. HUF and company while under the I.T. Act, by way of contrast, every person is an assessable entity; and person includes, according to the definition in s. 2(31) of the I.T. Act, an individual, HUF, company, firm and association or persons or body of individuals, whether incorporated or not, local authority and every artificial juridical person not falling within any of the preceding sub-clauses. The petitioner, therefore, contends that under the W.T. Act there are only a limited number of assessable entities as against a larger number of assessable entities under the I.T. Act. It has been contended by the petitioner that an association of persons or a body of individuals, whether incorporated or not, is not specifically made an assessable entity but a company has been made an assessable entity under the W.T. Act. The petitioner has relied upon the provisions of s. 4(1)(b) which provides for inclusion of the proportionate share of a member of an association of persons where that particular association of persons holds any assets, but the determination of the share of that association of person has to be done in the prescribed manner. Under r. 2 of the W.T. Rules, the manner of including the interest of a member of an association of persons has been prescribed and the residue of the net wealth of the association has to be allocated among the members in accordance with the agreement of association for the distribution of assets in the event of dissolution of the association and, in the absence of such agreement, in the proportion in which the members are entitled to share profits. This is the prescribed manner, according to the petitioner-club, so far as an association of persons is concerned. It is further the case of the petitioner that there is no question of a representative-assessee so far as an association of persons is concerned looking to the language of s. 21 of the W.T. Act.
5. No affidavit-in-reply has been filed on behalf of the respondent in the present proceedings and Mr. Raval, the learned counsel for the respondent, has merely relied upon the legal principles of interpretation of statutes and decided cases for the purpose of persuading us that an association of persons is covered by the word 'individual' occurring in the charging section of the W.T. Act.
6. Section 3 of the W.T. Act is the charging section and at the relevant time was in these terms :
'Subject to other provisions contained in this Act, there shall be charged for every assessment year commencing on and from the first day of April, 1957, a tax (hereinafter referred to as wealth-tax) in respect of the net wealth on the corresponding valuation date of every individual, Hindu undivided family and company at the rate or rates specified in the Schedule I.'
7. It may be pointed out that though a company as defined by the W.T. Act in s. 2(h) is an assessable entity, by virtue of the provisions of the Finance Act, 1960, for the assessment year 1960-61 onwards, wealth-tax is suspended so far as the assets of a company are concerned. Therefore, for all practical purposes, since commencement of the assessment year 1960-61 onwards, only an individual and HUF are assessable entities under the W. T. Act. Mr. Raval's efforts have been to persuade us to hold that an association of persons which consists of individuals is covered by the word 'individual' occurring in s. 3 of the W.T. Act. In CIT v. Sodra Devi : 32ITR615(SC) , the Supreme Court considered the meaning of the word 'individual' occurring in s. 16(3) of the Indian I.T. Act, 1922. The Bench of the Supreme Court consisted of three learned judges and Bhagwati and Kapur JJ. delivered the majority judgment. At page 620, Bhagwati J. speaking for the majority, observed :
'...... the word 'individual' has not been defined in the Act and there is authority for the proposition that the word 'individual' does not mean only a human being but is wide enough to include a group of persons forming a unit. It has been held that the word 'individual' includes a corporation created by a statute, e.g., a university or a bar council, or the trustees of a Baronetcy trust incorporated by a Baronetcy Act.'
8. Relying upon the observation that the word 'individual' is wide enough to include a group of persons forming a unit, Mr. Raval contended that an association of persons which forms a unit and is a group of persons is covered or included in the word 'individual' occurring in s. 3 of the W.T. Act. It must also be pointed out that S. K. Das J. who delivered the minority decision in Sodra Devi's case : 32ITR615(SC) :
'It is not disputed before us that the word 'individual' occurring in sections 3, 4A, 48 and 55 means either a male or a female; nor has it been disputed before us that, according to the ordinary accepted meaning of the word, it means a single human being as opposed to 'society', 'family', etc., and that a single human being may be of either sex. Learned counsel appearing for the assessees in the two appeals have pointed out, however, that the word 'individual' has not the same width of meaning in sub-section (3) of section 16 as it has in the other provisions; for example in section 3, the word 'individual' has-been held to include a corporation created by a statute, e.g., a university or a bar council or the trustees of a Baronetcy trust incorporated by a Baronetcy Act.'
9. The question before us is not a whether the word 'individual' which occurs in singular in s. 3 of the W.T. Act does not mean 'individuals' in plural. By virtue of the General Clauses Act, a singular word would include the plural and therefore the word 'individual' in section 3 would also include 'individuals'. It is by thus interpreting the word 'individuals' that the High Courts in India and the Supreme Court have, in the light of the provisions of ss. 5 and 21 of the W.T. Act, interpreted the word 'individual' to include trustees of a trust. The Supreme Court pointed out in the case of Gordhandas Charity Trust : 88ITR47(SC) , that because of the indications given in ss. 5 and 21 of the W.T. Act, trustees of a trust were liable to be assessed under the W.T. Act in respect of the assets held by them and that though they were an association of persons or a body of persons, because of the indications given in ss. 5 and 21, the word 'individual' would cover such a body of persons as well. The whole body of decisions starting from the Calcutta High Court decision in Suhashini Karuri's case : 46ITR953(Cal) and the Bombay High Court decision in Abhay L. Khatau's case : 57ITR202(Bom) , turned upon the meaning of the word 'individual' in the context of a body of trustees and it emerges from a consideration of Gordhandas Charity Trust's case : 88ITR47(SC) that trustees were considered to be covered by the word 'individual', because 'individual' means a body of individuals and there are indications that in ss. 5 and 21 of the W.T. Act this particular body of individuals, namely, trustees of a trust, are sought to be covered and are meant to be covered by the W.T. Act. The question that we have to ask ourselves is whether any ordinary association of persons other than trustees of a trust is sought to be covered by the language of the provisions of the W. T. Act and whether there are any indications, one way or the other, as regards such an association of persons.
10. The decision in V. Venugopala Ravi Varma Rajah v. Union of India : 74ITR49(SC) , turned upon the challenge to the provisions of the Expenditure-tax Act on the ground of discrimination between HUFs and Muslim Mappilla families of Kerala. Both the HUFs and Mappilla families are governed by Marumakkattayam law but because of the HUFs being specifically mentioned in the Expenditure-tax Act it was contended that the incidence of expenditure-tax was heavier in the case of a HUF than in the case of Mappilla family which was not a family of Hindus. The Supreme Court pointed that the under the charging section of the Expenditure-tax Act, tax was imposed on individuals and HUF and undivided family which consists of Hindus alone may be treated as a unit or an association and members of an undivided family whose members were not Hindus will be assessed and taxed as individuals. In the concluding paragraph of the judgment of the Supreme Court which dealt with purely the question of discrimination between HUF and Mappilla family, at page 57, Shah J., as he then was, speaking for the Supreme Court, observed :
'Parliament in the present case having made the Expenditure-tax Act applicable to Hindus governed by the law of the joint family, but not including Mappilla families who are governed by the Mappilla Marumak-kattayam Act has not made any discrimination and the charging section is not liable to be struck down on the ground that the Mappilla family may have to pay tax at a lower rate, whereas a Hindu undivided family, by reason of the amalgmation of the expenditure of all the members of the family, may have to pay tax at a higher rate.'
11. Members of Mappilla family would, according to this decision of the Supreme Court, be left to pay expenditure-tax, not on the basis of aggregation but on the basis of the expenditure of the individual members of the family, not on the aggregate of all expenditure but on expenditure of each individual members of the family. This decision on the question of what is meant by the word 'individual' was in the above context and certain observations were made while considering the question of challenge on constitution grounds is hardly of any assistance to us in interpreting the word 'individual' in the context of the W. T. Act.
12. Mr. Raval also relied upon the decision of the Supreme Court in Banarsi Das v. WTO : 56ITR224(SC) . There the validity of the W.T. Act in relation to HUF was challenged on the ground that the word 'individuals' in Entry 86 of List I of Sch VII covered a HUF and it was contended before the Supreme Court that the constitutional entry merely covered tax on individuals and not on groups of individuals and on companies. It was contended that a HUF consists of different coparceners who are, no doubt, individuals, but inasmuch as the impugned provision purported to levy wealth-tax on the capital value of the assets of the HUF as such, the tax was not levied on individuals but on groups of individuals and, therefore, was outside the scope of Entry 86. The Supreme Court in Banarsi Dass' case : 56ITR224(SC) applied the well-known principle that the entries in Sch. VII confer powers of the widest amplitude on the Legislature and that these constitutional entries in Sch. VII have to be given the widest scope at the time of considering the validity of any piece of legislation. The Supreme Court held in Banarsi Dass' case : 56ITR224(SC) that the word 'individuals' in Entry 86, List I of Sch. VII took within its sweep groups of individuals like HUFs. This interpretation of the word 'individuals' rendered in the context of interpretation of entries in the Seventh Schedule in the Legislative List cannot help us in deciding the much narrower question where the approach has to be from a different angle altogether, namely, interpretation of the provisions of the W.T. Act.
13. The decision of the Full Bench of the Kerala High Court in Kerala Financial Corporation v. WTO : 82ITR477(Ker) turned upon the question whether the definition of the word 'individual' in s. 3 of the W.T. Act was restricted to human beings alone. Following the earlier decision of the Supreme Court in Andhra Pradesh State Road Transport Corporation v. ITO : 52ITR524(SC) , the Full Bench held that the word 'individual' in s. 3 of the W.T. Act was not restricted to human beings and included a corporation similar to the Kerala Financial Corporation constituted under a Central, provincial or State Act. It may be pointed out that these decisions, one of the Supreme Court in Andhra Pradesh State Road Transport Corporation's case : 52ITR524(SC) and the other in Kerala Financial Corporation's case : 82ITR477(Ker) are in line with the observations in Sodra Devi's case : 32ITR615(SC) and the word 'individual' therefore can be interpreted to mean a juridical person as well. After the decision of the Supreme Court in Andhra Pradesh State Road Transport Corporation's case, Parliament has amended the definition of the word 'company' in s. 2(h) of the W.T. Act. A new definition was substituted for the earlier definition by the Finance Act, 1975, with effect from April 1, 1975. By virtue of this definition substituted in 1975, a company means a company formed and registered under the Companies Act, 1956, and includes, by clause (ii), a corporation established by, or under a Central, State or provincial Act. It thus means that by the latest enactment of Parliament, a corporation established by or under Central, State or Provincial Act, which till that moment was looked upon as an individual is now considered to be a company and by virtue of the suspension since assessment year 1960-61 of the provisions of the W.T. Act in the case of a company, such a corporation is not liable to be assessed to wealth-tax. What is more important for the purposes of our judgment is that by s. 2(h)(iii), 'company' also includes any institution, association or body, whether incorporated or not and whether Indian or non-Indian, which the Board may, having regard to the nature and objects of such institution, association or body, declare, by general or special order to be a company. Therefore, it means that qua an association of persons or a body of persons, whether incorporated or not, it is open to the Board of Direct Taxes to declare by special or general order that such association or body is a company and then by virtue of the inclusive definition in s. 2(h)(iii), it will be treated as a company for all purposes of the W.T. Act and will become an assessable entity.
14. The fact that the words 'association of persons' are not unknown to Parliament in the context of the W.T. Act is also borne out by the provisions of s. 4 which deals with net wealth of an individual to include certain assets. Under s. 4 in computing the net wealth, of an individual, there shall be included, as belonging to that individual, under sub-cls. (a) and (b), the value of the assets which on the valuation date are held by a person or an association on persons to whom such assets have been transferred by individual, etc., etc. So the Legislature did use the words 'association of person' when it wanted to use in a particular context. Similarly in s. 4(1)(b), in computing the net wealth of an individual, there shall be included as belonging to the individual, where the assessee is a partner in a firm or a member of an association (not being a co-operative housing society), the value of his interest in the firm or association determined in the prescribed manner. Rule 2 of the W.T. Rules, 1957, prescribes the manner in which the interest of an individual member in property held by an association of persons is to be valued and under sub-r. (1) of r. 2, the value of the interest of a person in an association of persons in which he is a member shall be determined in the manner provided in sub-r. (1) Net wealth of an association on the valuation date shall first be determined. That portion of the net wealth of the association as is equal to the amount of its capital shall be allocated among the members in the proportion in which capital has been contributed by them. The residue of the net wealth of the association shall be allocated among the members in accordance with the agreement of association for the distribution of assets in the event of dissolution of the association or, in the absence of any such agreement, in proportion in which members are entitled to share profits. It is, therefore, clear that under r. 2(1) of the W.T. Rules, 1957, read with s. 4(1)(b), the Legislature has given clear indication that an association of persons is not an assessable entity covered by the word 'individual' in s. 3 of the W.T. Act. Just as ss. 5 and 21 give a positive indication that the word 'individual' covers trustees of a trust, similarly. s. 2(h)(iii) and s. 4(1)(b) read with r. 2 of the W.T. Rules, give a negative indication that the word 'individual' in s. 3 does not cover a body of individuals or an association of persons but that the particular species of association of persons is specifically covered by virtue of the indications given in ss. 5 and 21 by the word 'individual' and that by virtue of the negative indication given by ss. 2(h)(iii) and 4(1)(b) read with r. 2, an association of persons or a body of individuals apart from trustees is not covered by the word 'individual' in s. 3. That is the only possible conclusion that one can reach in the light of the provisions of the W.T. Act and the indications given by the W.T. Act.
15. Under the circumstances, the notice, annex. 'B' to the petition, which is challenged in this special civil application, must be quashed and set aside as the petitioner-club which is an association of persons is not an 'individual' for the purposes of the W.T. Act and hence not an assessable entity as an individual, nor is there any other provision in the W.T. Act which makes an association of persons like the petitioner-club an assessable entity. It must be pointed out that the contention of the petitioner regarding association of persons is only in the context of the W.T. Act and not in the context of any other piece of direct taxation.
16. This special civil application is, therefore, allowed and the notice, under s. 14(2) of the W.T. Act being the notice dated January 5, 1979, annex.'B' to the petition, is quashed and set aside. Rule is made absolute accordingly. The respondent will pay the costs of this special civil application to the petitioner.