1. This reference, under Section 27(1) of the Wealth-tax Act, 1957, has been made in the circumstances hereinafter related.
2. For the assessment year 1957-1958 (the relevant valuation date being December 31, 1956) the Wealth-tax Officer assessed the assessee Sm. Champa Kumari Singhi, in respect of family assets, in the status of a Hindu Undivided Family. Against the order of assessment, the assessee appealed before the Appellate Assistant Commissioner and, inter alia, contended.
(1) that regard being had to the description of the assesses in the notice of demand,as Champa Kumari Singhi and ors., the assessee should be deemed to nave been treated as an association of persons and that such a unit was not chargeable to tax under the Wealth-tax Act.
(2) that the assessee being a member of a Jain family could not be treated as a Hindu Undivided Family.
(3) that even if the assessee be treated as a Hindu Undivided Family the imposition of Wealth-tax on a Hindu Undivided Family was ultra vires the Constitution.
3. The Appellate Assistant Commissioner negatived all the three contentions with the following observation :--
'As regards the objection regarding the description of the assessee there is no substance in the objection. Only for the sake of conciseness the assessee has been described as Sm. Champa Kumari Singhi and ors. Sri Bhandari's objection is that the names of the other members of the H. U. F. should have been included. This is purely a matter of convenience. The status has been correctly described in the D. N. itself as H. U. F Therefore, there is no force in this objection of Sri Bhandari. The contention that the word H. U. F. does not include a Jain family is also not correct It has been held that the Hindu Law applies to Jains, Sikhs and even the Khoja Muslims of Bombay. Therefore, there is no force in this contention. The third objection that the W. T. Act does not apply to H. U. F. has also been answered by the Bombay High Court in the case of Mahabir Prasad Badridas : 37ITR191(Bom) Sri Bhandari's another objection is that though that case has decided the point that the W. T. Act applies to H. U. F. the point is not very clear in the case of Mitakshara families. In the present case no evidence has been produced that the assessee is governed by Mitakshara Law. Even assuming that this is correct there is no scope for the argument of Sri Bhandari. The case cited above has decided that the word 'individual' mentioned in entry 86 of list I of the 7th Schedule to the Constitution includes H. U. F. The discussion of the learned Judge Sri S. T. Desai regarding the ownership of property by the Hindu family probably lends scope of Sri Bhandari's argument. But though a Mitakshara family can be considered a owner of the property it is not the real or the legal owner of the property. This is because a Hindu family cannot be such negotiate for sale or purchase or mortgage of any property. The machinery through which the Hindu family operates is the Karta. Therefore, for all legal purposes the Karta is to be considered as the individual referred to entry 86 of List I of the 7th Schedule to the Constitution.'
4. Against the order of the Appellate Assistant Commissioner, the assessee and the Revenue both appealed to the Appellate Tribunal. We need not concern ourselves with the result of the departmental appeal, because that is not the subject matter of this reference. In support of the appeal the assessee submitted
(i) that even if it be assumed for the sake of argument that an assessee can be assessed in the status of a Hindu undivided family, the assessee being governed by the Mitakshara School of Hindu Law, the Imposition of Wealth tax on the Hindu Undivided Family was beyond the competence of the Parliament inasmuch as entry 86 of List I of the 7th Schedule of the Constitution of India, which is the only entry under which tax on capital value of assets can be assessed, permits imposition of such tax only on individuals and companies,
(ii) that Hindu undivided family is not the same thing as an Association of Individuals and as such, even if such tax may be levied on in individual or individuals separately, a Hindu Undivided Family can not be charged to Wealth tax as a unit comprising of several individuals.
(iii) that the assessee was not a Hindu family but a Jain Family and since units chargeable to Wealth-tax under Section 3 of the Wealth-tax Act 1957 were either individual or Hindu undivided family or Company, none of the units covered the case of the assessee.
5. The Tribunal allowed the appeal preferred by the assessee with the following observations :--
'Admittedly, the department has assessedthe assessee in the status of it Hindu undividedfamily. When the learned representative forthe assessee reiterated before us the groundtaken before the Appellate Assistant Commissioner, that the Assessee was not a Hindu buta Jain, we asked for an affidavit and/or otherevidence if any to show that the assessee wasa Jain. Compliance has been made and weaccept the fact that the assessee is a Jain andforms a Jain undivided family. The questionthen arises, whether the term Hindu undivided family mentioned in Section 3 of the WealthTax Act encompasses a Jain undivided family.*** *** Referring to Mulla's HinduLaw, 12th Edition, *** *** we findthat in sub-paragraph (2) of paragraph 1, it isstated that Hindus are divided into four castesnamely,
(1) the Brahmans, or priestly caste;
(2) the Kshatriyas, or warrior caste;
(3) the Vaisyas, or agricultural caste and
(4) the Sudras.
The Jains do not have these classifications. Referring in this respect to the Chapter on 'Jains' in the said Edition of Mulla's Hindu Law (Chapter XXX), paragraph 612, we read that -
' ........ The Jain religion refers to anumber of Tirthankars the last of whom was Maha Veera, who was a contemporary of Buddha and died in about 527 B. C. Jainism rejects the authority of Vedas which form the bed-rock of Hinduism and denies the efficacy of various ceremonies which Hindus consider essential ........'
On reading this, we are of the opinion that Jains are not Hindus. We therefore, agree with the contention raised on behalf of the assessee that Jains are not Hindus.'
The learned counsel for the assesses then submits that there is no explanation regarding the term 'Hindu' or 'HUF' under the Wealth Tax Act, about its application, as is to be found in other enactments, as for example, in Section 2(3) of the Hindu Adoptions and Maintenance Act of 1956, (Act 78 of 1956) so that the expression 'Hindu' or 'HUF' in any portion of the Wealth-tax Act could be construed to include a person who, though being a Jain, Sikh, etc. by religion, was nevertheless, a person within the category of a 'Hindu' and a joint family of persons of that religion could be categorised as a Hindu undivided family so that the provisions of Section 3 of the Wealth Tax Act could apply. There is in fact no clause in the Wealth-tax Act indicating the extent of the applicability of the term 'Hindu' or 'Hindu undivided family'. The term Hindu undivided family having thus been left in ambiguity under the Wealth Tax Act, the benefit must go to the assessee.'
6. Aggrieved by the order of the Tribunal, the Revenue induced the Tribunal to refer the following questions of law to this Court-
'(1). Whether, the assessee, a Jain undivided family, was not a Hindu undivided family within the meaning of Section 3 of the Wealth-tax Act, 1957, and as such the Tribunal was right in setting aside the assessment made on the assessee?
(2). Whether levy of Wealth-tax on Hindu undivided family or joint family governed under the Mitakshara School of Hindu Law was beyond the legislative competence of Parliament and ultra vires the Constitution of India?
(3) Whether the Wealth Tax Act in so far as it purports to levy Wealth-tax on Hindu undivided families is void and inoperative as it offends Article 14 of the Constitution of India?'
7. Now Section 3 of the Wealth Tax Act, as it stood at the material time, used to read:
'Subject to the other provisions contained In this Act, there shall be charged for every financial year commencing on and from the 1st 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.'
8. It was not disputed before us that the assessee forms a 'Jain undivided family'. If a Jain undivided family is not the same thing as a Hindu undivided family, the assessee family does not fall to be taxed as a Hindu undivided family under Section 3 of the Wealth Tax Act. Mr. B. L. Pal, learned counsel for the Revenue wanted to establish that Jains were Hindu dissenters.
In support of the above proposition, he relied, firstly, on Golapchandra Sastri's Tagore Law Lectures on the Hindu Law of Adoption (2nd Edn.), lecture 12 at p. 452, where the following passage appears :--
'And although Jainism differs in many respects from Hinduism yet on the whole, theJains may be called Hindu dissenters. xx xxXX XX X XX XXFor religious purposes, the Jains are divided into two classes, namely, the Yatis or Jains ascetics devoted to religion, and the Sravakas or secular Jainas or the laity; the word 'Saraogi' which you will find in several cases is a corruption of the latter term. The Yatis again are divided into Digambaras who are followers of Mahavira and go naked, and Svetamvaras who are disciples of Parsvanath and are dressed in garments. The Sravaka or the laity includes persons o various tribes; but, on this side of India, the secular Jains are mostly of the Vaisya class which subdivides itself into numerous sects, the most common of which are, Oswals, Agarwals, Parwars and Khandelwals.'
9. He next relied on the following passage from a Judgment of the Oudh Chief Court in Milap Chand v. Mt. Mohini Bibi AIR 1928 Oudh 348 at p. 351 :--
'*** *** Oswals are emigrantsfrom Marwar. There are various traditions asto the caste to which they belonged originally,but all agree that they are Hindus who werethe converted to the Jain religion at the latest in twelfth century and that they came from Marwar. They were a tribe who could conceivably have carried with them their customs.'
10. He also relied on the following extract from the judgment of Sir Arthur Wilson in Rani Bhagwan Kuar v. J.C. Bose, (1887) LR 30 I. A. 249 at p. 253 (PC):
'The framers of the earlier Acts, Regulations, and Charters had a less detailed acquaintance than we have now with the diversities of creed and of religious law existing in India. They were familiar with two great classes, Mahomedans and Hindus, each with its own law bound up with its own religion. They thought no doubt that they were sufficiently providing for the case by securing to Mahomedans the Mahomedan Law, and to Hindus (or Gentus, as they were sometimes called) the Hindu Law. In process of time it became more and more clearly understood that there were more forms than one of the Mahomedan law, and more forms than one of the Hindu Law, and the Courts, acting in the spirit, which prompted the legislation, have applied the law of each School to the people whose ancestral law it was. In the same way it came to be known that there were religious bodies in India which had, at various periods and under various circumstances, developed out of, or split off form, the Hindu system, but whose members have nevertheless continued to live under Hindu Law. Of these the Jains and the Sikhs are conspicuous examples.'
11. Using his first proposition as a spring-board, Mr. Pal further argued that the Jains, although dissenting from Hindu tenets of religion, continue to live as Hindu Joint families, whenever they form a joint family, and do not constitute a different kind of joint family. In support of the second proposition, he ralied upon the facts of the case in Gulab Chand v. Mannilal AIR 1941 Oudh 230, in which aJain family admittedly continued the family business as a joint Hindu family business after the death of the ancestor.
12. Historically, Mr. Pal may be right in his contention that the Jains were originally Hindus but later on dissented from Hindu religious belief and became renegades. This is also the view expressed by the Judicial Committee in Sheo Singh Rai v. Dakho (1877) 5 I A 87 (PC) and in Sheokuarbai v. Jeoraj AIR 1921 PC 77 and also by the Madras High Court in Gettappa v. Eramma : AIR1927Mad228 . Mr. Pal is, not however, right in his next contention that because some undivided joint families cared to describe themselves as Hindu undivided families, all Jain joint families must be regarded as Hindu undivided families. The case relied on by Mr. Pal, namely Lala Gulab Chand's case, AIR 1941 Oudh 230 (supra) does not lay down that proposition. That case is an authority for the proposition that a customary law, different from Hindu Law, unless strictly proved will not apply to a Jain family. There is no dispute that Hindu Law applies to Jains excepting in so far as such law is varied by custom. So it does to many more. In his book 'Principles of Hindu Law' (12th Edition) Mulla describes the persons governed by the Hindu Law in the following language (Article 6):
'***The Hindu Law applies--
(i) not only to Hindus by birth, but also to Hindus by religion, i.e. converts to Hinduism,
(ii) to illegitimate children where both parents are Hindus,
(iii) to illegitimate children where the father is a Christian and the mother a Hindu, and the children are brought up as Hindu. ***
(iv) to Jains, Buddhists in India, Sikhs, and Nambudri Brahmins except so far as such law is varied by custom and to Lingayats who are considered Sudras;
(v) to a Hindu by birth who, having renounced Hinduism, has reverted to it after performing the religious rites of expiation and repentance. Or even without a formal ritual of reconversion when he was recognised as a Hindu by his community.
(vi) to sons of Hindu dancing girls of the Naik caste converted to Mahomedanism, where the sons are taken into the family of the Hindu grand-parents and are brought up as Hindus:
(vii) to Brahmos, to Arya Samajists; and to Santhals of Chota Nagpur; and also to Santhals of Manbhum except so far as it is varied by custom; and
(viii) to Hindus who made a declaration that they were not Hindus for the purpose of the Special Marriage Act, 1872.'
13. Hindu Law also applies to non-Hindus like Khojas and Cutchi Memons of Bombay and to Sunni Borahs of Gujrat and Molesalam Girasias of Broach, in matters of inheritance and succession. This is so because some non-Hindus have adopted some provisions of the Hindu Law as their personal law. But because some non-Hindus are governed by someprovisions of the Hindu Law, they do not become Hindus only because of that.
14. It is true that Hindu religion is marvelously catholic and elastic. Its theology is marked by electicism and tolerance and almost unlimited freedom of private worship. But, nevertheless, Hinduism does not include in its fold Hindu converts to Christianity and Mohamadenism and also dissenters from Hinduism, who formed themselves into distinct communities or sects, with peculiar religion and usages, so different from the principles of the Shastras that they cannot but be regarded as being outside Hinduism. So far as native Christians are concerned there is a direct decision on the point by the Judicial Committee namely, in Abraham v. Abraham, (1861) 9 Moo IA 195 (PC) in which the following passages occurs:
' ......... upon the conversion of aHindoo to Christianity, the Hindoo law ceasesto have any continuing obligatory force uponthe convert. He may renounce the old lawby which he was bound as he has renouncedhis old religion, or, if he thinks fit, he mayabide by the old law notwithstanding he hasrenounced his old religion . The profession of Christianity releases the convert fromthe trammels of the Hindu law, but it does notof necessity involve any change of the rightsor relations of the convert in matters withwhich Christianity has no concern, such as hisrights and interests in, and his powers over,property. The convert though not bound asto such matters, either by the Hindu Law orby any other positive law, may by his courseof conduct after his conversion have shown bywhat law he intended to be governed as tothese matters '
15. The Jains rejected the authority of the Vedas, which forms the bedrock of Hinduism and denied the efficacy of various ceremonies which the Hindus consider essential. It will require too much of boldness to hold that the Jains, dissenters from Hinduism, are Hindus, even though they disown the authority of the Vedas. This must be the reason why statutes like the Hindu Marriage Act, 1955, Hindu Succession Act, 1956. Hindu Minority and Guardianship Act, 1956, and Hindu Adoptions and Maintenance Act, 1956, provide for an artificial field of application of the law in the following language:
'This Act applies-
(a) to any person who is a Hindu by religion in any of its forms or developments, including a Virashaiva, a Lingayat or a follower of the Brahmo, Prarthana or Arya Samaj,
(b) to any person who is a Buddhist, Jaina or Sikh by religion, and
(c) to any other person domiciled in the territories to which this Act extends who is not Muslim, Christian, Parsi or Jew by religion, unless it is proved that any such person would not have been governed by the Hindu Law or by any custom or usage as part of that law in respect of any of the matters dealt with herein if this Act had not been passed.
Explanation.-- The Following persons are Hindus, Buddhists, Jainas or Sikhs by religion, as the case may be :--
(a) any child legitimate or illegitimate, both of whose parents are Hindus, Buddhists, Jainas or Sikha by religion;
(b) any child, legitimate or illegitimate, one of whose parents is a Hindu, Buddhist, Jainas or Sikh by religion and who is brought up as a member of the tribe, community, group or family to which such parent belongs or belonged; and
(c) any person who is a Convert or re-convert to the Hindu, Buddhist, Jaina or Sikh religion.
(2) Notwithstanding anything contained in Sub-section (1), nothing contained in this Act shall apply to the members of any Scheduled Tribe within the meaning of Clause (25) of Article 366 of the Constitution unless the Central Government by notification in the Official Gazette, otherwise directs.
(3) The expression 'Hindu' in any portion of this Act shall be construed as if it included a person who, though not a Hindu by religion is, nevertheless, a person to whom this Act applies by virtue or the provisions contained in this section.'
16. It is to be noticed from the above provision, that Jainism is not even treated as a form or a development of Hinduism. Jains have been included within the applicability of the Acts hereinbefore mentioned, irrespective of the fact that they are not Hindus properly speaking. The Wealth Tax Act does not adopt the above field of the applicability of the law and, therefore, the width of the applicability of the Acts, mentioned above, should not be imported in the Wealth Tax Act. We have thus to proceed on the basis that Jains are non-Hindus, who are generally governed by the Hindu Law. Now can a non-Hindu joint family be treated as a Hindu joint family? This question came up for consideration before the Mysore High Court in the case P. F. Pinto v. Commissioner of Wealth-tax, Mysore : 65ITR123(KAR) (Mys). In that case, the ancestors of the assessee, an Indian Christian professing Roman Catholic Faith, were originally Hindus who were later on converted to Christianity. In respect of the succession to the properties of the assessee's grandfather's grandfather, the claim of the assessee that the Indian Succession Act will not apply, since they were governed by the provisions of Hindu Law, was upheld ultimately by the Mysore High Court. Though the assessee was assessed to Income-tax in the status of an 'individual', for purposes of wealth tax, he put forward a claim that he should be assessed in the status of a 'Hindu undivided family', support being drawn for this claim from the decision of the Mysore High Court. This claim was negatived by the department and the Tribunal. On a reference under Section 27(1) of the Wealth Tax Act, the Mysore High Court held:
'We think that the interpretation above suggested, viz., the expression 'Hindu undivided family' is limited to Mitakshara families or families of persons professing Hindu religion governed by Mitakshara law, is the correct view to take not only for the reason that the same view was taken in the decision of this Court referred to above but also upon principle.'
17. While generally agreeing with the above observation, we need point out that the term 'Hindu undivided family' need not be limited to Mitakshara families 'or families of persons professing Hindu religion governed by Mitakshara law'. There are Hindus governed by other schools of law, e. g., Dayabhaga School of law, who may also form a Hindu undivided family.
18. Thus the Jains not being Hindus, in the generally accepted sense of the term, a Jain undivided family cannot be a Hindu undivided family, although the incidence of a Jain undivided family and a Hindu undivided family may be the same or largely the same. To form a Hindu undivided family, the members must be Hindus. The assessee family being Jains were not Hindus and incapable of forming a Hindu undivided family, although capable of forming a unit of very much the same type and governed by the law applying to Hindu undivided family.
19. Mr. Pal argued in the next place, that the Wealth Tax Act was meant to apply to Hindus and non-Hindus alike. To delimit the term 'Hindu undivided family' to Hindus only would leave other joint families outside the ambit of taxation under the said Act and such an interpretation should be avoided. We are unable to uphold this argument because members of such a joint family may still then be taxed as individuals and this position is apparent from the decision of the Supreme Court in Banarasi Dass v. Wealth-tax Officer. : 56ITR224(SC) .
20. Since the assessee did not form a Hindu undivided family but a Jain undivided family, the assessment on the assessee as t Hindu undivided family was not proper and legal. In the view that we take we answer question No. 1 in the affirmative and in favour of the assessee.
21. Questions Nos. 2 and 3 were not pressed before us for answer. This was so because in the case of K. S. Venkataraman and Co. (P) Ltd. v. State of Madras : 60ITR112(SC) the Supreme Court observed :
'As the Tribunal is a creature of the Statute, it can only decide dispute between the assessee and the Commissioner in terms of the provisions of the Act. The question of ultra vires is foreign to the scope of its jurisdiction. If an assessee raises such a question the Tribunal can only reject it on the ground that it has no jurisdiction to entertain the said objection or to decide on it. As no such question can be raised or can arise on the Tribunal's order the High Court cannot possibly give any decision on the question of the ultra vires of a provision. At the most the only question that it may be called upon to decide is whether the Tribunal has jurisdiction to decide the said question. On the express provisions of the Act it can only hold that it has no jurisdiction.'
22. The same view appears to have been reiterated by the Supreme Court in C. T. Senthilnathan Chettiar v. State of Madras (1967) 65 ITR 5 (S. N.) (SC). That being the law, we can only say that the Tribunal had no jurisdiction to go into the question of ultra vires and that such a question should not have been referred to this Court. Since question Nos. 2 and 3 are not pressed before us for answer, we need not answer the same or answer the questions against the Revenue.
23. Regard being had to the nature of the question that were referred to us, we do not think it proper to make any order for costs in this reference.
K.L. Roy, J.
24. I agree.