SHELAT C.J. - This is a reference under section 27 of the Wealth-tax Act, XXVII of 1957. The relevant assessment years are 1957-1958 and 1958-59, and the relevant valuation dates are the 31st of December, 1956, and the 31st of December, 1957.
The two assessee are brothers and have been separately assessed as individuals. Amongst the other properties, the two assessees were possessed of 12 year National Savings Certificates and 10 year 3 1/2% Treasury Savings Certificates. The assessee, Harshad, had, at the relevant time, 12 year National Savings Certificates of the value of Rs. 25,000 in his own name and of Rs. 1,35,000 in some other name or names. He was also possessed of the year 3 1/2% Treasury Savings Deposit Certificates of the value of the Rs. 25,000 which stood in his name and other such certificates of the value of Rs. 1,00,000 which stood in other name or names. Likewise, the other assesee, Mahendra, was possessed of 12 years Post Officer National Savings Certificates of the value of Rs. 25,000 which stood in his name, as also 10 year 3 1/2% Treasury Savings Deposit Certificates of the value in all of Rs. 75,000 out of which, certificates of the value of Rs. 50,000 stood in his and his wifes joint names and the rest of the Certificates of the value of Rs. 25,000 in some other name or names. In addition to these certificates, each of the two assesses inherited certificates of the value of Rs. 1,00,000 upon the death of their brother, one Manubhai R. Patel. The holdings as on the 31st of December, 1957, of each of the two assessees in the aforesaid certificates were the same as those on the 31st of December, 1956. The assessee claimed exemption from wealth-tax in respect of these certificates and relied therefore on section 5(1), clause (xvi) of the Act. The Wealth-tax Officer granted exemption to the assessee, Harshad, in respect of certificates of Both the types of the value of Rs. 25,000 each, and so far as the assessee, Mahendra, was concerned, he granted exemption in respect of the 12 year National Savings Deposit Certificates of the value of Rs. 25,000 and the 10 year 3 1/2% Treasury Savings Deposit Certificates of the value of Rs. 50,000 only. The rest of the claim for exemption in respect of the other certificates was rejected by the officer. The wealth-tax Officer, while rejecting the aforesaid claim in his assessment order against the assessee, Harshad, stated as follows :
'The total holdings of the assessee in such certificates is Rs. 3,85,000 which are claimed to be exempt under section 5(1)(xvi) of the Wealth-tax Act. It is however to be noted that the exemption embodied in section 5(1)(xvi) of the Wealth-tax Act is restricted to the actual holding of the assessee. On the other hand, it is admitted that the holdings to the tune of Rs. 3,85,000 as detailed above are not entirely held by the assessee in his own name. As already stated above, Rs. 1,00,000 in these holdings represent the share in the holding of his brother, Shri Manubhai, who is now deceased. This amount, therefore, cannot enjoy the exemption prescribed by section 5(1)(xvi) of the Wealth-tax Act. As for, the balance of holdings of Rs. 1,85,000 the assessee is entitled to exemption for Rs. 25,000 in respect of 12 years Post Office National Savings Certificates only and Rs. 25,000 in respect of 10 year 3 1/2% Treasury savings Deposits which is the limit up to which he can invest into such certificates in his personal name. The assessee is, therefore, entitled to total exemption of Rs. 50,000. The balance of Rs. 3,35,000 is, therefore, included in his total wealth, Rs. 3,85,000.'
A similar order was passed against the other assessee, Mahendra. The two assessees took the matter in appeal before the Appellate Assistant Commissioner, before whom they raised tow contentions : (1) that since the certificates were not in the names of the assessee, but in names of the nominees, under the post office rules and under the Government rules the owners of such certificates would be the persons in whose names such certificates stood and, therefore, such certificates could not be included in the net wealth of the assessee, and (2) in the alternative, that if it were held that the assessees were the owners of these certificates then these certificates must be treated as having been held by the assessees within the meaning of section 5(1)(xvi) of the Wealth-tax Act. In either event, therefore, those certificates were not includible in the wealth of the assessees. The Appellate Assistant Commissioner declined to accept either of the two contentions and held that the Wealth-tax Officer was entitled to include the value of these certificates in the net wealth of the assessees as the certificates which were admittedly owned by them including the certificates which stood in the names of their nominees. As regards section 5(1)(xvi), the Assistant Commissioner held that clause (xvi) applied only to those certificates which were held by the assessees, in other words, which stood in the names of the assessee, and that the concept of beneficial ownership or 'benami' was unknown to section 5(1)(xvi) of the Act. In that view, he held that though the certificates standing in the names of their nominees were the assets of the assessees, includible in the wealth of the assesses, such of the certificates as did not stand in the wealth of the assessees, were not entitled to exemption and, therefore, were rightly included by the wealth-tax Officer in the taxable net wealth of the assessees.
Aggrieved by the orders of the Assistant Commissioner, both the assessee filed appeals before the Tribunal and the Tribunal, taking a different view on the interpretation of clause (xvi) of section 5(1), set aside the orders of the Assistant Commissioner and held that the assessee were entitled to exemption in respect of the value of all the certificates and that no distinction could be made between the certificates standing in the names of the assessee and those standing in the names of their nominees. The Tribunal held that the securities in question formed part of the wealth exempt from assessment altogether with no limit specified in the exempting sub-section and under section 5(1)(xvi) such certificates were not includible in any assessment, whether they stood in the names of the assessee or were possessed of by them as beneficial owners. The Tribunal therefore made the present reference at the instance of the Commissioner of Wealth-tax and the question of law that has been referred to us is as follows :
'Whether, on a proper interpretation of section 5(1)(xvi) of the Wealth-tax Act, the assets representing the aforesaid savings certificates which are not in the name of the assessee but of which the assessee was the beneficial owners are exempt from wealth-tax ?'
The question that falls for our determination is one of interpretation of clause (xvi) of section 5(1) and, in particular, of the words, 'held by the assessee' occurring in that clause. Before, however, we go to section 5(1)(xvi) it will be necessary first to turn to the definitions of 'net wealth' given in the Act. Sections 2(m) defines 'net wealth' as meaning the amount by which the aggregate value computed in accordance with the provisions of this Act of all the assets, wherever located, belonging to the assessee on the valuation date, including assets required to be included in his net wealth as on that date under this Act, is in excess of the aggregate value of all the debts owed by the assessee on the valuation date. It is clear from this definition that any property, wherever located, belonging to the assessee on the relevant valuation date would be includible in the computation of his net wealth. Clause (e) of section 2 defines the word 'assets' as including property of every description, movable or immovable, except properties thereinafter set out. Since the exempted properties are not relevant for the purposes of this reference, it is not necessary to quote the rest of the definition of the word 'assets'.
Section 5(1)(xvi) which is the section requires to be construed in this reference, provides as follows :
5. Exemption in respect of certain assets - (1) Wealth-tax shall not be payable by an assessee in respect of the following assets, and such assets shall not be included in the net wealth of the assessee - ....
(xvi) ten year treasury savings deposit certificates, fifteen-year annuity certificates, deposits in post office savings banks, post office cash certificates, post office national savings certificates and twelve year national plan savings certificates held by the assessee.'
Clause (xvi) was subsequently amended, but so far as the present reference is concerned, it is clause (xvi) as it stood prior to the amendment and as cited above, which is relevant. It will be notices at once that both in the definition of 'net wealth' as also in section 4 of the Act which provides for the net wealth to include certain assets set out therein, the legislature has used the expression 'belonging to the assessee' but while enacting clause (xvi) in section 5(1) it has used the expression 'held by the assessee'. The question is, whether the interpretation given by the tribunal to the expression 'held by the assessee' namely, whether standing in the name of the assessee or not, is a true and proper construction.
The learned Advocate-General, appearing for the Commissioner, contended that there was a clear distinction between the two expressions, namely, 'belonging to' and 'held by the assessee.' He submitted that the expression 'belonging to' has reference to ownership in the property and that the expression 'belonging to' means that the assessee has property right or ownership in the property in question. He argued that as against such a meaning of the expression 'belonging to' the expression 'held by the assessee', as used in clause (xvi) of section 5(1), has a limited meaning in the sense that the certificates in question can be said to be held by the assessee only if such certificates stand in the name of the assesee. As against this construction, Mr. Nanavaty for the assessee canvassed for the interpretation of the expression 'held by the assesee' as meaning belonging to or of the ownership of the assessee, and argued that the expression meant not only the certificates standing in the name of the assessee but also those in the name or names of his nominees. Mr. Nanavaty went to the extent of suggesting that there was no difference between the expressions 'held by'and belonging to and that both the expressions were synonymous and relied upon the meaning of the verb 'held', i.e., own as property, as given in the Oxford Short Dictionary. Mr.,Nanavaty also submitted that since clause (xvi) was an exemption clause in favour of an assessee, that clause be liberally construed, particularly in view of the object of the scheme under which the Government of India have issued these certificates, viz, encouraging thrift and economy amongst the people of this country. Mr. Nanavaty, therefore, contended that the Tribunal was right in holding that these certificates, whether they stood in the name of the assessee or in the names of his nominees, had to be exempted under the provisions of clause (xvi) of section 5(1).
Now it is true that where an exemption clauses, such as the one we have in clause (xvi), is inserted by the legislature for the benefit of the assessees, the court must incline to give such a clause a liberal construction. But in trying to give such liberal construction the court cannot afford to lose sight of the context in which the words or expressions falling for interpretation are use by the legislature in the statute in question. In order, therefore, to appreciate the proper interpretation to be given to the expression 'held by the assessee' in clause (xvi), it will be necessary to appreciate whether the legislature has used the two expressions, namely, 'belonging to' and 'held by the assessee' in different senses or not.
The expression 'belonging to' has been the subject-matter of construction in many a decision and courts have construed that expression as meaning having proprietary rights or interests ownership in the object in question. Thus, in Heritable Reversionary Co. Ltd. v. Millar the House of a Lords had to construe certain provisions in the Bankruptcy Act of 1856 of Scotland and in particular the expression 'belonging to the creditor' as therein used, and, while doing so, Lord Macnaghten in his special observed at page 621 as follows :
The words 'property' and 'belonging to' are not technical words in the law of scotland. They are to be understood, I think, in their ordinary signification. They are in fact convertible terms; you can hardly explain the one except by using the other. A mans property is that which is his own, that which belongs to him. What belongs to him is his property. No one in ordinary parlance would speak of land or funds held only in trust for another as the property of the trustee. Land or funds so held are not the trustees property in any real sense any more than a bankrupts sequestered estate is the property of the trustee in bankruptcy. It is true that in the present case the complete feudal title was in the bankrupt. it is true that in a strict legal view the right of the beneficiaries was only a personal claim against the trustees. But for all that the bankruptcy could not have applied the property to his own purposes or used it for his own benefit without committing a fraud for which he might have been made ceremonially responsible. The beneficiaries were the true owners all along.'
Similarly, in In re Miller the question as to the construction of section 15 of the Friendly Societies Act, 1875, arose, which section, inter alia, provided that registered friendly societies shall be entitled to the following privileges, namely, upon the bankruptcy of any officer of a society having in his possession by virtue of his office any money or property belonging to the society, his trustees in bankruptcy shall upon demand in writing pay such money and deliver over such property to the trustees of the society, in preference to any other debts or claims against the estate of such office. Lord Esher M.R. at page 333, construing the expression 'belonging to the society' observed that that expression was not a technical term of legal art and that the expression pointed to any money or property which, in ordinary language, could be said to 'belong to' the society. These were cases arising under the Bankruptcy Acts, but the construction of the words 'belonging to' would apply equally to the same words used in section 4 and in the definition clause, clause 2(c), in the present Act. The expression 'belonging to' therefore is synonymous with ownership or proprietary rights in a particular property in question, and there can be no doubt that the expression 'property belonging to a person' means the property which is of the ownership of that person. Consequently, the certificate in which the rights of ownership vest in an assessee, whether such certificates stand in his name or in the name of another person, such as his income, must be said to belong to the assesee and therefore would be his assets within the meaning of section 2(e) and would form part of the net wealth under section 4 of the Act. For the purpose of computation of his net wealth therefore, it therefore, it would not matter whether the property in question stands in his name or stands in the name of another person so long as the beneficial ownership therein vests in the assessee. The Tribunal, therefore, in our view, was right when it held that the value of those certificates was includible in the net wealth of the assessee.
The real controversy in this reference, however, starts when we go to the question of interpretation to be given to the expression 'held by the assessee'. The learned Advocate-General, in support of the limited construction he suggested, relied upon the decision in In re Wala Wynaad Indian Gold Mining Co. It was held there that a contributory of a company may present a petition to wind up the company where his name appears on the register as the holder of shares, though a trustee may have been appointed under a liquidation petition filed by such contributory, during the period of six months mentioned in section 40 of the companies Act, 1867. It was there stated that the word 'held' in section 40 had no technical meaning, the true meaning of the word being that the name of the contributory has been on the register as the holder of shares for the period in question.. At page 852 of the report, Chitty J. asking himself the question as to what was the meaning of the word 'held' thought that the word 'held' had no specific technical meaning, and that it would be sufficient if the shares were registered in the name of the contributory at the relevant period and that if they were so registered during the prescribed period, such a contributory would be entitled to maintain a petition for winding up. At page 853 of the report, he again observed that the expression 'held' had no other meaning except that the shares were held by the person in whose name they were registered. Illustrating certain articles from Table 'A', he observed that the words 'holder' and 'held' were used in no other sense except the sense of a registered owner and further observed that under article 72 in Table 'A', there could be nothing more claimed than that no one can vote at the meeting where the companys capital is divided into shares except those who are on the register as holders of shares. Similarly, under article 74, the expression 'the shares which if' held by one person must have the same meaning, and the same meaning of the word held in section 40 of Companies Act, 1867, must also be right. it is true that the expression held in that case was being construed by Chitty J. in the contest of the provisions of the companies Act of 1867 and particularly with reference to section 40 where the word held has been used in conjunction with the expression 'registered holder'. But it is clear from the observations made by Chitty J. in the decision that he construed the word 'held' not merely from its content with the expression 'registered holder' but on the basis of the ordinary dictionary meaning that would be attachable to the word 'held' when used in relation to a person holdings shares of the company. Ordinarily, when one uses the expression 'a shareholder' he does so meaning thereby the holder of shares whose name is registered in the register of the company.
The question, however is that, though a shareholder, within the meaning of the companies Act must mean a holder whose name is registered in the companys register, whether the same meaning must be attached to the expression 'held by the assessee' in clause (xvi) of section 5(1). Mr. Nanavatys contention was that a clause in one statute cannot be rightly construed in the light or context of another statute, and he argued that we must turn to the expression 'held by the assessee' as used in the clause itself. The learned Advocate-General, however, pointed out that as appearing from the order of the Wealth-tax Officer, under the scheme under which these certificates were issued, there was a prescribed limit up to which only an individual could invest in these certificates, namely, that an individual could purchase these certificates only of the value of Rs. 25,000 and of Rs. 50,000 in case they were purchased in the joint names of himself and his wife. The learned Advocate-General contended that if it was considered necessary to lay down such as limit of holding, it would be highly improbable that the legislature, presumably being aware of such a limit, would ever think of granting exemption in respect of certificates were to be of the value of more than Rs. 25,000 they would have to be in the name of a person other than an assessee. In our view, there is some force in the contention roused by the learned Advocate-General. But apart from that consideration, it is clear that the legislature have used two different expressions occurring at two different places in the statute with a purpose and with a view to bring out its intention clearly, viz, that the exemption under clause (xvi) was limited to those certificates which were held by the assessee at the relevant, time, that is to say, those certificates which stood in the name of the assessee, and not in respect of certificates standing in the name of another person, his nominee, though the assessee had beneficial ownership in such certificates. This conclusion acquires considerable strength from the fact that if the legislature wanted to give exemption to certificates irrespective of the fact whether they stood in the name of the assessee or not, it need not have added at all the expression 'held by the assessee' at the end of the clause (xvi). Alternatively, if the legislature wanted to grant exemption in respect of all certificates whether they stood in the name of the assessee or in some other name, it was possible for the legislature to use the expression 'belonging to the assesee' as the legislature has in fact used such an expression in clause (xv) of section 5(1) while dealing with jewellery. It is clear, therefore, that the legislature has used the expression 'held by the assessee' purposefully and in order to bring out a meaning or a connotation different from that would be given to the words 'belonging to'. What is still more important is that the expression 'held by the assessee' is used in reference to the certificates mentioned in that clause. The certificates therein mentioned are those certificates issued by the Central Government under a scheme referred to by the Wealth-tax Officer under which, as stated by him, an individual can purchase such certificates to the extent of Rs. 25,000 and no more. There is no dispute that this is the maximum provided under the aforesaid scheme and up to which an individual can invest in the certificates. It is, therefore, obvious that the expression 'held by the assessee' relates to the certificates issued by the Government under the aforesaid scheme and it is to those certificates held by an assessee to which the exemption has been granted under clause (xvi). Since in our view this is the only construction that can be given to the expression 'held by the assessee' which governs the word 'certificates' in the context in which this expression has been used in that clause, no question of a liberal interpretation of the expression 'held by the assessee' as suggested by Mr. Nanavaty can possibly arise. We are clear in our minds that the legislature has used the expression 'held by the assessee' as meaning certificates which are registered in the name of the assessee and which stand in his name and not the certificates of which beneficial ownership is vested in him, but which stand in the name or names of his nominee or nominees. In that view, the Wealth-tax Officer and the Assistant Commissioner were right when they came to the conclusion that it was only those certificates which stood in the names of the two assesses, and in one case in the name of the assessee and his wife, which were entitled to exemption under clause (xvi) and not the rest of the certificates, and the Tribunal was therefore in error in coming to the conclusion which it did.
In the result, we answer the question in the negative. The assessees will pay to the commissioner the costs of this reference.
Question answered in the negative.