judgement:
Civil Appeal Nos. 295 & 296 (NT) of 1974.
From the Judgment and Order dated 19.7.1973 of the Kerala High Court in I.T.R. Nos. 32 and 33 of 1971.
section Poti, section Sukumaran and D.N. Mishra, for the Appellant.
G.C. Sharma, K.C. Dua and Miss A. Subhashini, for the Respondent.
The Judgment of the Court was delivered by SABYASACHI MUKHARJI, J.
These two appeals arise by certificate by the High Court in Income Tax Reference Nos. 32 and 33 of 1971.
The High Court of Kerala by its judgment dated 19th July, 1973 answered the following two questions in the negative and in favour of the revenue. "(i) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in holding that the sums of Rs. 2,90,220 and Rs. 3,63,750 were not assessable as income of the assessee for the assessment years 1960 61 and 1961 62? (ii) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law and had material for holding that the sums of Rs. 2,90,220 and Rs. 3,63,750 are exempt from taxation under section 4(3)(vii) of the Indian Income tax Act, 1922 for the assessment years 1960 61 and 1961 62 respectively?" The references relates to assessment years 1960 61 and 1961 62.
The assessee 's accounting year was the calender year.
940 The assessee publishes a Malyalam daily newspaper by name Kerala Dhwani.
Till 1953, he was a lecturer in History and Political Science in the College at Kottayam.
He had his education in the United State of America, during 1953 to 1957.
During this period of stay in the U.S.A. he had the privilege of associating himself with the India Gospel Mission in the United States.
The India Gospel Mission, it was stated, was collecting money for its working abroad through the Indian Christian Crusade.
The assessee was also publishing a religious magazine called "Viswa Deepam".
The magazine was started in January, 1957.
The father of the assessee Shri K.G. Thomas was the Editor of Viswa Deepam.
Shri Thomas was also in America and he was also doing missionary work in America for some time.
In 1958, Shri Thomas, the lather of the assessee was in India the was going to America off and on.
Indian Christian Crusade, U.S.A. is an institution sponsoring religious education in India and it was admitted that the assessee was propagating the ideals of the Indian Christian Crusade on returning to India after finishing his education in the States.
Later on the assessee started publishing a paper called "Kerala Dhwani".
This paper was started in 1959.
While the assessee was in America, he took his Ph.D. degree.
For the assessment year 1960 61, the assessee filed a return disclosing a loss of Rs. 1,59,894 under the head 'business '.
The assessee, as mentioned hereinbefore, was publishing Malayalam daily newspaper called 'Kerala Dhwani '.
While t scrutinising the accounts, the Income tax Officer found in the ledger folio in the name of the assessee amounts totalling Rs. 2,57,138 credited in ' his account.
The assessee was asked to explain these credits and he represented that most of the amounts were received by the assessee as donations from U.S.A. through an organisation known as Indian Christian Crusade, U.S.A. The Income tax Officer found that the names and other details of persons who had donated the amounts were not available.
He also found that such amounts amounted in all Rs. 2,90,220.
The Income tax Officer had stated that in the absence of definite information regarding the individuals who has made the donations, it had to be presumed that the amounts had been given by the Indian Christian Crusade, U.S.A. to the assessee.
The assessee 's case before the Income tax Officer was that the amounts received by the assessee were purely personal gifts and testimonials which were given because of the esteem and regard for the personal qualities of the assessee and that the payments were purely voluntary.
The Income tax Officer rejected the contention.
He held: 941 (i) The payment of donations started simultaneously with the publication of the daily newspaper Kerala Dhwani and the donations were continued during the period the publication continued.
(ii) The donations were regular and continued for the next year also.
(iii) There was nothing to show that the amounts were given on account of the personal qualities of the assessee.
(iv) The donations were being made regularly throughout the year and these were evidently given as aid to the running of the newspaper which was the business carried on by the assessee.
(v) The Indian Christian Crusade, U.S.A. which was paying money to the assessee was an enterprise in India established for the furtherence of ideals and objectives similar to theirs.
For aforesaid reasons the Income tax Officer held that the so called donations were payments by way of remuneration for the work done by the assessee in connection with the spreading, in India, of the ideals of the Indian Christian Crusade, U.S.A. The Income tax Officer came to the conclusion that the amounts paid to the assessee were connected with the business of the assessee and were liable to be taxed as the business income of the assessee.
He, therefore, brought to tax Rs. 2,90,220 which had been received during the assessment year.
For the next assessment year, the assessee had received similar amounts totalling to Rs. 3,63,750 through the Indian Christian Crusade, U.S.A.
For the reasons given in the order of the previous year, the Income tax Officer treated this amount also as the business income for the assessment year 1961 62 and brought the same to tax.
The assessee filed appeals in respect of both the years and the Appellate Assistant Commissioner disposed of the appeals by different orders delivered on the same date.
He discussed all the contentions raised by the assessee in his appellate orders.
The main contention raised by the assessee before the Appellate Assistant Commissioner was that the various amounts credited in his bank account and in his personal account in the business represented gifts made by personal friends in the U.S.A., that the amounts were collected by the Indian Christian Crusade and forwarded to India to the assessee.
The Appellate Assistant Commissioner rejecting these contentions of the assessee found that the assessee was a journalist and it was his avocation or vocation to propagate certain ideas and ideals.
He was closely associated with the missionary work carried on by the Indian Christian Crusade in America and he was propagating the ideals of 942 Indian Christian Crusade, America in India because of his close relationship with that origination as mentioned hereinbefore.
The assessee during his stay in U.S.A. and after his return was engaged in a movement for the spread of religion and fighting the forces of atheism.
According to the assessee, his friends in America and those Who believed in the cause which he sponsored were sending him donations for helping tile movement and the amounts that were handed over to or were collected by the Indian Christian Crusade, U.S.A. were remitted to him.
In further appeal the Tribunal held that the amounts did not represent remuneration or payments for services rendered.
The tribunal further held that the receipts were clearly causal and non recurring and aid not arise in the course of the exercise of any vocation.
Then the aforesaid two questions were referred to the High Court under Section 66 (1) of the Indian Income tax Act, 1922.
The High Court held that the receipts of casual and non recurring nature would not be included in the total income of a person.
But if there were receipts arising from the exercise of a vocation, these would be included in the total income, even if these were of casual or non recurring nature or voluntary and the receipts resulting from such payments would be outside Section 4(3)(vii) of the Income tax Act, 1922 (hereinafter referred to as the ( 'Act ').
Relying on the findings of the Tribunal, the High Court held that the assessee was very actively, fully occupied with the activities connected with achieving the objects of straightening faith in God and fighting against atheism and was occupied with this affair.
The payer which he published for this purpose was a daily coming out with views in support of this mission.
Teaching and propagating religion could be an occupation.
It was not necessary that its object should be to earn a livelihood.
Anything in which a person was engaged systematically could be an occupation or vocation.
The next question would be whether receipts could be said to arise from such occupation or vocation.
There was link between the activity of the assessee and the payments, and that the payments were made by those who held similar views as those of the assessee and who were very much interested in the propagation and the acceptance of those views by the general public.
The payments were made for the purpose of helping the assessee to run the paper which was the mouth piece or medium through which the ideas were to be spread.
The 943 connection between the activity of the assessee and the donations was thus intimate.
lt arose out of the vocation or the occupation carried on by the assessee.
Therefore, the receipts arose from the exercise of an occupation by the assessee.
The high Court also considered whether such payments were excluded by Section 4(3)(vii) of the Act.
Section 4 of the Act made the total income of the previous year of any person assessable to tax and sub section (3) specified certain incomes which should not be included in the total income of the person.
Sub section (vii) of Section 4(3) was in the following terms: "(vii) any receipts not being capital gains chargeable according to the provisions of section 12B and not being receipts arising from business or the exercise of a profession, vocation or occupation, which are of a casual and non recurring nature or are not by way of addition to the remuneration of an employee.
As the section made it clear, in order to be entitled to exemption, the receipts must be of income character first.
In the instant case, there is no doubt that if a sum of money is received for the purpose in pursuance of an avocation or vocation, it arose out of this vocation or profession.
If this is so, then this was income under the Act.
Such income could only be excluded if it was specifically excluded by any provision of the Act.
The High Court held, and in our opinion rightly, that in view of the facts and circumstances of this case as found by the Tribunal, these amounts were not excluded under Section 4(3)(vii) of the Act.
The position was thus, these amounts were received by the assessee in the course of his avocation or vocation and were given to him for the purpose of the same.
These were therefore incomes which were not also of a casual or non recurring nature nor were these capital gains under Section 12B of the Act.
If that was the position, then, in our opinion, the amounts were clearly taxable as held by the Income tax Officer and by the High Court.
Several aspects of the question were placed before us on a large canvass namely that the High Court had gone into facts of the first time over ruling the findings of the fact of the Tribunal without there being a question to that effect and also there was no finding that the receipts were of income character.
In support of these contentions, several decisions of this Court were referred before us, Inter alia, Parimisetti Seetharamma vs 944 Commissioner of Income Tax, Andhra Pradesh.
, Reliance was placed on the observations appearing at pages 536, 537 and 538 of the said report.
It was urged that the burden of proof was wrongly placed by the High Court and on the facts, that the two circumstances relied on by the High Court did not establish that certain money was given to the assessee as remuneration for services and as such it could not be held that the person concerned was assessable to tax.
It was urged that the High Court wrongly placed the burden of proof upon the assessee.
But on the facts and in the circumstance of this case, the conclusion recorded by the High Court in the instant case was borne out on the facts on record.
The observations of this Court referred to above cannot be of much assistance to the assessee.
The case which is most apposite to the facts of the instant case is a decision of this Court in the case of P. Krishna Menon vs Commissioner of Income Tax, Mysore, Travancore Cochin and Coorg.
Bangalore.
, There after retirement from Government service, the appellant therein was spending his time in studying and teaching Vedanta philosophy.
L, who was one of his disciples, used to come from London at regular intervals to Trivendrum where the appellant resided, and stay there for a few months at a time and attend his discourses, and so received instructions in Vedanta and had the benefits of his teachings.
L transferred his entire balance standing to this credit in his on account at Bombay, amounting to more that Rs. 2 lakhs, to the account of the appellant opened in the letter 's name in the same bank at Bombay.
Thereafter, from time to time, L put in further sums into the appellant 's account in Bombay.
The question was whether the receipts from L. constituted the appellants income taxable under the Travancore Income Tax Act, 1121 (Malayalam Era) which was identical with the Indian Income Tax Act, 1922.
It was held that teaching was a vocation, if not a profession, and teaching Vedanta was just as much teaching as any other teaching and therefore a vocation; that in order that an activity might be called a vocation it was not necessary to show that it was an organised activity and that it was indulged with a motive of making profit; it was well established that it was not the motive of a person doing an act which decided whether the act done by him was the carrying on of a business, profession or vocation; and if any business, profession or vocation in fact produced an income, that was taxable income and none the less so because it was carried on without the motive of producing an income; that teaching of Vendetta by the appellant in that case was the 945 carrying on of a vocation by him and that the imparting of the teaching was the causa causans of the making of the gifts by L, and it was impossible to hold that the payments to the appellant had not been made in consideration of the teaching imparted by him, and that, therefore, the payments were income arising from the vocation of the appellants that the payments made by L were income arising from a vocation.
These were not casual or non recurring receipts and no question of exemption under Section 4(3)(vii) of the Act arose.
It was further observed that in order that a payment might be exempted under Section 4(3)(vii) as a casual and non recurring receipt, it had to be shown that it did not arise from the exercise of a vocation.
In the instant case before us, identical is the position.
The assessee carried on a vocation of preaching against atheism.
In the course of such vocation and for the purpose of the same he received the amounts in question as donation for the furtherance of the objects of his vocation.
The receipts arose to the assessee for the carrying on of the vocation by the assessee, and these were not casual and non recurring.
These were taxable.
These facts were found by the Income tax Officer.
These facts not in so many terms but essentially found by the Appellate Assistant Commissioner and were reiterated by the Tribunal and the High Court accepted these findings of facts and answered the question accordingly.
Reliance was also placed on the decisions of the Gujarat High Court in the case of the Acharya D.V. Pande vs Commissioner of Income tax, Gujarat., , and Commissioner of Income tax, Gujarat vs Shri Girdharram Hariram Bhagat, , decisions of the Bombay High Court in the Case of Maharaj Shri Govindlalji Ranchhodlalji vs Commissioner of Income tax, Ahmedabad, , and H.H. Maharani Shri Vijaykuverba Shed of Morvi and Another vs Commissioner of Income tax, Bombay City II, , decision of the Madras High Court in the case of S.A. Ramakrishnan vs Commissioner of Income tax, Madras, , and decision of the Delhi high Court in the case of Siddhartha Publications (P) Ltd. vs Commissioner of Income tax, Delhi, , dealing with certain facts and circumstances where income could be said be taxable.
From all these decisions, two facts emerge.
The burden is on the revenue to establish that the receipt is of a revenue character.
Once receipt is found to be of a revenue character 946 whether it comes under exemption or not, it is for the assessee to establish.
Facts must be found by the Tribunal and the High Court must proceed on the basis of the facts found by the Tribunal.
The High Court cannot afresh go to the facts over ruling the facts found by the Tribunal unless there is a question to that effect challenging the facts found by the Tribunal.
These propositions are well settled and in this case in the decision of the High Court, these principles, in our opinion, have not been breached.
It has been established that the assessee was carrying on a vocation, the vocation preaching of Christian Gospel and helping anti atheism was the vocation of his life.
He was running a newspaper in aid of that.
The donations received from America were to help him for the said purpose.
They arose out of his carrying on and continued so long as he carried on this avocation or vocation.
These receipts therefore arose out of his vocation.
These were therefore his income.
In the facts these were not exempt under Section 4(3)(vii) of the Act.
In the premises these were taxable.
Numerous decisions were referred to us on the question as to how far the High Court could interfere with the facts found by the Tribunal.
Reliance was placed on the decisions of this Court in the case Karnani Properties Ltd. vs Commissioner of Income tax, West Bengal, , Aluminium Corporation of India Ltd. vs Commissioner of Income tax, West Bengal, , Anil Kumar Roy Chowdhury and Others vs Commissioner of Income tax, West Bengal II, , Commissioner of Income tax, West Bengal III vs Kamal Singh Rampuria, , Commissioner of Income tax, West Bengal III vs Imperial Chemical Industries (India) (P) Ltd., , and the decision of the Bombay High Court in the case of Commissioner of Income tax, Bombay City II vs Deviprasad Khandelwal and Co. Ltd., , and also the decision of the Madras High Court in the case of Commissioner of Income tax vs P.S. Chelladurai.
, 145 I.T.R. 139.
We have set out the findings of the Tribunal and considered the findings of the Tribunal as well as the judgment of the High Court.
There has not been any unwarranted interference by the High Court with the facts found by the Tribunal.
Basic facts have been found by the Tribunal.
On the question where income could be said to arise, it may be relevant to refer to Strong & Co. of Romsey, Limited vs Woodifield (Surveyor of Taxes), ; There a brewery 947 company owned an inn which was carried on by the manager as part of their business.
A customer sleeping in the inn was injured by the fall of a chimney, and recovered damages and costs against the company for the injury, which was owing to the negligence of the company 's servants.
The question was whether the amounts paid as damages could be claimed as a deduction from the business of s carrying on the activities of the inn keeper.
The Lord Chancellor observed at page 452 of the report as follows: "I think only such losses can be deducted as are connected with in the sense that they are really incidental to the trade itself.
They cannot be deducted if they are mainly incidental to some other vocation or fall on the trader in some character other than that of trader.
The nature of the trade is to be considered.
To give an illustration, losses sustained by a railway company in compensating passengers for accidents in travelling might be deducted.
On the other hand, if a man kept a grocer 's shop, for keeping which a house is necessary, and one of the window shutters fell upon and injured a man walking in the street, the loss arising thereby to the grocer ought not be deducted.
Many cases might be put near the line, and no degree of ingenuity can frame a formula so precise and comprehensive as to solve at sight all the cases that may arise.
In the case of The Commissioner of Inland Revenue vs E.C. Warnes & Co. Ltd., , at page 231 of the Report, Rowlatt J. observed: "I may shelter myself behind the authority of Lord Loreburn, who, in his judgment in the House of Lords in Strong & Co. vs Woodifield, said that it is impossible to frame any formula which shall describe what is a loss connected with or arising out of a trade.
That statement I adopt, and 1 am not sure that I gain very much by going through a number of analogies; but it seems to me that a penal liability of this kind cannot be regarded as a loss connected with or arising out a trade.
In the instant case there cannot be any doubt that the receipts by the assessee arose out of the avocation of the assessee of propagating views against atheism and preaching Christian Gospel.
948 In view of the facts and circumstances of the case there was a link between the activities of the assessee and the payments received by him and the link was close enough.
In that view of the matter, in our opinion, the High Court was right in answering both the questions referred to it in the negative and in favour of the revenue.
The appeals accordingly fail and are dismissed with costs.
Civil Miscellaneous Petition No. 10046 of 1976 for condonation of delay in filing the additional papers is allowed.
A.P.J. Appeals dismissed.

summary/full:
The assessee appellant had associated himself with the India Gospel Mission while he was getting his education in the United States of America during 1953 to 1957 and was propagating the ideals of Indian Christian Crusade, U.S.A., an Institution sponsoring religious education in India.
The India Gospel Mission was collecting money for its working abroad through the Indian Christian Crusade.
On returning to India in January 1957 he started publishing a religious magazine called "Viswa Deepam" and in 1959 started publishing Malyalam daily newspaper called "Kerala Dhwani".
In the assessment year 1960 61 he filed a return disclosing a 1088 of Rs. 1,59,894 under the head 'business '.
While scrutinising the accounts, the Income Tax Office found amounts totalling Rs. 2,90,220 credited in the assessee 's accounts.
Since the names and other details of persons who had donated the amounts were not available it had to be presumed that the amounts had been given to the assessee by the Indian Christian Crusade, U.S.A. and therefore, the Income Tax Officer rejected the contention of the assessee that the amounts received by him were purely personal gifts and testimonials made voluntarily and held that the so called donations were payments by way of remuneration for the work done by the assessee in connection with the spreading in India, of the ideals of the Indian Christian Crusade, U.S.A. and that these amounts were connected with the business of the assessee and were liable to be taxed as his business Income.
He, therefore, brought to tax Rs. 2,90,220 which had been received during the assessment year 1960 61.
For the assessment year 1961 62 the assessee had received similar amounts totalling to Rs. 3,63,750 through the Indian Christian Crusade, U.S.A. and Income Tax Officer treated this amount also as business income and brought the same to tax.
937 The assessee filed appeals and the Appellate Assistant Commissioner while dismissing the appeals held that the assessee was a journalist and it was his avocation or vocation to propagate Christian ideas and ideals and that the assessee during the stay in U.S.A. and after his return was engaged in a movement for the spread of religion and for fighting the forces of atheism.
In further appeal, the tribunal held that the amounts did not represent remuneration or payments for services rendered, and that the receipts were clearly casual and non recurring and did not arise in the course of the exercise of any vocation.
The Tribunal referred the matter to the High Court, which held that the receipts of casual and non recurring nature would not be included in the total income of a person.
But if there was receipts arising from the exercise of vocation, these would be included in the total income, even if these were of a casual or non recurring nature or voluntary and the receipts resulting from such payments would be outside section 4(3)(vii) of the Income Tax Act, 1922.
Since there was link between the activity of the assessee and the payments and the same were made by those who held similar views and who were interested in the propagation and the acceptance of those views by the general public, the receipts, therefore, arose from the exercise of an occupation by the assessee.
Dismissing the Appeals ^ HELD: 1.
The receipts by the assessee arose out of the avocation of the assessee of propagating views against Atheism ant preaching Christian Gospel.
[947 H] 2.
There was a link between the activities of the assessee and the payments received by him and the link was close enough.
[948 A] Strong & Company, of Romsey Limited vs Woodifield (Surveyor of Taxes), ; and The Commissioner of Inland Revenue vs E.C. Warnes & Co. Ltd., [1919] 12 T.C. 227, referred to.
Section 4(3)(vii) of the Indian Income Tax Act 1922 makes it clear that in order to be entitled to the exemption, the receipts must be of income character first.
if a sum of money is received for the purpose in pursuance of an avocation or vocation, it arose out of this vocation or profession.
If that is 938 so, then this was income under the Act.
Such income could only be excluded if it was specifically excluded by any provision of the Act.
[943 D E] 4.
The High Court rightly held that in view of the facts and circumstances of this case as found by the Tribunal, these amounts were received by the assessee in the course of his avocation or vocation and were given to him for the purpose of the same.
These were, therefore, incomes which were neither of a casual or non recurring nature nor were these capital gains under section 12B of the Act.
The amounts were, therefore, clearly taxable as held by the Income Tax Officer and by the High Court.
[943 E G] P. Krishna Menon vs Commissioner of Income Tax, Mysore, Travancore Cochin and Coorg.
Bangalore. , relied upon.
The burden 18 on the revenue to establish that the receipt is of a revenue character.
Once receipt is found to be of a revenue character whether it comes under exemption or not, it is for the assessee to establish.
Facts must be found by the Tribunal and the High Court must proceed on the basis of those facts.
The High Court cannot afresh go to the facts over ruling the facts found by the Tribunal unless there is a question to that effect challenging the facts as found by the Tribunal.
In this case the High Court has not interfered with the basic facts found by the Tribunal.
It has been established that the assessee was carrying on a vocation of preaching of Christian Gospel and helping anti athesim.
He was running a newspaper in aid of that.
The donations received from America were to help him for the said purpose.
They arose out of his carrying on and contained so long purpose.
The carried on this avocation or vocation.
These receipts, therefore, arose out of his vocation.
These were, therefore, his Income, not exempt under s.4(3)(vii) of the Act and were taxable.
[945 H, 946 A C] Parimisetti Seetharamma vs Commissioner of Income Tax, Andhra Pradesh, inapplicable.
Acharya D.V. Pande vs Commissioner of Income tax, Gujarat, , Commissioner of Income Tax, Gujarat vs Shri Giurdharram Hariram Bhagat, , Maharaj Shri Govindlalji Ranchhodlaji vs Commissioner of Income tax, Ahmedabad, , H.H. Maharani Shri Vijay Kuverba Saheb of Morvi and Another vs Commissioner of Income Tax Bombay City II, S.A. Ramkrishnan vs Commissioner of Income tax, Madras, , Siddhartha Publications (P) Ltd. vs Commissioner of 939 Income tax, Delhi. , Karnani Properties Ltd. vs Commissioner of Income tax, West Bengal, , Aluminium Corporation of India Ltd. vs Commissioner of Income tax, West Bengal, , Anil Kumar Roy Chowdhury and Others vs Commissioner of Income tax, West Bengal II, , Commissioner of Income tax, West Bengal III vs Kamal Singh Rampuria, , Commissioner of Income tax, West Bengal III vs Imperial Chemical Industries (India) (P) Ltd. , Commissioner of Income tax, Bombay City II vs Devi Prasad Khandelwal and Co. Ltd. , and Commissioner of Income tax vs P.S. Chelladurai, , referred to.


judgement:
on No. 8209 & 882 1 of 1983.
(Under Article 32 of the Constitution of India.) M.A. Krishnamoorthy, Pramod Dayal, Rishi Kesh, R.B. Mehrotra, M.G. Ramachandran, C.M. Nayyar, M. Karanjawala, S.A. Sayed, Sushil Kumar Jain, section Dikshit, P.P. Juneja, P.K. Jain, K.N. Bhatt, D.N. Misra, I. Makwana, A. Subba Rao, Harjinder Singh, B.P. Singh, Parijat Sinha, C.P. Lal, Shri Narain, S.K. Gupta, K.R. Nambiar, S.S. Khanduja, K.K. Jain, C.M. Nargolkar, Kapil Sibal, R. Ramachandran, Miss A. Subha shini for the Appearing Parties and Devi Ditta Mal, Peti tioner in person.
The Judgment was delivered by AMARENDRA NATH SEN, J: We disposed of these two writ petitions by an order made on 12th March, 1985 by which we directed that the lime stone quarries classified in category C in the Bhargava Committee Report should not be allowed to be operated and the same direction of closing down the lime stone quarries should also apply to the lime stone quarries in the Sahsatdhara Block even though they, are placed in category B by the Bhargava Committee.
We also directed by our order that so far as the other lime stone quarries classified as category B in the Bhargava Committee Report and category 2 in the Working Group Report are concerned, they should not be allowed to continue nor should they be closed down permanently without further inquiry and we accordingly appointed a high powered committee consisting of several officers to examine any scheme or schemes which may be submitted by the lessees of these lime stone quarries and submit report to ' this Court on the question whether in its opinion a particular lime stone quarry can be allowed to be operated in accordance with the scheme and if so, subject to what conditions and if it cannot be allowed to be operated, the reasons for taking that view.
We gave the same direc tions also in regard to the lime stone quarries Classified as category A in Bhargava Committee Report and for category 1 in the Working Group Report and falling within the city limits of Mussoorie.
We also directed by our order that the lime stone quarries placed in category 2 by the Working Group other than those which are placed in categories B and C by the Bhargava Committee should also not be allowed to be operated and should be dosed down save and except for the lime stone quarries covered by Mining Leases Nos. 31, 36 and 37 for which we gave the same direction as in the case of lime 639 stone quarries classified as category B in the Bhargava Committee Report.
So far as lime stone quarries classified as category A in the Bhargava Committee Report and/or cate gory 1 in the Working Group Report and falling outside the city limits of Mussoorie are concerned we directed that they should be allowed to be operated subject to the observance of the requirements of the , the Metalliferous Mines .Regulations 1961 and other relevant statutes, rules and regulations.
This order made by us was a detailed order and we stated at the time when we made this order that we shall proceed to give detailed reasons for the same in due course.
I do not think it necessary to give any further reasons than those which are already stated in the order made by us on 12th March, 1985.
Speaking personally for myself I think that the broad reasons have been adequately set out in the order and it would be an unnecessary exercise to elaborate them.
We have referred in the order to the reports of the Bhargava Committee and the Working Group and we have accept ed these reports.
The Bhargava Committee has classified the lime stone quarries into three categories namely, A, B and C while the Working Group has classified them into two catego ries, namely, 1 and 2.
The lime stone quarries comprised in category A by the Bhargava Committee are the same as the lime stone quarries classified in category 1 by the Working Group and the lime stone quarries in categories B and C of the Bhargava Committee are classified in category 2 by the Working Group.
Both the Bhargava Committee and the Working Group are unanimous in their view that the lime stone quar ries classified in category A by the Bhargava Committee and category 1 by the Working Group are suitable for continuance of mining operations and they have given their reasons for taking this view.
So far as the lime stone quarries in category C of the Bhargava Committee Report are concerned, they are regarded both by the Bhargava Committee and by the Working Group as unsuitable for continuance of mining opera tions and both are of the view that they should be closed down for reasons which they have given in their respective reports.
I agree with the reasons given in the Reports of the Bhargava Committee and the Working Group.
The only difference between the Bhargava Committee and the Working Group is in regard to lime stone quarries classified in category B where the Bhargava Committee has taken the view that these lime stone quarries need not be closed down while the Working Group has definitely taken the view that these lime stone quarries are not suitable for further mining.
I have preferred not to take the extreme view of the Working Group so far as the lime stone quarries classified in cate gory B by the Bhargava Committee are con 640 cerned, but have instead given an opportunity to the lessees of those lime stone quarries to submit a scheme or schemes to the high powered committee constituted by us, so that if the high powered committee thinks that any particular lime stone quarry out of these can be allowed to be operated in accordance with such scheme or schemes, the court may allow such lime stone quarry to be operated subject to conditions which may be thought fit to be imposed.
These are the rea sons which have prevailed with me in making the order dated 12th March, 1985.
I wish to observe that though exploitation of mineral resources in the interest of industrial growth of the coun try is necessary, yet such mines should be so worked as not to disturb the ecology and not to affect the livelihood and the living conditions of a very large number of people.
Advantage gained by working the mines for industrial growth and national development in a manner which may seriously prejudice the interests of a large number of human beings and disturb the ecological balance, may very much be out weighed by the serious consequences which are likely to follow.
Industrial development is necessary for economic growth of the country in the larger interests of the nation.
If, however, industrial growth is sought to be achieved by haphazard and reckless working of the mines resulting in loss of life, loss of property, loss of basic amenities like supply of water and creation of ecological imbalance, there may ultimately be no real economic growth and no real pros perity.
It is necessary to strike a proper balance.
In my opinion the appropriate authorities at the time of granting leases should take all these facts and factors into consid eration and should while granting lease of mines for exploi tation of mineral provide for adequate safeguards.
Had appropriate safeguards been provided at the time of granting of leases, it would not, indeed, have been necessary for us to direct the closure of so many mines and to good deal of sufferings of the people of the locality would have been avoided.

dataset_name: IN-Abs

summary/full:
These Writ Petitions relate to the mining of lime stone quarries in Dehradun mining area.
During the pendency of the Writ Petitions, the Court appointed a Committee known as Bhargav Committee for the purpose of inspecting the lime stone quarries mentioned in the Writ Petitions.
The Govern ment of India had also appointed a working Group headed by the same, Shri D.N. Bhargav, who was a member of the Bhargav Committee appointed by the Court, on the mining of lime stone quarries in Dehradun Mussoorie area, some time in 1983.
After the hearing was over, the Court passed a de tailed order on 12th March, 1985 [1985) 3 SCR 169] giving various directions and observing that the reasons for the order will be set out in the judgment to follow later.
Hon 'ble Mr. Justice A.N. Sen, one of the members of the Bench who heard these petitions before his retirement, speaking for himself, OBSERVED: I.
It is not necessary to give any further reasons than those which are already stated in the order made by the Court on 12th March, 1985 because the broad reasons have been adequately set out in that order and it would be an unnecessary exercise to elaborate them.
[639C] 2.
Industrial development is necessary for economic growth of the country.
If, however, industrial growth is sought to be achieved by haphazard and reckless working of the mines resulting in loss of life, loss of property, loss of basic amenities like supply of water and creation of ecological imbalance, there may ultimately be no real eco nomic growth and no real prosperity.
It is necessary to strike a proper balance.
Appropriate authorities at the time of granting leases should take all these facts into consid eration and also provide for adequate safeguards.
[640D F]


judgement:
Civil Appeal No. 353 (N) of 1971.
From the Judgment and Order dated 29.7.
1970 of the Punjab and Haryana High Court in C.W. No. 2331/70.
Civil Appeal No. 1469 (N) of 1972.
From the judgment and order dated 28.
1971 of the Patna High Court in C.W No. 1330/10).
AND Civil Appeal No. 1470 of 1972.
From the judgment and order dated 24.
1971 of the Calcutta High Court in F.M.A. No. 201 of 1971) Dr. Y. section Chitale, Anil Sharma and Praveen Kumar for the Appellants.
M. section Gujaral, V. K. Punjwani, C. V. Subba Rao and Ms. A. Subhashini for the Respondents.
The Judgment of the Court was delivered by BALAKRISHNA ERADI, J.
In these three appeals the parties involved are the same and the point arising for determination is identical.
Hence they were heard together and are being disposed of by this judgment.
963 The Bata Shoe Company Ltd. (hereinafter called 'the company ') is an existing company within the meaning of The ; with its head office at No. 30, Shakespeare Sarani, Calcutta 17.
The company is engaged in the business of manufacturing and dealing in articles of footwear and accessories.
For the purposes of the said business, the company has three manufacturing establishments namely, a factory a Batanagar in the district of 24 Parganas, West Bengal, another factory at Batanagar near Patna in the State of Bihar and a third manufacturing establishment at Faridabad in the State of Haryana.
By virtue of Entry 36 of the First Schedule in the (hereinafter called the 'Act ' ), footwear and parts thereof in or in relation to the manufacture of which any process is ordinarily carried on with the aid of power, is chargeable to excise duty, the rate of duty being ten per cent ad valorem in respect of 'footwear and fifteen per cent ad valorem in respect of 'parts of footwear '.
By a Notification G. section R. 360, dated February 28, 1965 issued by the Central Government in exercise of the powers conferred by Sub rule (1) of Rule 8 of the Central Excise Rules, 1944 for short "the Rules" footwear and parts thereof were completely exempted from levy of excise duty.
However, shortly thereafter, by other Notification dated May 26, 1967, the exemption from duty granted in respect of footwear and parts thereof by the preceding Notification dated February 28, 1965 was withdrawn.
Thereafter followed yet another Notification dated July 24, 1967 which was in the following terms: "NOTIFICATION CENTRAL EXCISES G. section R.
In exercises of the powers conferred by Sub rule (1) of rule g of the Central Excise Rule, 1944 the Central Government hereby exempts, with effect from the 26th may, 1967, footwear falling under Item No. 36 of the First Schedule to the (I of 1944) of which the value does not exceed Rs. 5.00 per pair, from the whole of the duty of excise leviable thereon.
(No. 171/67)" 964 The sole question raised in these appeals Concerns the interpretation of this Notification.
During the year 1967 and 1968, the company was manufacturing certain items of footwear of which the wholesale price was RS. 6.25 per pair The company contended that since the assess able value of such items of footwear calculated in accordance with the provisions of Section 4 of the Act, as they stood at the relevant time was only Rs. 4.94 and hence less than Rs. 5 per pair, such items qualified for exemption from duty under the Notification dated July 26,1967.
Though originally the Department appears to have been inclined to accept the correctness of the stand taken by the company.
Later on they changed their stand and informed the company that the articles of footwear manufactured by it, of which the wholesale price was Rs. 6.25 per pair were chargeable to excise duty since while computing the "value" of the articles for the purpose of judging the applicability of the exemption, the duty element of the cost structure could not be deducted from the whole sale price and on such calculation the value of such footwear would exceed Rs. 5 per pair.
The company took up the matter with the respective Collectors of Central Excise in West Bengal, Bihar and Haryana but without success In the meantime the Department continued to levy and collected from the company substantial amounts by way of duty on such articles of footwear.
The company, therefore, instituted separate Writ Petition in the High Courts of Calcutta, Patna and Punjab and Haryana The Patna High Court allowed Writ Petition of the company and upheld its contention that the articles of footwear in question were not exigible to duty since they fell within the scope of exemption granted the Notification of July 26, 1967.
Accordingly a mandamus refund of the duty illegally collected from the Company was issued by the Patna High Court.
The High Court of Calcutta however, took a different view and accepted the stand of the Department that the expression "value" occurring in the Notification dated July 26, 1967 is not the deemed 'value ' calculated according to the provisions of Section 4 of the Act but is the real and actual 'value ' of the goods after payment of duty.
The High Court of Punjab and Haryana was moved by the company only after short interval of time during which it had been pursuing its remedies before the highest Departmental a Authorities as well 965 as before the Patna and Calcutta High Courts.
A Division Bench consisting of two learned Judges of the Punjab and Haryana High Court dismissed the company 's Writ Petition in limini on the ground that the company had approached the High Court at a very belated stage.
The Division Bench however, certified the case to be St one to this Court under Article 133 of the Constitution of India.
Similar certificates were granted to the company and to the Union of India respectively by the High Courts of Calcutta and Patna.
That is how these appeals have come to be filed in this Court.
After hearing Counsel appearing on both sides and giving our anxious consideration to the matter in all its aspects, we are clearly of the opinion that the view taken by the High Court of Patna is the correct one and the contrary view taken by the High Court of Calcutta cannot be sustained We are also of opinion that on the facts and circumstances of the High Court of Punjab and Haryana was not justified in dismissing the Writ Petition of the company in limini on the ground of delay especially having regard to the fact that the matter was throughout being actively pursued by the company before the Departmental Authorities as well as before the two other High Courts.
Section 3 of the Act is the charging section and Sub section (1) thereof lays down that there shall be levied and collected in such manner as may be prescribed duties of excise on all excisable goods other than salt which are produced or manufactured in India and a duty on salt manufactured in, or imported by land into any part of India as, and at the rates, set forth in the First Schedule Section 4 deals with the subject of valuation of excisable goods for purposes of charging of duty of excise.
We shall reproduce that section as it stood at the relevant time, omitting portions thereof which are unnecessary for our present purpose: "4.
Determination of value for the purposes of duty where under this Act, any article is chargeable with duty at a rate dependent on the value of the article, such value shall be deemed to be (a) the wholesale cash price for which an article of the like kind and quality is sold or is capable of being sold at the time of the removal of the articles chargeable 966 with duty from the factory or any other premises of manufacture or production for delivery at the place of manufacture of production, or if a wholesale market does not exist for such article at such place, at the nearest place where market exists.
(b) (Not relevant) Explanation In determining the price of any article under this section no abatement or deduction shall be allowed except in respect of trade discount and amount of duty payable at the time of removal of the article chargeable with duty from the factory or other premises aforesaid.
" Under this Section, in all cases where any article is charge able with duty at a rate 'dependent upon its value ' such 'value ' is to be computed by deducting from the wholesale cash price referred to in clause (a) two components of the price structure namely (1) trade discount and (2) the amount of duty payable on the article at the time of its removal from the factory or other premises of manufacture or production.
The short question for consideration is whether the mode of determination of "value" prescribed by Section 4 is not attracted while computing the "value ' of the articles of footwear for the purposes of testing the availability of the exemption granted under the Notification dated July 26, 1967.
To our mind the answer to the question is perfectly simple.
Section 4 is comprehensive in its coverage and it lays down the procedure to be followed for determination of "value" of any article in every case where the article is chargeable with duty at rate dependent on the value of the article.
On a careful reading of the Notification dated Jul y 26, 1967, it also become clear that the effect of the Notification is to render the chargeability or otherwise to duty of excise of footwear falling under Item 36 of the First Schedule is made wholly dependent upon the 'value ' of the article of footwear; in case such 'value ' exceeds Rs. 5 per pair, duty will be chargeable at the rate of 10% whereas if the value does not exceed Rs. 5 per pair, no duty will be chargeable on such items of footwear, that is the rate of duty will be 'nil '.
It is precisely to such a situation that the provision of Section 4 gets attracted because as expressly stated in the opening part 967 part of the said section the mode of determination of 'value ' specified in the section will be applicable to; all cases where any article is chargeable with duty at a rate dependent upon the value of the article.
In the case of a total exemption, the rate will be 'nil '.
Thus Entry 36 read along with the Notification dated July 24, 1967 clearly shows that the chargeability to duty in respect of any article of footwear is made dependent upon its value in the sense that the chargeability to duty of excise ill arise only if the 'value ' of the article does not exceed RS.
5 per pair.
; It is therefore, plain that before determining the question of availability of the exemption under the Notification dated July 24, 1967, the first essential step is to determine the value of the article in the manner prescribed in Section 4 of the Act.
The fact that on such a computation the article may ultimately be found to be exempted from excise duty does not have any bearing on the question of applicability of Section 4 of the Act for.
determining the 'value, for purpose of duty.
The expression 'for the purposes of duty ' occurring in Section 4 has a wide import.
For all purposes connected with the determination of chargeability and levy of duty the provisions of the section are to be applied for comuptation of the value ' of the article.
Under the Explanation to Section 4, it is mandatory that in determining the price of an article both trade discount as well as the amount of duty calculated as payable on the wholesale cash price payable at the time of removal of the article based on the wholesale cash price referred to in clause (a) are to be deducted from such wholesale price.
This is the view taken by the High Court of Patna in the judgment appealed against C. A. No. 1469 of 1972 and we have no hesitation to agree with the said view.
The High Court of Calcutta was of opinion that Section 4 only lays down the formula or the principle for determination of "value for the purpose of duty" and it has not laid down any principle or formula for the determination of value for exemption from duty as already indicated.
In our opinion this is not a correct interpretation of the scope and ambit of Section 4 of the Act.
In the result, we hold that inasmuch as the value of the articles of footwear in question calculated in accordance with the provisions of Section 4 of the Act did not exceed Rs. 5 per pair, the articles in question were exempt from the charge to duty of excise under the Notification dated July 24, 1967.
968 In the result C. A. No. 1470 of 1972 arising out of the judgment of the High Court of Calcutta, C. A. No. 353 of 1971 filed against the order of the High Court of Punjab and Haryana and the Writ Petitions filed by the company in the High Courts will stand allowed with the direction that the amounts of duty illegally realised by the Department from the company should be forthwith refunded to it.
C. A. No. 1469 of 1972 filed by the Collector of Central Excise, Patna against the decision of the Patna High Court will stand dismissed In C. A. No. 1470 of 1972 and C, A. No. 353 of 1971 the appellants will get their costs from the respondents.
There will be no order as to costs in C. A. No. 1469 of 1972.
S.R. Civil Appeal Nos.
353/1971 and 1470/2 allowed.
Civil Appeal No. 1469/72 dismissed.

summary/full:
By virtue of Entry 36 of the First Schedule in the "footwear and parts thereof" in or on relation to the manufacture of which any process is ordinarily carried on with the aid of power, is chargeable to excise duty, the rate of duty being 10% ad valorem in respect of "footwear" and 15% ad valorem in respect of "parts of footwear".
By a Notification dated July 24, 1967, issued In exercise of the powers conferred by sub rule (1) of rule 8 of the Central Excise Rules, 1944, the Central Government exempted, with effect from the 26th May, 1967, footwear falling under item No. 36 of the First Schedule to the , of which the value did not exceed Rs. 5 per pair from the whole of the duty of excise leviable thereon.
During the year 1967 and 1968, Bata Shoe Company was manufacturing certain items of footwear of which the wholesale price was Rs. 6.25 per pair.
The contention of the company that since the assessable value of such items of footwear calculated in terms of section 4 of the Act, as it stood at the relevant time was only Rs. 4.94 and thus less than Rs. 5 per pair were qualified for exemption under the Notification was negatived by the department on the ground that while computing the value of the articles for the purpose of judging the applicability of the exemption, the duty element of the cost structure could not be deducted from the wholesale price and on such calculation the value of such footwear would exceed Rs. 5 per pair.
Three Writ Petitions were, therefore, filed in the High Courts of Patna, Calcutta and the Punjab & Haryana, since the company had three manufacturing establishments attracting the jurisdictions of these Courts.
The Patna High Court allowed the writ petition accepting the contention of the company and granted certificate of appeal to the department.
The High Court of Calcutta 961 dismissed the petition and accepted the stand of the Department that the expression "value" occurring in the Notification dated July 24,1967 is not the deemed "value" calculated according to the provisions of section 4 of the Act, but is the real and actual "value" of the goods after the payment of the duty.
The High Court of Punjab & Haryana dismissed the petition in limini on the ground of laches.
Both these two High Courts, however, granted certificate of appeal to the company.
Hence the three appeals by certificates.
Allowing the appeals of the company and dismissing the State appeal, he Court, ^ HELD 1.1 While computing the "value" of the articles of footwear for the purposes of testing the availability of the exemption granted under the Notification dated July 24,1967 section 4 of the gets attracted.
Section 4 is comprehensive in its coverage and it lays down the procedure to be followed for determination of "value" of any article in every case where the article is chargeable with duty at a rate dependent on the value of the article.
[966H, 967A] 1.2 While the notification makes it clear that the effect of the Notification is to render the changeability or otherwise to duty of excise of footwear falling under item 36 of the First Schedule is made wholly dependent upon the "value" of the article of footwear; in case such "value" exceeds Rs. 5 per pair, duty will be chargeable at the rate of 10%.
whereas if the value does not exceed Rs.5 per pair, no duty will be chargeable on such items of footwear, that is the rate of duty will be nil.
Thus entry 36 read along with the Notification dated July 24, 1967 clearly shows that the changeability to duty in respect of any article of footwear is made dependent upon its value in tho sense that the chargeability to duty of excise will arise only if the "value" of the article does not exceed Rs. 5 per pair.
[966D E, 967A B] 1.3 Before determining the question of availability of the exemption under the Notification dated July 24, 1967, the first essential step, therefore, is to determine the "value" of the article in the manner prescribed in section 4 of the Act.
The fact that on such a computation the article may ultimately be found to be exempted from excise duty does not have any bearing on the question of applicability of section 4 of the Act for determining the ' 'value" for purpose of duty.
[967B D] 1.4 The expression 'I`or the purpose of duty" occurring in section 4 has a wide import.
For all purposes connected with the determination of chargeability and levy of duty the provisions of the section are to be applied for computation of the "value" of the article.
Under the Explanation to section 4, it is mandatory that in determining the price of an article both trade discount as well as the amount of duty calculated as payable on the wholesale cash price payable at the time of removal of the article based on the wholesale cash price referred to in clause (a) are to be deducted from such wholesale price.
[967D E] In the instant case, in as much as the value of the articles of footwear in 962 question calculated in accordance with the provisions of section 4 of the Act did note exceed Rs.5 per pair, the articles in question were exempted from the charge to duty of excise under the Notification dated July 24, 1967 and the company is entitled, forthwith, to a refund of the amounts of duty illegally realised by the Department.
[967G H] The Collector of Central Excise, Patna & Ors.
vs The Bata Shoe Company (P) Ltd. AIR Patna approved.
The Bata Shoe Company (P) Ltd. vs The Collector of Central Excise & Ors., Calcutta, AIR Calcutta : The Bata Shoe Company (P) Ltd. vs The Collector of Central Excise & Ors., AIR Pun jab & Haryana reversed.


judgement:
Civil Appeals Nos.
797 799 (NT) of 1974.
From the Judgment and Order dated 30.4.1973 of the Punjab and Haryana High Court in Wealth Tax Reference Nos. 2, 3 and 4 of 1972.
B.B. Ahuja and Miss A. Subhashini for the Appellant.
Harish Salve, P.K. Ram and Mrs A.K. Verma for the Respondents.
The Judgment of the Court was delivered by TULZAPURKAR, J.
The common question of law that arises for our determination in these appeals 16: Whether on the facts and in the circumstances of the case, the right or interest of an assessee in an annuity policy is exempt from wealth tax under 8. 5 (1) (vi) of the Wealth Tax Act, 1957? The facts giving rise to the question are briefly these.
Yuvraj Arminder Singh and Princess Rupinder Kumari are individual assessees being assessed to wealth tax under the Wealth Tax Act, 1957 (hereinafter called the Act).
As regards the former the two assessment years are 1964 65 and 1965 66 for which the respective valuation dates 31.3.1964 and 31.3.1965, whereas the assessment year in the case of Princess Rupinder Kumari is 1965 66 for which the valuation date 18 31.3.1965.
The two assessees had purchased one annuity policy each and they claimed exemption in respect of the value of each policy in each one 's assessment to wealth tax under 8. 5 (1) (vi) of the Act.
The value of the annuity policy in the case of Yuvraj Amrinder Singh was Rs. 2,13,000 while in 570 the case of Princess Rupinder Kumari lt was Rs. 2,35,176.
Exemption in respect of such value was claimed under 8. 5 (1) (vi) of the Act inasmuch as the annuity policies fell within the expression" any policy of insurance" occurring in the said provision.
The Wealth Tax Officer rejected the claim and included the above mentioned amounts in the assessees ' net wealth for the concerned assessment years on the ground that the exemption was allowable only to insurance policy whereas the policy taken out by the assessee was an annuity policy whereunder the assessee had made lumpsum payment and he would be getting periodical returns after the lapse of a number of years and as such annuity policy could not be considered as insurance policy.
Aggrieved by the orders passed by the Wealth Tax Officer the assessees preferred appeals to the Appellate Assistant Commissioner who allowed their appeals holding them to be entitled to exemption under section 5 (1) (vi) as according to him annuity policies were covered by the term "any policy of insurance" used in the said sub section.
This view of the Appellate Assistant Commissioner was confirmed by the Income Tax Appellate Tribunal in appeals preferred by the Revenue.
In the three Wealth Tax References nos. 2, 3 & 4 of 1972 made to the High Court by the Tribunal at the instance of the Revenue the High Court confirmed the Tribunal 's view and Answered the question set out above (which arose in each Reference) in favour of the assessee.
The revenue has come up in appeals challenging the view taken by the High Court.
Since the question raised in these appeals concerns the proper construction of the expression 'any policy of insurance ' occurring in section 5 (l)(vi) of the Act read with the other connected provisions thereof in relation to the terms of the annuity policies purchased by the two assessees it will be desirable to set out the terms of the two annuity policies.
In each the annuitant is the proposer and each contains provisions for commutation, that is to say, neither is a non commutable policy.
It may be stated that the terms and conditions of both the annuity policies are the same and hence the terms and conditions of one (of Yuvraj Amrinder Singh) may be set out which are as follows: "Type of Annuity: Deferred annuity without profits guaranteed for 35 years.
Date on which the: Twenty second day of January, annuity vests: Nineteen Hundred and sixty four.
571 Even on the On expiry of 35 years calculated happening of which from the date on which the annuity annuity ceases or vests or at the death of annuitant, determines: if later.
To whom annuity To the annuitant payable: Dates when annuity On the stipulated due date of the payable 1st Annuity instalment and monthly thereafter.
Special provisions: (1) If the annuitant shall die before the date on which the annuity vests, the amount of the single premium paid but without any interest shall be returned to the proposer or in case he shall be then dead to his Proving Executors or Administrators or other legal representatives who should take our representation to his Estate or limited to the moneys payable under this policy from any Court of any State or Territory of the Union of India, or in case the Annuitant (provided he 18 also the proposer) shall have appointed any nominee to receive such money or executed any assignment in favour of any assignee to such nominee or assignee.
(2) In lieu of the payment of the annuity under this policy the proposer has the option to be exercised before the date on which the annuity vests to receive 8 cash payment of RS.
2,88,184 on 22nd January, 1964.
" Before dealing with the rival submissions made by the learned counsel for the parties the relevant provisions of the Act with which we would be concerned may be referred to.
Under the charging provision contained in section 3 of the Act wealth tax is charged, subject to the other provision contained in the Act, for every assessment year 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 Schedule I. 'Net Wealth ' is defined in section 2 (m) as meaning (so far as is material) the amount by which the aggregate value of all the assets belonging to the assessee on the valuation date is in excess of the aggregate value of all the debts owed by the assessee on that date.
The expression 'assets ' is defined in s.2 (e) and the relevant part thereof runs thus : 572 2.(e) 'assets ' includes property of every description, movable or immovable property, but does not include (i) xx xx xx (ii) xx xx xx (iii) xx xx xx (iv) a right to any annuity in any case where the terms and conditions relating thereto preclude the commutation of any portion thereof into a lumpsum grant; The next material provision is section 5 (1) (vi) with which we are directly concerned and it runs thus: Exemptions in respect of certain assets.
5.(1) Subject to the provisions of sub section (1A), 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 (vi) the right or interest of the assessee in any policy of insurance before the moneys covered by the policies become due and payable to the assessee: Provided that in the case of a policy of insurance the premium or other payment whereon is payable during a period of less than ten years, the amount that shall not be included in the net wealth of the assessee under this clause shall be a sum that bears to the value of the right or interest of the assessee in the policy the same proportion as the number of years during which the premium or other payment on the policy is payable bears to ten; It may be stated that the above proviso was not there at the relevant time and it has been inserted by Finance Act, 1974 with effect from 1.4.1975 but since an argument was based on it we have thought fit to reproduce the same.
The next material provisions are section 5 (1) (vi a) and (vii) which run thus: " (vi a) the right of the assessee to receive any annuity payable by the Central Government under the provisions of section 280D of the Income tax Act; 573 (Inserted by Taxation Laws (Amendment) Act, 1970 with retrospective effect from 1.4.1965) (vii) the right of the assessee to receive a pension or other life annuity in respect of past services under an employer; Since a contention was raised that annuity policies of the type with which we are concerned in the case cannot be regarded as life insurance policies it will be necessary to refer to the definition of life insurance business" given in section 2 (11) of the .
Section 2 (11) runs thus: 2 (11) Life insurance business ' means the business of effecting contracts of insurance upon human life, including any contract whereby the payment of money is assured on death (except death by accident only) or the happening of any contingency dependent on human life, and any contract which is subject to payment of premiums for a term dependent on human life and shall be deemed to include (a) the granting of disability and double or triple indemnity accident benefits, if so provided in the contract of insurance, (b) the granting of annuities upon human life; and (c) the granting of superannuation allowances and annuities payable out of any fund applicable solely to the relief and maintenance of persons engaged or who have been engaged in any particular profession, trade or employment or of the dependants of such persons; At the outset we would like to dispose of the initial contention raised on behalf of the Revenue that a contract for deferred annuity is quite distinct from a 'policy of insurance ' the expression used in section 5 (1) (vi) since there is no element of insurance against any risk involved in such annuity policy a contention which found favour with the Wealth Tax Officer but was rejected by the Assistant Appellate Commissioner, the Tribunal and the High Court.
The contention is that in the case of a deferred annuity policy the annuitant, on payment of a lumpsum gets the right to the annuity equivalent in the shape of deferred h annual or monthly payments guaranteed for a certain period (in 574 the instant case for 35 years), that there is a date on which the annuity vests in the annuitant (here 22.1.1964), that usually there is a provision that in the event of the death of the annuitant before the date of vesting the single premium paid by him would be returned to the proposer, and that the proposer may have (as is the case here) the option, to be exercised before the date on which the annuity vests, to receive the commuted value in lieu of deferred annual or monthly payments and such provisions clearly show that the intention is that in essence the annuity contract is operative from the date on which the annuity vests and thereafter there is no element of insurance in the contract.
It is, therefore, urged that a contract for deferred annuity cannot be treated as a policy of insurance and as such the value thereof would not be exempt under section 5 (1) (vi) of the Act.
The gravamen of the contention is that there is no element of insurance covering any risk on human life involved in a deferred annuity policy.
The contention, in our view, proceeds on a misconception of the true or real nature of a deferred annuity policy.
It is well known that a contract of insurance based on human life can be effected in two ways, (a) the insurer, in consideration of payment of periodical premia, undertakes to pay the person for whose benefit the insurance is made a stipulated lumpsum upon the death of the person whose life is insured or the happening of any contingency dependant on human Life (e.g. usual life policies or endowment policies) and (b) the insurer, in consideration of payment of a gross sum premium, undertakes to pay the person for whose benefit the insurance is made annuity equivalent (either annual or monthly instalments) after a certain age on the happening of a contingency depending upon the duration of human life (e.g. deferred annuity policies).
In either case it is insurance against the risk of penury and as such is a contract of insurance.
That contracts of insurance based on human life are effected in one of the two ways mentioned above will be clear from the manner in which the concept of life insurance is understood in the legal and commercial world.
In Halsbury 's Laws of England, Fourth Edition Volume 25, page 13, the following passage occurs in para 7 under the heading 'Main types of risk ': 7.
Main types of risk.
For convenience the different types of insurance business may be classified as follows: (1) marine, aviation and transport insurance (2) ordinary long term insurance; (3) personal accident insurance; (4) property insurance; (5) liability 575 insurance; (6) motor vehicle insurance; (7) pecuniary 1088 insurance; (8) war risks assurance; and (93 industrial insurance.
Foot note 2 deals with 'ordinary long term insurance business ' and says 'ordinary long term insurance business ' means the business of effecting and carrying out contracts of insurance on human life or to pay any annuities on human life (A. 83 (2) (a) of Insurance Companies Act, 1974) In Bouvier 's Laws Dictionary (Rawle 's Third Revision) Vol. 2, at page 1619, the following passages occur under the caption 'Life Insurance ': LIFE INSURANCE.
The insurance of the life of a person is a contract by which the insurer, in consideration of a certain premium, either in a gross sum or periodical payments, undertakes to pay the person for whose benefit the insurance is made, a stipulated sum, or annuity equivalent, upon the death of the person whose life is insured, whenever this shall happen, if the Insurance be for the whole life or in case this shall happen within a certain period, if the Insurance be for a limited time An agreement by the insurer to pay to the insured or his nominee a specified sum of money either on the death of a designated life, or at the end of a certain period provided the death does not occur before, in consideration of the present payment of a fixed amount, or of an annuity till the death .
curs or the period of Insurance is ended.
The definition of 'life insurance business ' as given in section 2 (11) of our clearly includes, by a deeming provision, the business of granting of annuities upon human life within the expression 'life insurance business '.
In C.I.T. vs General Family Pension Fund, the Calcutta High Court has held that if the right to payment under annuity contract is governed by the happening of a contingency which depends in any way upon the duration of human life the business of effecting such a contract is life insurance business.
When the same case came up in appeal before this Court this Court confirmed that view by observing that where the 576 business of a company consists exclusively in granting terminable pensions or annuities dependent on human life in favour of the subscribers such business is life insurance business.
In Chandulal Harjiwandas vs Commissioner of Income Tax, Gujrat, while dealing with a policy called 'Children 's Deferred Endowment Assurance" issued by the Life Insurance Corporation of India in the context of the question whether rebate was allowable on the premia paid during the minority of the life assured under section 15 (1) of the Indian Income tax Act, 1922, this Court at page 631 of the Report has observed thus: "Life insurance in a broader sense comprises any contract in which one party agrees to pay a given sum upon the happening of a particular event contingent upon the duration of human life, in consideration of the immediate payment of a smaller sum or certain equivalent periodical payment by another party (Halsbury 's Laws of England third edition, volume 22, page 273).
In the instant case in each of the two annuity policies there is a term stipulating the event on the happening of which the annuity shall cease or determine and it states that the annuity shall cease or determine "on the expiry of 35 years calculated from the date on which the annuity vests (22.1.1964) or at the death of the annuitant, if later.
" In other words the monthly payments are guaranteed for a period of 35 years commencing from 22.1.1964 even if the death occurs before the expiry of the period but in case the annuitant lives beyond the said period of 35 years the monthly payments shall continue to be made till he dies.
In view of this provision which is to be found in each of the two annuity policies it cannot be gainsaid that the policies evidence a contract of insurance covering the risk of human life and such would fall within the expression a 'policy of insurance ' occurring in .
5 (1) (vi) of the Act.
The contention that no element of insurance covering any risk of human life was involved after 22.1.1964 (the date of vesting) was, in our view, rightly rejected by the AAC, the Tribunal and the High Court.
In the light of the above discussion the position becomes quite clear that annuities dependent on human life constitute a species of contracts of life insurance and would normally fall within the expression "any policy of insurance" occurring in a. 5 577 (1) (vi) of the Act.
The object of enacting the provision is the encouragement of thrift which element is present in both types of life insurance and hence the provision should be interpreted in such a manner as not to nullify that object.
Moreover, section 5 deals with exemptions in respect of certain assets and one of such exempted assets under sub clause (vi) of sub section
(1) thereof is "the right or interest of the assessee in any policy of insurance before the moneys covered by the policy become due and payable to the assessee".
It is quite clear that while granting chis exemption the legislature has used the expression "any policy of insurance" which is a very wide import.
The exemption is not confined to rights or interests in life insurance policies alone much less any particular species of life insurance policies but it extends to rights or interests of an assessee in other types of insurance policies also, such as a marine or a fire insurance policy, etc.
It cannot be suggested that the right or interest of an assessee in such other types of policies has no value or cannot be valued.
For instance, a marine or fire insurance policy may be for three or five years and in such a case the unexpired value of the premium could be one of the bases for determining the value of the assessee 's interest in the policy on the valuation date; similarly it is possible that the contingent event insured against has occurred, though the claim is pending determination on adjudication, and in such a case also the assessee would have a valuable interest in the policy.
In such case the assessee 's interest would be exempt under the aforesaid clause if the moneys under the policy have not become due and payable on The valuation date.
It is, therefore clear that the exemption contemplated by section 5 (1) (vi) covers interests of an assessee in all types of insurance policies and the expression 'any policy of insurance ' in the said provision would a fortiori attract within its ambit or scope a deferred annuity policy based on human life, it being a species of life insurance policies and, therefore, unless there is some warrant to cut down the ambit or scope of that expression the right or interest of an assessee in such a policy would be exempt from the charge of wealth tax unless of course any moneys thereunder have become due and payable to the assessee on the valuation date Counsel for the revenue urged a two fold contention in support of the plea that there is such a warrant to cut down the ambit or scope of the expression 'any insurance policy ' occurring in section 5 (1) (vi) and confine it to life insurance policies of the usual type where in consideration of periodical premia the stipulated lumpsum becomes payable upon the death or happening 578 of an event dependant upon duration of human life, that is to say the usual Life Policies or Endowment Policies.
In the first place it was urged that the proviso to sub clause (vi), though inserted by Finance Act, 1974 with effect from 1.4.1975, suggests that the legislature intended that the said expression should be so confined and annuities on life are excluded and in this behalf reliance was placed on Notes on Clauses accompanying the relevant Finance Bill as also the speech of the Hon 'ble Finance Minister while introducing the Bill.
Secondly it was urged that since non commutable annuities only have been excluded from the definition of 'assets ' given in section 2(e), the legislature could not have intended to exempt annuities based on human life under section 5 (1) (vi) by bringing them within the expression 'any policy of insurance ' used therein.
For the reason which we shall indicate presently there is no substance in either of the pleas pressed by Counsel for the Revenue.
The proviso to sub clause (vi) has been reproduced above.
It has the effect of cutting down the exemption contained in the sub clause to some extent.
It commences with the words "Provided that in the case of a policy of insurance the premium or other payment whereon is payable during a period of less than 10 years" and the argument is that the under lined words suggest that the expression "any policy insurance" in the main sub clause must mean.
a policy based on human life and that too where periodical premia are payable and as such annuity on life which consists of lumpsum investment followed by deferred annual or monthly payments is excluded.
It is impossible to read the under lined words in the proviso in this manner which has the effect of unduly narrowing down the expression "any policy of insurance" used in the main sub clause, which as indicated earlier, is of very wide import covering all types of insurance policies like life, marine fire etc.
In the first place the main provision (sub clause vi) was enacted in 1957 and continued to operate for 17/18 years till 31.3.1975 without any qualification and as such it will be absurd to attribute to The legislature, because or the insertion of the proviso (containing the underlined words) in 1975, an intention of having used the wide expression "any policy of insurance" throughout all his period in a narrow sense as suggested.
Secondly if the main provision and the proviso are read together the underlined words do not suggest that any narrow construction, much less as urged, was intended and to say so would be missing the real object or purpose of the proviso.
In our view the proper way to read the proviso would be to treat the main provision as creating or granting an exemption and the 579 proviso carving out something from the exemption.
The main provision creates an exemption in respect of the assessee 's right or interest in any policy of insurance and the proviso seeks to cut down that exemption to a limited extent, namely whenever there is a policy of insurance in respect whereof periodical premia are payable for a duration of less than 10 years then in such a case a proportionate exemption specified therein will be available to the assessee irrespective of what type of policy it is; the proviso has no other effect.
That such was the object or purpose of inserting the proviso will be clear if regard is had to relevant part of notes on Clauses accompanying the Bill and the relevant portion of the speech of the Finance Minister while introducing the Bill.
We were taken through the relevant portions of Notes on Clauses [vide and the speech of the Hon 'ble Finance Minister while introducing the Bill vide and in our view far from supporting the contention of counsel for the Revenue these lend support to the view which we have just expressed.
The relevant portion of 'notes on Clauses ' states that under this amendment (the insertion of proviso) the value of the taxpayer 's right or interest in a policy of insurance will be exempt from tax only if the premia are payable over a period of ten years or more.
In cases where premia are payable over a period of less than ten years, only a proportionate amount of the value of the taxpayer 's right or interest in the policy of insurance will be exempt from wealth tax.
The Finance Minister 's speech though strictly not relevant as an aid to construction, substantially reiterates what has been stated in the 'Notes on Clauses ' accompanying the Bill.
On this account therefore, there is no warrant to put a narrow construction on the expression any policy of insurance occurring in sub clause (vi) of section 5 (1).
Similarly counsel 's reliance on the definition of 'assets ' given in section 2 (e) of the Act and particularly the exclusionary part contained in sub clause (iv) in relation to annuities for the purpose of giving a narrow construction to the expression 'any policy of insurance ' occurring in sub clause (vi) of section 5 (1) is of no avail.
We have already quoted above section 2 (e) (iv).
The definition of 'assets ' is in two parts; the first part defines assets as including property of every description, movable or immovable while the second part excludes certain items of property from falling within the expression 'assets ' and one of the item coming within this exclusionary part is: (iv) a right to any annuity in any case where the terms and conditions 580 relating thereto preclude the commutation of any portion thereof into a lumpsum grant .
In other words non commutable annuities only are excluded from 'assets '.
The contention for the Revenue is that if under section 2 (e) (iv) only non commutable annuities have been excluded from the definition of assets then the legislature could not have intended to exempt annuities based on human life from wealth tax charge under section 5 (1) (vi); in other words it is urged that it would be incongruous for the legislature to include commutable annuities on life within the expression 'assets ' under section 2 (e) on the one hand and at the same time to exempt such annuities from the charge by including them within the expression 'any policy of insurance ' under section 5(1) (vi).
The contention in our view, is entirely misconceived, for, in the first place it proceeds on a wrong assumption that the topic of annuities is exhaustively dealt with under section 2 (e) (iv) and secondly it ignores the scheme of the Act emerging from the relevant provisions.
It is obvious that the postulate of the so called incongruity that is being suggested on a reading of the two concerned provisions together must be that the topic of annuities has been dealt with exhaustively by section 2 (e) (iv).
but the postulate is non existent.
That clause (iv) of section 2 (e) is not exhaustive of all annuities is clear from the fact that at least 2 types of annuities are separately and specifically dealt with under section 5 (1) (vi a) and 5 (1) (vii) the former speaks of the assessee 's right to receive annuity payable by the Central Government under section 280D of the Income tax Act and the latter speaks of the assessee 's right to receive a pension or other life annuity in respect of past services under an employer.
If that be so, the argument based on any incongruity arising from reading of section 2 (e) (iv) and section 5 (1) (vi) together must fall to the ground.
Further a careful analysis of the two relevant provisions shows what is the general scheme of the Act.
Section 2 (e) defines 'assets ' to include property of every description; it however excludes certain items from the purview of the charge by excluding them from the definition of 'assets ', while section 5 (1) (vi) on the other hand exempts certain assets from the tax by declaring that tax will not be payable in respect of such assets.
In other words in order to be covered by the exemption under section 5 (1) (vi) a property must in the first instance be an asset under section 2 (e).
The question of exempting commutable annuity policies of insurance arises only because they are not excluded from the definition but because they fall within the definition of 'assets '.
It is therefore, fallacious to contend that because commutable annuity policies fall within 'assets ' they should not be exempted under section 5 (1) (vi).
581 We have already pointed out that a reading of section 2 (e) together with section 5 (1) (vi a) and 5 (1)(vii) negates the view that legislative intention was to deal exhaustively with annuities under section 2 (e) (iv).
Now, a commutable life annuity received from an Employer would undoubtedly be exempt from the charge of wealth tax under section 5 (1) (vii).
If section 2(e) is construed as confining, by implication, the exemption from wealth tax to non commutable annuities alone, then there would be an obvious conflict between section 5 (1) (vii) and section 2 (e).
Therefore, a harmonious reading of section 2(e) (iv) with section 5 (1) (vi) and s.5 (1) (vii) would be that while non commutable annuities are wholly outside the purview of the wealth tax, commutable annuities are exempt under s.5 (1) (vi) and 5 (1) (vii) to the limited extent mentioned in each.
It is well settled that when such a harmonious construction is possible and which furthers the object of the Act namely to promote thrift and channelise private savings for national use, the same must be preferred to the construction which leads to a conflict between s.2 (e) (iv) and s.5 (1) (vi).
The contention that a narrow construction should be placed on the expression 'any policy of insurance ' occurring in section 5 (1) (vi) of the Act, has, therefore to be rejected.
In other words commutable annuities on life like the ones in the instant case, would fall under s.5 (1) (vi) of the Act and the value thereof would qualify for the exemption from the charge.
In the result we decide the point raised in the appeals in favour of the assessees and confirm the view of the High Court.
The appeals are therefore, dismissed with costs.
A.P.J. Appeals dismissed.

summary/full:
The two assessees are individually assessed to wealth tax under the Wealth Tax Act, 1957.
They had purchased one annuity policy each, and claimed exemption of the value thereof under 8. 5 (1) (vi) of the Act, alleging that the annuity policies fell within the expression "any policy of insurance" occurring in that provision.
The Wealth Tax Officer rejected the claim and included the value of the annuity policies in the assessees ' net wealth on the ground that the exemption was allowable only to insurance policy whereas the policy taken out by the assessee was an annuity policy whereunder the assessee had made lumpsum payment and he would be getting periodical returns after the lapse of a number of years and as such annuity policy could not be considered as insurance policy.
The Appellate Assistant Commissioner allowed the assessees ' appeals holding that the annuity policies were covered by the term "any policy of insurance" and, therefore, they were entitled to exemption under section 5 (1) (vi).
This view was confirmed by the Appellate Tribunal in appeals and in Reference by the High Court.
In the appeals by the Revenue to this Court it was contended: (1) that a contract for deferred annuity is quite 566 distinct from a "policy of insurance"; an annuity contract is operative from the date on which annuity vests and thereafter there is no element of insurance in the contract covering the risk of human life and, therefore, a contract for deferred annuity cannot be treated as a policy of insurance and the value thereof would not be exempted under section 5 (1) (vi) of the Act; (2) that the ambit or scope of the expression "any insurance policy" occurring in section 5 (1) (vi) should be confined to the usual life policies or endowment policies; (3) that the proviso to sub clause (vi) suggests that the legislature intended to confine the expression "any insurance policy" to the exclusion of annuities on life and that since non commutable annuities only have been excluded from the definition of 'assets ' given in section 2 (e), the legislature could not have intended to exempt annuities based on human life under section 5 (1) (vi) by bringing them within the expression "any policy of insurance" and (4) that it would be incongruous for the legislature to include commutable annuities on life within the expression assets under section 2 (e) on the one hand and at the same time to exempt such annuities from the charge including them within the expression "any policy of insurance" under section 5 (1) (vi).
Dismissing the Appeals, ^ HELD: 1.
Commutable annuities on life, like the ones in the instant case, would fall under 8.5(1)(vi) of the Wealth Tax Act 1957 and the value thereof would qualify for the exemption from the charge.
[581 D] 2.
The exemption contemplated by 6.5(1)(vi) covers interests of an assessee in all types of insurance policies and the expression" any policy of insurance" in that provision would fortiori attract within its ambit or scope a deferred annuity policy based on human life, it being a species of life insurance policies and, therefore, unless there is some warrant to cut down the ambit or scope of that expression, the right of interest of an assessee in such a policy would be exempt from the charge of wealth tax unless my moneys thereunder have become due and payable to the assessee on the valuation date.
[577 E G] 3.
The definition of "life insurance business" as given in s.2(11) of clearly includes by a teeming provision, the business of granting of annuities upon human life within the expression "life insurance business".
[575 F] 4.
A contract of insurance based on human life can be effected in two ways, (a) the insurer, in consideration of 567 payment of periodical premia, undertakes to pay the person for whose benefit the insurance is made a stipulated lumpsum upon the death of the person whose life is insured or the happening of any contingency dependent on human life (e.g. usual life policies or endowment policies) and (b) the insurer, in consideration of payment of a gross sum premium undertakes to pay the person for whose benefit the insurance is made annuity equivalent (either annual or monthly instalments) after a certain age on the happening of a contingency depending upon the duration of human life (e.g. deferred annuity policies).
In either case it is insurance against the risk of penury and as such is a contract of insurance.
[574 D F] In the instant case, each annuity policy stipulate that the monthly payments are guaranteed for a period of 35 years commencing from 22.1.1984 even if the death occurs before the expiry of the period but in case the annuitant lives beyond the period of 35 years the monthly payments shall continue to be made till he dies .
Thus the annuity policies evidence a contract of insurance covering the risk of human life and as such would fall with in the expression "policy of insurance" occurring in s.5 (1) (vi) of the Act.
[576 D f] C.I.T. vs General Family Pension Fund, (1952) 22 Com.
Cas 89, approved.
Chandulal Harjiwandas vs Commissioner of Income Tax, Gujrat, , Halsbury 's Laws of England, Fourth Edition, Vol.
25, p. 13 and Bouvier 's Law Dictionary (Rawle 's Third Revision) Vol. 2, p. 1619, relied on.
The object of the provision in section 5 is the encouragement of thrift which element is present in both types of life insurance.
The provision should hence be interpreted as not to nullify that object.
Moreover, section 5 deals with exemptions in respect of certain assets and one of such exempted assets under sub cl.
(vi) in any policy of insurance before the monies covered by the policy become due and payable to the assessee".
While granting this exemption the legislature has used the expression "any policy of insurance" which is of very wide import.
The exemption is not confined to rights or interests in life insurance policies alone, but extends the rights or interests of an assessee in other types of insurance policies also, such as a marine or life insurance policy etc.
[577 A C] 568 6.
The proviso to sub cl.
(vi) has the effect of cutting down the exemption contained in the sub clause to some extent.
The main provision creates an exemption in respect of the assessee 's "right or interest in any policy of insurance" and the proviso seeks to cut down that exemption to a limited extent, namely, whenever there is a policy of insurance in respect whereof periodical premia are payable for a duration of less than 10 years then in such a case a proportionate Exemption specified therein will be available to the assessee irrespective of what type of policy it is; the proviso has no other effect.
That such was the object or purpose of inserting the proviso will be clear if regard is had to the Notes on Clauses accompanying the Bill and the speech of the Finance Minister while introducing the Bill.
There 18 therefore, no warrant to put a narrow construction on the expression "any policy of insurance" occurring in sub cl.
(vi) of 8. 5 (1).
[578 C; 579 A C; 579 E] 7.
The definition of 'assets ' in 8. 2 (e) of the Act is in two parts; the first part defines assets as including property of every description moveable or immovable, while the second part excludes certain items of property from falling within the expression 'assets ' and one of the item coming within this esclusionary part 18: "(iv) a right to any annuity in any case where the terms and conditions relating thereto preclude the commutation of any portion thereof into a lumpsum grant".
This excludes only non commutable annuities from 'assets '.
Clause (lv) of 8 2 (e) does not exhaustively deal with all type of annuities.
Two types of annuities are separately and specifically dealt with under 8. 5 (i) (vi a) and 5 (i) (vii).
Section 2 (e) defines 'assets ' to include property of every description movable or immovable excluding certain items from the purview of the charge by excluding them from the definition of 'assets '; while 8. 5 (1) (vi) exempts certain assets from the tax by declaring that tax will not be payable on them.
in order to be covered by the exemption under 8. 5 (1) (vi) a property must in the first instance be an asset under 8. 2 (e).
The question of exempting commutable annuity policies of insurance arises only because they fall within the definition of 'assets '.
It is, therefore, fallacious to contend that because commutable annuity policies fall within 'assets ' they should not be exempted under 8. 5 (1) (vi).
[579 ; 580 A H] 8.
A reading of 8. 2 (e) together with 8. 5 (1) (vi a) and 5 (1) (vil) negates the view that legislative intention was to deal exhaustively with annuities under section 2 (e) (iv).
A commutable 569 life annuity received from an employer would undoubtedly be exempt from the charge of wealth tax under 8 5 (1) (vil) If 8. 2 (e) 16 construed as confining, by implication, the exemption from wealth tax to non commutable annuities alone, then there would be an obvious conflict between 8. 5 (1) (vii) and 8. 2 (e).
Therefore, a harmonious reading of 8. 2 (e) (iv) with 8. 5 (1) (vi) and 8. 5 (1) (vii) would be that while non c .
mutable p annuities are wholly outside the purview of the wealth tax, non commutable annuities are exempt under 8. 5 (1) (vi) and 5 (1)(vii) to the limited extent mentioned in each.
[581 A C]