judgement:
Appeal No. 1015 1968.
Appeal from the judgment and Order dated April 30, 1964 of the Madras High Court in T.C. No. 194 of 1961 (Reference No. 74 of 1961).
D.Narsaraju, R. H. Dhebar, R. N. Sachthey and B. D. Sharma, for the appellant.
R.Gopalkrishnan and R. Balasubramaniam, for the respondent.
The Judgment of the Court was delivered by Grover, J.
This is an appeal by certificate from a judgment of the Special Bench of the Madras High Court in which the sole question that has to be determined is whether Rule 24 of the Appellate Tribunal Rules, 1946, insofar as it enables the Tribunal to dismiss an appeal for default of appearance was ultra vires the provisions of section 33 of the Income tax Act, 1922, hereinafter called the "Act".
The facts which gave rise to the reference which was made to the High Court by the Appellate Tribunal lie within a narrow compass.
The assessee owned 1674 shares in Asher Textiles Ltd. and 9 out of 20 shares in Textile Corporation (Private) Ltd. at Tiruppur.
The latter company was the managing agents of the Asher Textiles Ltd. The assessee was a Joint Managing Director of the Textile Corporation (Private) Ltd. along with one P. D. Asher.
The assessee sold on December 21, 1954 his entire holding in two companies to Asher and some of his relations.
These sales resulted in a profit of Rs. 72,515/ and Rs. 3,14,100/ respectively.
The Income tax Officer assessed these amounts to tax for the assesment year 1956 57 under section 10(5A) of the Act as compensation earned for parting with the effective power of management.
The assessment was upheld by the Appellate Assistant Commis sioner.
The assessee appealed to the Appellate Tribunal.
After some adjournments the appeal was finally fixed for hearing on August 26, 1958.
On that date no one was present on behalf of the assessee nor was there any application for an adjournment.
On August 28, 1958 the Tribunal dismissed the appeal for default of appearance.
This the Tribunal purported to do under Rule 24 of the Appellate Tribunal Rules, 1946 as amended by notification dated January.26, 1948.
Five weeks after the disposal of the appeal the assessee filed a petition before the Appellate Tribunal praying for its restoration.
It was stated, inter alia, in that petition 11 Sup CI/69 3 820 that it was owing to some misapprehension on the part of the assessees auditors at Coimbatore that the date of the hearing of the appeal was not intimated to the counsel at Madras who was convalescing there after a surgical operation.
The Tribunal did not consider that there was sufficient cause for restoration and rejected the petition.
The: assessee applied for a reference under section 66(1) of the Act on two questions of law but that application was rejected by the Tribunal.
The assessee approached the High Court under section 66(2) of the Act and on April 5, 1960 the High Court directed the Tribunal to state the case on two questions.
The matter was first heard by a division bench but owing to the validity of Rule 24 having been canvassed a special bench consisting of the Chief Justice and two judges was constituted.
The special bench reframed the first question thus : "Whether rule 24 of the Appellate Tribunal Rules, 1946 in so far as it enables the tribunal to dismiss an appeal for default of appearance, is ultra vires.
" The second question was "Whether on the facts and in the circumstances of the case the two sums of Rs. 72,515 and Rs. 3,14,100 were assessable to tax under section 10(5A) of the Income tax Act ?" Rule 24 was framed under sub section
(8) of section 5A of the Act.
This provision confers power on the Appellate Tribunal to frame Rules regulating its own procedure.
Section 5A(8) reads : "Subject to the provisions of this Act, the appellate tribunal shall have power to regulate its own procedure and the procedure of Benches of the Tribunal in all matters arising out of the discharge of its functions, including the places at which the Benches shall hold their sittings.
" The Appellate Tribunal first made certain Rules which were published by means of a notification dated Feburary 1, 1941.
Rule 36 provided that the Tribunal shall determine the appeal 'on merits notwithstanding the fact that the appellant did not choose to appear.
The Tribunal was also empowered to restore an appeal which had been disposed of without hearing the appellant.
The Rules made in 1941 were substituted by the Appellate Tribunal Rules, 1946 which were promulgated by means of Income tax Appellate Tribunal Notification, dated October 31, 1946.
Rule 24 was in the following terms Where on the day fixed for hearing or any other day to which the hearing may be adjourned, the appel 821 lant does not appear when the appeal is called on for hearing, the Tribunal may, in its discretion, either dismiss the appeal for defau lt or may hear it ex parte.
" This Rule was amended by means of a notification dated January 26, 1948 and it took the following shape "Where on the day fixed for hearing or any other day to which the hearing may be adjourned,, the appellant does not appear when the appeal is called on for hearing, the tribunal may dismiss the appeal for default.
" The Rule contained no provision for restoring an appeal dismissed for default.
The Special Bench of the High Court noticed the previous history of Rule 24 as also the terms in which it came to be framed after the passing of the Income tax Act, 1961 which enables the Tribunal, in its discretion, either to dismiss the appeal for default or to hear it ex parte in case of non appearance of the parties and further enables the Tribunal to set aside the dismissal on sufficient cause being shown for non appearance.
After referring to various decided cases and examining the relevant provisions of the Act, the Special Bench summed up the position thus "To sum up the position, the Appellate Tribunal is the appointed machinery under the Act for finally deciding questions of fact in relation to, assessment of income tax,.
Its composition, consisting as it does of qualified persons in law and accountancy, makes it peculiarly qualified to deal with all questions raised in a case, whether there be assistance from the party or his counsel or not.
Section 33(4) obliges it to decide an appeal, after giving an opportunity to the parties to put forward their case ' The giving of the opportunity only emphasises the character of the quasi judicial function per formed by the Appellate Tribunal.
The fact that that opportunity is not availed of in 'a 'particular case, will not entitle the Tribunal not to decide the case.
There can be no decision of the case on its merits if the matter is to be disposed of for default of appearance of the parties.
Further, an adjudication on the merits of the case is essential to enable the High Court to perform its statutory duty and for the Supreme Court to hear an appeal filed under section 66 A Section 33 (4) itself indicates by the use of the word "thereon, that the decision should relate to the subject matter of the appeal.
Rule 24, therefore, to be consistent with section 3 3 (4) could only empower the Tribunal to dispose of the appeal on 822 its merits, whether there be an appearance of the party before it or not.
This was indeed the rule when it was first promulgated in the year 1941.
The rule in its present form, as amended in the year 1948, in so far as it enables the dismissal of an appeal before the Income tax Appellate Tribunal for default of appearance of the appellant, Wm, therefore, be ultra vires, as being in conflict 'with the provisions of Section 3 3 (4) of the Act.
" On behalf of the appellant it was urged that the powers of the Appellate Tribunal relating to an appeal are derived from section 3 3 (4) as also from section 5A(8) and the Rules made thereunder and when Rule 24 cannot be said to be ultra vires the latter provision it cannot be impugned as being repugnant to section 33(4).
There is nothing, either express or implied, in the language of section 33(4) from which it could be held that the order of the Tribunal in an appeal must always be made on the merits.
The decisions of the Allahabad, Madras and Punjab High Courts in Shri Bhagwan Radha Kishen vs Commissioner of Income tax, U.P., (1) Ruvula Subba Rao & Ors.
vs Commissioner of Income tax, Madras (2) and Mangat Ram Kuthiala & Ors.
vs Commissioner of Income tax, Punjab (3) have also been pressed in support of the appellants contention.
Now section 5A of the Act appears in Chapter 2A relating to the Appellate Tribunal.
Sub sections
(1) to (4) provide for the constitution of the Tribunal and the appointment of its President and Members.
Sub sections (5) to (7) provide for the manner in which the benches of the Tribunal have to function.
Sub section (8) is to this effect "Subject to the provisions of this Act the Appellate Tribunal shall have the power to regulate its own procedure and the procedure of benches of the Tribunal in all matters arising out of the discharge of its functions including the places at which the bench shall hold their sittings.
" The powers, functions and duties of the Appellate Tribunal are set out in sections 28, 33, 35, 37,48 and 66.
For Our purpose reference may be made only to sections 33 and 66.
Sub sections (1) and (2) of section 33 give a right to the assessee and the Commissioner to appeal to the Appellate Tribunal against the order passed by the Appellate Assistant Commissioner within sixty days of the cornmunication of his order.
Under sub. 'section (2A) the Tribunal can admit an appeal after the expiry of sixty days if it is, satisfied that there was sufficient cause for not presenting it within that period.
Sub section (3) lays down the formalities in the matter of the filing of an appeal.
Sub section
(4) is to the effect that the Appellate (1) (3) (2) 823 Tribunal may, after giving both parties to the appeal an opportunity of being heard, pass such orders thereon as it thinks fit and shall communicate any such orders to the assessee and "to the Commissioner.
Sub section
(5) deals with the changes lo be made in the assessment as a result of the orders of the Appellate Tribunal Sub section (6) makes the orders of the Tribunal on appeal final,, the only saving being with reference to the provisions of section 66.
Under that section the assessee or the Commissioner can require the Appellate Tribunal to refer to the High, Court any question.
of law arising out of the order of the Appellate Tribunal and if the Tribunal refuses to state the case on the ground that no question of law arises the assessee or the Commissioner can, within the prescribed period, apply to the High Court and the High Court can direct the Appellate Tribunal to state the case and make a reference.
It is unnecessary to refer to all the previsions of section 66 except to notice the power of the High Court to decide the question of law which decision has to be implemented by the Appellate Tribunal.
Now Rule 24 cannot be said to be ultra vires sub section
(8) of section 5A but what has to be essentially seen is whether it is repugnant to the provisions of section 3 3 (4).
The reasoning which prevailed with the Special Bench of the High Court, in the present case, was that under section 3 3 (4) the Tribunal is bound to dispose of the appeal on the merits, no matter whether the appellant is absent or not.
Reference in particular was made to the remedies, namely, the provisions contained in section 66 relating to reference on question of law and the further right of appeal to this Court under section 66A if the case is certified to be fit one for appeal.
The Special Bench found it difficult to accept that by exercising the power to dismiss an appeal for default of appearance under Rule 24, these remedies which were open to an aggrieved party could be defeated or ren dered infructuous.
The fact that there was no provision in Rule 24 or any other Rule for restoring an appeal once it was dismissed for default was also considered weighty in the matter.
The cases in which the validity of Rule 24 has been upheld may now be considered.
In Shri Bhagwan Radha Kishen vs Commissioner of Income tax, U.P.(1) the discussion on the question of validity of the rule is somewhat meagre.
It was no doubt said that Rule 24 did not in any way come into conflict with section 33(4) but hardly any reasons were given in respect of that view.
It was recognoised ' that there was no specific rule empowering the Tribunal to restore an appeal dismissed for default of appearance but it was observed that the Tribunal would have inherent jurisdiction to set aside such an order if satisfied with regard to the existence of a sufficient cause.
According to Ravula Subba Rao & Ors.
vs Commissioner of Income tax, kadras(2) a very wide power was given to (1) (2) 824 the Appellate Tribunal by section 33(4) and it could pass any order which the circumstances of the one required.
it was immaterial whether the opportunity of being heard had be en availed of by the party or not.
This provision, it was held, did not make it obligatory for the Appellate Tribunal to dispose of the appeal on merits.
In this case again there, was hardly much discussion and the Allahabad decision was simply followed.
In Mangat Ram Kuthiala & Ors.
vs Commissioner of Income tax, Punjab(1), the points raised were different and arose in a petition filed under articles 226 and 227 of the Constitution.
It does not appear that the validity of Rule 24 was canvassed.
The scheme of the provisions of the Act relating to the Appellate Tribunal apparently is that it has to dispose of an appeal by making such orders as it thinks fit on the merits.
It follows from the language of section 33 (4) and in particular the use of the word "thereon" that the Tribunal has to go into the correctness or otherwise of the points decided, by the departmental authorities in the light of the submissions made by the appellant.
This can only be done by giving A decision on the merits on questions of fact and law and not by merely disposing.
of the appeal on the ground that the party concerned has failed to appear.
As observed in Hukumchand Mills Ltd. vs Commissioner of Income tax, Central Bombay (2) the word "thereon" in section 33(4) restricts the jurisdiction of the Tribunal to the subject matter of the appeal and the words "pass such orders as the Tribunal thinks fit" include all the powers (except possibly the power of enhancement) which are conferred upon the Appellate Assistant Commissioner by section 31 of the Act.
The provisions contained in section 66 about making a reference on question of law to the High Court will be rendered nugatory if any such power is attributed to the Appellate Tribunal by which it can dismiss an appeal, which has otherwise been Properly filed, for default without making any order thereon in accordance with section 33 (4).
The position becomes quite simple when it is remembered that the assessee or the Commissioner of Income tax, if aggrieved by the orders of the Appellate Tribunal, can have resort only to the provisions of section 66.
So far as the questions of fact are concerned the decision of the Tribunal is final and refe rence can be sought to the High Court only on questions of law.
The High Court exercises purely advisory jurisdiction and has no appellate or revisional powers.
The advisory jurisdiction can be exercised on a proper reference being made and that cannot be done unless the Tribunal itself has passed proper order under section 33(4).
It follows from all this that the Appellate Tribunal is bound to give approper decision on questions of fact as well as law which can only be done,if the appeal is disposed of on the merits (1) (2) 8 25 and not dismissed owing to the absence of the appellant.
It was laid down as far back as the year 953 by section R. Das, J. (as he then was) in Commissioner of Income tax, Madras vs Mtt.
section Ar.
Arunahalam Chettiar(1) that the jurisdiction of the Tribunal and of the High Court is conditional on there being an order by die Appellate Tribunal which may be said to be one under section 33 (4) and a question of law arising out of such an order.
The Special Bench, in the present case, while examining this aspect quite ' appositely referred to the observations of Venkatarama Aiyar, J. in Commissioner of Income tax, Bombay vs Scindia Steam Navigation Co. Ltd. (2) indicating the necessity of the disposal of the appeal on the merits by,the Appellate Tribunal.
This is how the learned judge had put the matter in the form of interrogation "How can it be said that the Tribunal should seek for advice on a question which it was not called upon to consider and in respect of which it had no opportunity of deciding whether the decision of the Court should be sought.
Thus looking at the substantive provisions of the Act there is no escape from the conclusion that under section 33(4) the Appellate Tribunal has to dispose of the appeal on the merits and cannot short circuit the same by dismissing it for default of appearance.
Now although Rule 24 provides for dismissal of an appeal for the failure of appellant to appear, the Rules at the material time did not contain any provision for restoration of the appeal.
Owing to this difficulty some of the High Courts had tried to find an inherent power in the Tribunal to set aside the order of dismissal [vide Shri Bhagwan Radha Kishen vs Commissioner of Income tax, U.P.(3) and Mangat Ram Kuthiala & Ors.
vs Commissioner of Income tax, Punjab(4)].
There is a conflict of opinion among the High Courts whether there is any inherent power to restore fin appeal dismissed for default under the Civil Procedure.
(Mulla, Civil.
Procedure Code, Vol.
II, pp.
1583, 1584).
It is unnecessary to resolve that conflict in the present case.
It is true that the Tribunal 's powers in dealing with appeals are of the widest amplitude and have, in some cases, been held similar to and identical with the power of an appellate court under the Civil Procedure Code.
Assuming that for the aforesaid reasons the Appellate Tribunal is competent to set aside an order dismissing an appeal for default in exercise of its inherent power there are serious difficulties in upholding the validity of Rule 24.
It clearly comes into conflict with sub.
section
(4) of section 33 and in the event of repugnancy between the substantive provisions of the Act and a rule it is (1) (2) ; (3) (4) 826 the rule which must give way to the provisions of the Act.
We would accordingly affirm the decision of the Special Beach of the High Court and hold that the answer to the question which was referred was rightly given in the affirmative.
The appeal fails and it is dismissed with costs.
R.K.P.S. Appeal dismissed.

summary/full:
The respondent 's appeal against an order of assessment was rejected by the Appellate Assistant Commissioner and he, thereafter appealed to the Appellate Tribunal.
The Tribunal, after having granted some adjournments, dismissed the appeal for default in appearance On a day fixed for the hearing, purporting to do so under rule 24 of the Appellate Tribunal Rules, 1946.
The High Court directed the Tribunal to refer two questions to itself one relating to the merits and the other to the effect whether rule 24 of the Appellate Tribunal Rules, 1946, in so far as it enables the Tribunal to dismiss an appeal in default in appearance, is ultra vires.
A special bench of the High Court took the view that under section 3 3 (4) the Tribunal was bound to dispose of the appeal on the merits, whether the appellant was present or not.
On appeal to this Court, HELD : It follows from the language of section 33(4) and in particular the use of the word "thereon" that the Tribunal has to go into the correctness or otherwise of the points decided by the departmental authorities in the light of the submissions made by the appellant.
This can only be done by giving a decision on the merits on questions of fact and law and not by merely disposing of the appeal on the ground that the party concerned had failed to appear.
[824 C D] The provisions contained in section 66 about making a 'reference on questions of law to the High Court would be rendered nugatory if a power is attributed to the Appellate Tribunal by which it can dismiss an appeal, which has otherwise been properly filed, for default, without making an order thereon in accordance with section 33(4).
So far as the questions of fact are concerned the decision of the Tribunal is final and reference can be sought to the High Court only on questions of law.
The High Court exercises purely advisory jurisdiction and has no appellate or revisional powers.
The advisory jurisdiction can be exercised on a proper reference being made and that cannot be done unless the Tribunal itself has passed a proper order under section 33(4).
[824 E H] Rule 24 clearly comes into conflict with section 33(4) and in the event ,of repugnancy between the substantive provisions of the Act and a rule, it is the rule which must give way to the provisions of the Act.
[825 H] Shri Bhagwan Radha Kishen vs Commissioner of Income tax, U.P. ; Ruvula Subba Rao & Ors.
vs Commissioner of Income tax Madras, ; Mangat Ram Kuthiala & Ors.
vs Commissioner of Income tax, Punjab, ; Hukumchand Mills Ltd. vs Commissioner of Income tax, Central Bombay, ; Commissioner of Income 819 tax Madras vs Mtt.
section Ar.
Arunachalam Chettiar, and Commissioner of Income tax, Bombay vs Scindia Stearn Navigation Co. Ltd. ; , referred to.


judgement:
Appeals Nos. 15 and 16 of 1969.
Appeals from the judgment and order dated December 3, 1968 of the Gujarat High Court in Letters Patent Appeals Nos. 43 and 42 of 1966 respectively.
M. C. Chagla, P. C. Bhartari, P. N. Tiwari and J. B. Dada chanji, for the appellants (in both the appeals).
I. N. Shroff, for the respondent (in both the appeals).
The Judgment of the Court was delivered by Hegde, J.
Common questions of law arise for decision in these appeals, by certificate.
The suits from which these appeals arise have been considered together and decided by common judgments, 838 both in the High, Court as well as in the courts below.
It is convenient to do so in this Court as well.
The suits in questions are representative suits.
The plaintiffs appellants who are consumers of electricity in the Godhra area sued the respondent company on behalf of all the consumers in that area seeking to restrain the respondent from enforcing the enhanced charges sought to be collected from the consumers of power used for lights and fans as well as of motive power.
The facts leading to these appeals may no,%, be stated.
On November 19, 1922, the then Government of Bombay granted a licence under the to a concern called Lady Sulochna Chinubhai & Co. authorising it to generate and supply electricity to the consumers in Godhra area.
Clause 10 of the licence prescribed the maximum charges that the licensee could levy for the power supplied.
The respondent is the successor of the said licensee.
After the (to be hereinafter referred to as the Supply Act) came into force, a rating committee was constituted under section 57(2) of the Supply Act at the request of the respondent on January 19, 1950.
On the recommendation of that committee, the Government fixed with effect from February 1, 1952, the following charges for the power supplied: (i) 0 7 9 pies per unit for the electricity supplied for lights and fans with a minimum of Rs. 3/ per month per installation and (ii) for motive power at 4 annas per unit with a minimum of Rs. 4 8 0 per month per installation.
The Supply Act was amended in 1956.
The respondent increas the charges for motive power from January 1, 1963 to 35 NP.
per unit with a minimum of Rs. 7/ per month for every installation.
On June 22.
, 1963, the rates for light and fans were increased with effect from July 1, 1963 to 70 NP.
per unit with a minimum of Rs. 51 per month for every installation.
The contention of the appellants is that the respondent wag not competent to enhance the charges, in question without the matter having been considered by a rating committee.
Their suits to restrain the respondent from levying the proposed increased charges were decreased by the trial court.
Those decrees were affirmed by the first appellate court as well as by a single judge of the Gujarat High Court in second appeals but the appellate bench of the Gujarat High Court reversed those decrees and dismissed the suits holding that under the Supply Act as amended in 1956 the respondent has a unilateral right to enhance the charges subject to the conditions prescribed in the VI Schedule to that Act.
It is 839 as against those decisions these appeals have been brought.
Civil Appeal No. 15 of 1969 relates to the enhancement of charges for electricity power for lights and fans and Civil Appeal No. 16 of 1969 relates to the enhancement of charges for the motive power.
The only question that arises for decision in these appeals is whether under the provisions of the Supply Act as amended in 1956, the respondent was competent to unilaterally enhance the charges.
In these appeals we are not concerned with the provisions of the Electricity Act, 1916.
There is no dispute as regards the charges fixed by the Government with effect from February 1, 1952, under section 57(2)(c) of the Supply Act on the basis of the recommendation made by the rating committee.
The appellants admit their liability to pay enhanced charges that may be fixed by ' the Government on the basis of any recommendation by a freshly, appointed rating committee.
They merely challenge the respondent 's right to unilaterally enhance the charges.
According to the appellants they have a vested right to be governed by the charges fixed in 1952 until the same is revised by the Government on the basis of the recommendation of a rating committee.
It was urged on their behalf that the amendments made in 1956 ' do not affect the charges fixed in 1952 and they continue to rule till altered by the Government in accordance with law.
The respondent repudiates those contentions.
It denies that the appellants have any vested right in the charges fixed.
It was urged on its behalf that the amendments made to the Supply Act in 1956 have substantially altered the scheme as regards levying charges; it is now open to a licensee to alter the charges fixed by the Government unilaterally subject to the conditions prescribed in section 57(A) and in Sch.
VI of the Supply Act.
We may mention at this stage that even according to the appellants the charges that may be fixed by the Government now on the basis of the recom mendation of a rating committee can be unilaterally altered by the licensee after the period fixed in the Government order in accordance with cl.
(e) of section 57(A)(1), expires.
In order to decide the point in controversy, we have to take into consideration the relevant provisions of the Supply Act as it stands now and as it stood prior to its amendment in 1956.
For the sake of convenience we shall set out side by side the relevant provisions.
The Supply Act as it stood before The Supply Act 1956 as amended In 1956 section 57.
Licensee 's charges to consu section 57.
The mers Provisions of the Sixth Schedule and the Seventh Schedule 840 ( 1st column of page no 840) (1) The Provisions of the Sixth Schedule and the Table ap pended to the Seventh Schedule shall be deemed to be incorporated in the licence of every licences not being a local authority, from the date of the commencement of the licensees next succeeding year of account.
and from such date the licensee shall comply therewith accordingly and any provisions of such licence or of the (I.X of 1910), or any other law, agreement or strument applicable to the licensee shall, in relation to the licensee, be void and of no effect in so far as they are inconsistent with the provisions of this section and the said Schedule and Table.
(2) Where the provisions of the.
Sixth Schedule and the Table appended to the Seventh Schedule are under sub section (1) deemed to be incorporated in the licence of any licensee, the following provisions shall have effect in relation to the said licensee, namely : (a) The Board or where 'no Board is constituted under this Act, the Provincial Government, may, if it is satisfied that the licensee has failed to comply with any provisions of the Sixth Schedule and shall when requested so to do by the licensee.
constitute a rating committee to examine the licensee 's charges for the supply of electricity and to recommend thereon to the Provincial Government; Provided that no rating commitee shall be constituted in respect of a licensee within three ( 2nd column of the page no 840) shall be deemed to be incorporated in the licence of every licensee.
not being a local authority (a) in the case of a licence granted before the commencement of this Act, from the date of the commencement of the licences next succeeding year of account; and (b) in the case of a licencee granted after the commencement of this Act, from the date of the commencement of supply, and as from the said date.
the licensee shall comply with the provisions of the said Schedules accordingly , and any provisions of, the , and the the licence granted, to him thereunder and of any other law.
agreement or instrument applicable to the licensee shall, in relation to the licensee, be void and of no effect in so far as they are inconsistent with the provisions of section 57A and the said Schedules.
section 57(A) (1) : where the provisions of the Sixth Schedule and the Seventh Schedule are under section 57 deemed, to be incorporated in the licence of any licensee, the following provisions shall have effect in relation to the said licensee namely : (a) the Board or where no Board is constituted under this Act, the State Government (i) may, if satisfied that the licensee has failed to comply with any of the provisions of the Sixth Schedule, and (ii) shall, when so requested by the licensee in writing constitute a rating committee to examine the licensee 's charges for the supply of electricity and 841 (1st column of the page no 841) years from the date on which such a committee has reported in respect of that licensee, unless the Provincial Government declares that in its opinion circumstances have arisen rendering the orders passed on the recommendation of the previous rating committee unfair to the licensee or airy of his consumers.
(b) The rating committee shall after giving the licensee a reasonable opportunity of being heard and after taking into consideration the efficiency of operation and management and the potentialities of his undertaking report to the Provincial Government making recommendations (and giving reasons therefore)regarding the charges for electricity which the licencee may make to any class or classes of consumers so however that the recommendations are not likely to prevent the licensee from earning clear profits sufficient when taken with the sums available in the Tariffs and Dividends Control Reserve to afford him a reasonable return during his next succeeding three years of account if the potentialities of the undertaking of the licensee, with efficient operation and management so permit.
(c) Within one, month after the receipt of the report under Clause (b) the Provincial Government shall cause the report to be published in the, offcial Gazette.
and may at the same time make an order in accordance therewith fixing the Been see 's charges for the supply (2nd column of the page no 841) to make recommandations in that behalf to the State Government Provided that where it is proto constitute a rating committee under this section on account failure of the licensee to comply with any provisions of the Sixth Schedule.
such committee shall not be constituted unless the licensee has been given a notice in writing of thirty clear days (which period, if the circumstances so warrant may be extended from time to time) to show cause against the action proposed to be taken Provided further that no such rating committee shall be constituted if the alleged failure of the licensee to comply with any provisions of the Sixth Schedule raises any dispute or difference as to the interpretation of the said provisions or any matter arising therefrom and such difference or dispute has been referred by the licensee to the arbitration of the Authority under paragraph XVI of that Schedule before the notice referred to in the preceding proviso was given or is so referred within the period of the said notice Provided further that no rating committee shall be constituted in respect of a 'licensee within three years from the date on which such a committee has reported in respect of that licensee, unless the State Government declares that in its opinion circumstances have arisen rendering the orders passed on the recommendations of the previous rating.
committee unfair to the licensee or any of the consumers : (b) a rating committee under clause (a) shall: (i) where such committee is to be, constituted under subclause (i) of that clause.
be constituted not later than three months after the 842 (1st column of the page no 842) of electricity with effect from such date, not earlier than two months after the date of publication of the report, as may be specified in the order; and the &Msee shall forth with give effect to such order Provided that nothing in this clause shall be deemed to pre vent a licensee from reducing at any time any charges, so fixed.
THE SIXTH SCHEDULE 1.The Licensee shall so adjust his rates for the Sale of electricity by periodical revision that his clear profit in any year shall not as far as possible exceed the amount of reasonable return Provided that the licensee shall not be considered to have failed so to adjust his rates if the clear profit in any year of account has not exceeded the. amount of &be reasonable return by more than thirty per centum of the amount of the reasonable return.
(1) If the clear profit of a licensee in any year of account is in excess of the amount of reasonable return one third of such excess.
not exceeding 7 1/2 per cent of the amount of reasonable return shall be at the disposal of the undertaking.
Of the balance of the excess, one half shall be appropriated to a reserve which shall be called the Tariffs and Dividends Control Reserve and the remaining half, shall either be distributed in the form of a proportionable rebate on the amounts collected from the sale of electricity and meter rentals 'or carried forward in the accounts of the licensee for distribution, to the consumers in future, in (2nd column of the page no 842) expiry of the notice referred to in 'the first proviso to that clause (ii) where such committee is to be constituted at the request of the licensee, be constituted within three months of the date of such request; (c) a rating committee shall, after giving the licensee a reasonable opportunity of being heard and after taking into consideration the efficiency of operation and management and the potentialities of his undertaking, report to the State Government within three months from the date of its constitution, making recommendations with reasons there for, regarding the charges for electricity which the licensee may make to any class or classes of consumers so, however.
that the recommendations are not likely to prevent the licensee from earning clear profit,, sufficient when taken with the sums available in the Tariffs and Dividends Control Reserve to afford him a reasonable return as defined in the Sixth Schedule during his next succeeding three years of account: Provided that the State Government may, if it go deems necessary, extend the said period of three months by a further period not exceeding three month within which the report of the rating committee may be submitted to it; (d) within one month after the receipt of the report under clause (c), the State Government shall cause the report to be published in.
the Official Gazette, and may at the same time make an order In accordance therewith fixing the licensee 's charges for 843 such manner as the Provincial Government may direct.
(2) The Tariffs and Dividends Control Reserve shall be available for disposal by the licensee only to the extent by which the clear profit is less than the reasonable return in any year of account.
(3) On the purchase of the undertaking under the terms of its licence any balance remaining in the Tariffs and Dividends Control Reserve shall be handed over to the purchaser and maintained as such Tariffs and Dividends Control Reserve.
(2nd column of the page no 843) supply of electricity with effect from such date,not earlier than two months or later than three months.after the date of publication of the report as may be specified in the order and the licensee shall forthwith give effect to such order; (e)the charges for the supply of electricity fixed under clause (d)shall be in operation for such period not exceeding three years as the State Government may specify in the order Provided that nothing in this clause shall be deemed to prevent a licensee from reducing at any time any charges so fixed.
THE SIXTH SCHEDULE 1.
Notwithstanding anything contained in the except sub section (2) of section 9 of 1910, 22A, and the provisions in the licence of a licensee.
the licensee shall so adjust his (charges) for the sale of electricity whether by enhancing or reducing them that his clear profit in any year of account shall not, as far as possible, exceed the amount of reasonable return Provided that such (charges) shalt not be enhanced more than once in any year of account : Provided further that the licensee shall not be deemed to have failed so to adjust his (charges) if the clear profit in any year of account has not exceeded the amount of reasonable return by (twenty) per centum of the amount of reasonable return: Provided further that the licensee shall not enhance the (charges) for the supply of,electricity until after the expiry of a notice in writing of, not less than sixty 844 (2nd column of the page no 844) clear days of his intention to so enhance the (charges) given by him to the State Government and and to the Board Provided further that if the (charges) of supply fixed in pursuance of the recommendations of a rating committee con stituted under sec.
57A are lower than those notified by the licensee under and in accordance with the preceding Proviso ', the licensee shall refund to the consumers the excess amount recovered by him from them : Provided also that nothing in this Schedule shall be deemed to prevent a licensee from levying.
with the previous approval of State Govt.
minimum charges for supply of electricity for any purpose.
The notice referred to in the third proviso to paragraph I shall be accompanied by such financial and technical data in supPort of the proposed enhancement of charges as the State Government may, by general or special order, specify.
(1) If the clear profit of a licensee in any year of account is in excess of the amount of reasonable return, one third of such excess, not exceeding (five per cent) of the amount of reasonable return, shall be at the disposal of the undertaking.
Of the balance of the excess, one half shall be appropriated to a reserve which shall be called the Tariffs and Dividends Control Reserve and the remaining half shall either be distributed in the form of a Proportional rebate on the amounts collected from the sale of electricity and meter rentals or carried, forward in the accounts of the licensee for distribution to the consumers in future, in such manner as the State Government may direct.
(2) The Tariffs and Dividends Control Reserve shall be available for disposal by the licensee only to the extent by which the clear 845 (2nd column of the page no 845) profit is less than the reasonable return in any yea of account.
(3) On the purchase of the undertaking under the terms of its licence any balance remaining in the Tariffs and Dividends Control Reserve shall be handed over to the purchaser and maintained as such Tariffs and Dividends Control Reserve: Provided that where the Undertaking is purchased by the Board or the State Government the amount of the Reserve may be deducted from the price payable to the licensee.
From an examination of these provisions it would be seen that under the Supply Act prior to its amendment in 1956, the charges fixed by the Govt.
under s ' 57(2)(c) remained in force unless reduced by the licensee in the meantime till the same were altered by a subsequent order made by the Govt.
after getting a fresh recommendation from the rating committee but under the law as it now stands the rate fixed by the Government under section 57 (A)(1)(d) would be in operation only for such period not exceeding three years as the State Govt.
may specify in the order.
Thereafter it can be enhanced by the licensee in accordance with the provisions contained in Sch.
It was urged on behalf of the appellants that the present section 57 (A (1) (e) can only govern the charges fixed under section 57(A)(1)(d) and it has not impact on an order made under the old section 57(2)(c).
According to the appellants the charges so fixed can only be modified by the Government after getting a report from the rating committee.
Mr. Chagla, learned Course for the appellants contended that the, consumers who 'get power from the respondent have a vested right in the charges fixed in 1952 and that vested right cannot be considered to have been taken away by the provisions of the Amending Act.
He argued that the provisions of the Amending Act are not retro spective in character nor is there any inconsistency between those provisions and the present provisions as the two operate on different fields; hence in view of section 6 of the , we must hold that the charges fixed by the Government in 1952 continue to be in operation.
In this connection he relied on certain observations made by this Court in State of Punjab vs Mohar Singh(") and Deep Chand vs State of U.P. & Ors.
On the other hand it was contended by the learned Counsel for the respondent that the rights and liabilities of the.respondents at present are exclusively regulated by the provisions of the Supply (1) ; (2) [1959] 2 Supp.
section C.R. 8.
846 Act as it stands now; the terms of licences as they originally stood or as they stood on the coming into force of the Supply Act in 1948 are of no consequence now; they cannot be looked into for finding out the rights or duties of the licensee as at present; for that purpose we must look into those terms as modified by the provisions of the Supply Act as It is now.
It was also urged on its behalf that there is no question of vested rights in these cases; herein we are only concerned with the procedure to be adopted in modifying the charges fixed in 1952.
In Mohar Singh 's case(1) this Court laid down that the provisions of section 6(c), (d) and (e) of the relating to the consequences of the repeal of a law are applicable not only when an Act or Regulation is repealed simpliciter but also to a case of repeal and simultaneous enactment re enacting all the provisions of the. repealed law.
In the course of its judgment this Court observed that when the repeal is followed by a fresh legislation on the same subject, the Court has undoubtedly to look into the provisions of the new Act but that only for the purpose of determining whether they indicate a different intention.
The line of inquiry would be, not whether the new Act keeps alive the old rights and liabilities but whether it manifests any intention to destroy them.
In Deep Chand 's case(2) this Court was considering the effect of repugnancy between a State Act and a Central Act.
The observations made in that context, we think, have no bearing on the point in issue in this case.
It is true that when an existing Statute or Regulation is repealed and the same is replaced by fresh Statute or Regulation unless the new Statute or Regulation specifically or by necessary implication affects rights created under the old law those rights must be held to continue in force even after the new Statute or Regulation comes into force.
But in the cases before us there is no question of affecting any vested right.
There is no dispute that the charges fixed can be altered.
The controversy relates to the procedure to be adopted in altering them.
That controversy does not touch any vested right.
The procedure in question must necessarily be regulated by the law in force at the time of the alteration of the charges.
Section 57 of the Supply Act as it stands now lays down that the provisions of Sch.
VI shall be deemed to be incorporated in the licence of every licensee not being a local authority, in 'the case of a licence granted before the commencement of the Act from the date of the commencement of the licensee 's next succeedmg year of account.
Admittedly the licence with which.
we are concerned in these cases was granted even before the Supply Act was enacted.
Therefore quite clearly the licence in question is governed by the present section 57.
Hence we have to read into that licence the provisions contained in Sch.1 VI.
If any of the earlier (1) ; (2) [1959] 2 Supp.
S.C.R. 8.
8 47 provisions in the licence either as they stood when the licence was originally granted or as they stood modified as per the provisions of the Supply Act prior to its amendment in 1956 are in consistent ,with the provisions of Sch.
VI or section 57(A) as they are now they must be held to be void and of no effect.
In other words we must read into the licence the provisions of Sch.
VI and strike out therefrom such terms as are inconsistent with those provisions and thereafter give effect to the same.
For determining the , rights and duties of the licensee as at present we have only to look into the terms of the licence as modified by Sch.
We cannot go behind them.
That much is clear from the language of the Supply Act.
The intention of the legislature is clear and unambiguous.
Therefore there is no need to call into aid any rule of statutory construction or any legal presumption.
Further no reason was advanced before us, nor can we conceive of any why those who obtained licenses prior to the amendment of Supply Act in 1956 should be in a more disadvantageous position than those who got their licenses thereafter.
Correspondingly we fail to see why those who are served by licensees who obtained their licences prior to the amendment of the Supply Act in 1956 should be placed in a better position than those served by licensees who obtained their licenses thereafter.
After all, every law has some reason behind it.
Section 57(A)(2)(e) was intended to meet the changing economic circumstances.
The purpose behind the new provisions appears to be to permit the licensees to so adjust their charges as to get reasonable profits.
, But at the same time a machinery has been provided to see whether any excess charges have been levied and if levied, get the same refunded to the consumers.
The law declared by the Amending Act does not affect any, right or privilege, accrued under the repealed provision.
It merely prescribes as to what could or should be done in future.
Therefore there is no basis for saying that it affects vested rights.
For finding out the power of the licensee to alter the charges one has to look to the terms of the licence in the light of the law as it stands the past history of that law being wholly irrelevant.
If the terms of the licence, including the deemed terms permit him to unilaterally alter the charges then he has that right.
If we merely look at those terms, as we think we ought to, then there is no dispute that the respondent was within its rights in enhancing the charges as admittedly it has followed the procedure prescribed by law.
We also do not agree with Mr. Chagla in his contention that there is no inconsistency between the present scheme relating to the enhancement of charges vis a vis the scheme provided under the Supply Act prior to its amendment in 1956.
The two schemes are substantially different. ' Under the former scheme once the Government fixes the charges the licensee cannot alter 848 it but at present at the end of the period order the licensee has a unilateral right to accordance with the conditions prescribed fixed in the Government enhance the charges in in the VI Schedule.
Therefore in view of section 57 the provisions contained in that schedule have an over riding effect.
In Amalgamated Electricity 'Co., Ltd. vs N. section Bhathena and Anr.(1) this Court was called upon to consider the scope of section 57.(A) and the Sch.
VI as it stands now.
Therein the controversy was whether the appellant therein was entitled ' to levy charges more than the maximum charges prescribed in its licence issued in 1932.
It may be noted that in that case the notice of enhancement of the charges was given on September 25, 1958.
This Court held that the maximum stipulated in the licence no longer governed the.
right of the licensee to enhance the charges; his rights were exclusively governed by the provisions contained in paragraph 1 of Sch.
VI of the Supply Act.
It is true that in that case this Court was considering the right of the licensee under the Supply Act vis a vis his right under the licence granted under the but that difference is not material.
What this Court in fact considered was the right of the licensee under the existing law to enhance the charges.
Dealing with the scope of paragraph 1 of Sch.
VI, Ayyangar, J. who spoke for the majority observed thus : "para 1 of Sch.
VI both as it originally stood and as amended, as seen already, empowered the licensee "to adjust his rates, so that his clear profit in any year shall not, as far as possible, exceed the amount of reasonable return".
We shall reserve for later consideration the meaning of the expression "so adjust his rates". ' But one thing is clear and that is that the adjustment is unilateral and that the licensee has a statutory right to adjust his rates provided he conforms to the requirements of that paragraph viz., the rate charged does not yield a profit exceeding the amount of reasonable return.
The conclusion is therefore irresistible that the maxima prescribed by the State Government which bound the licensee under the Electricity Act of 1910 no longer limited the amount which a licensee could, charge after the Supply Act, 1948 came into force since the "clear profit" and "reasonable return" which determined the rate to be charged was to be computed on the basis of very different criteria and factors than what obtained under the Electricity Act." , For the reasons above, these appeals fail and they are dismissed with costs.
One hearing fee.
G.C. Appeals dismissed.

dataset_name: IN-Abs

summary/full:
The respondent held a licence for the supply of Electricity under the ' in the Godhra area of undivided BombaY. On the creation of the State of Gujarat the area went to that State.
The Electricity (Supply) Act came into force in 1948 and under it the condi tions in Schedule VI thereof were deemed to be incorporated in the licence of every licensee.
Under section 57 (2) (c) of the ' Act the Government could fix the rates for supply of electricity and under cl. 1 of the Schedule VI a licensee could reduce the rates for keeping the profit at a reasonable level.
A licensee had no, power to enhance the rates except by requesting the Government to fix new rates on the recommendation of a fresh rating committee.
In 1952 the Covernment fixed certain rates on the recommendations of a rating committee.
In 1956 the Supply Act of 1948 was amended.
By section 57A(1) (e) of the amended Act the rates fixed by the Government under section 57(A)(1)(d) on the recommendation of a rating committee were to enure for a maximum of three years.
Under of the amended Schedule VI the licensee shall so adjust his charges Cl.
the sale of electricity whether by enhancing or reducing them that his clear profit in any year of account shall not as far as possible exceed the amount of reasonable return.
In 1963 the respondent enhanced the rates of supply without having them fixed by the Government on the recommendations of a rating committee.
The appellants who were consumers of electricity in the Godhra area filed suits seeking, to restrain the respondent from enforcing the enhanced charges.
The suits were decreed by the trial court and the decrees were 'confirmed by the first appellate court and in second appeal by a single Judge.
In Letters Patent appeal however the High Court held that under the Supply Act as amended in 1956 the respondent had a unilateral right to enhance the charges subject to the conditions prescribed in, Schedule VI of the Act.
The appellants Came to this Court contending that they had a vested right in.
the rates fixed by Government in 1952, that under the amended Act the respondent did not have a unilateral right to enhance those rates, and that the amended provisions not being retrospective nor inconsistent with the old provisions the charges fixed by the Government in 1952 must in view of section 6 of the continue to be in operation.
HELD : The law declared by the Amending Act does not affect any right or privilege, accrued under the repealed provision.
It merely Prescribes as to what can or should be done in the future.
Therefore there is no basis for saying that it affects vested rights.
[847 F] For finding out the power of the licensee to alter the charges one has to look at the terms of the license in the light of the law as it stands, the 837 past history of that law being wholly irrelevant.
If the terms of the licence, including the deemed terms permit him to unilaterally alter the charges then he has that right.
In the present case looking at those terms, the respondent was certainly within its rights in enhancing the charges as admittedly it had followed the procedure prescribed by law.
[847 F G] The contention that there was no inconsistency between the present scheme relating to the enhancement of charges vis a vis the scheme provided under the Supply Act prior to its amendment in 1956 could not be accepted.
The two schemes are substantially different.
Under the former scheme once the Government fixed the charges the licensee could not en hance them but at present at the end of the period fixed in the Government order the licensee has a unilateral right to enhance the charges in accordance with the conditions prescribed in Schedule VI.
Therefore in, view of section 57 the provisions contained in that Schedule have an overriding effect.
[847 H 848 A] The intention of the legislature being clear and unambiguous there was no need to call into aid any rule of statutory construction or any legal presumption.
Further, there was no reason why those who obtained licences prior to the amendment of the Supply Act in 1956 'should be in a more disadvantageous position than those who got their licences thereafter.
Correspondingly there was no reason why those who are served by licencees who obtained their licences prior to the amendment of the Supply Act in 1956 should be placed in a better position than those served by licensees who obtained their licences thereafter.
[847 C] Section 57(A)(1)(e) was intended to meet the changing economic circumstances.
The purpose behind the new provisions appears to be to, permit the licencees to adjust their charges to get reasonable profits.
But at the same time a machinery has been provided to see whether any excess charges have been levied and if levied 'get the same refunded to the consumers.[847 E] In view of the above considerations and findings the appeals must fail.
State of Punjab V. Mohar Singh, ; and Deep Chand, vs State of U.P. & Ors.
[1959] 2 Supp.
S.C.R. 8, distinguished.
Amalgamated Electricity Co. Ltd. vs N. section Bhathena & Anr. ; , applied.


judgement:
Appeals Nos. 2516 to 2519 of 1966.
Appeals from the orders dated February 10, 1965, March 31, 1965 and March 19, 1965 of the Punjab High Court in Letters.
Patent Appeals Nos. 38, 36, 100 and 74 of 1965, respectively and.
Civil Appeals Nos. 806 and 807 of 1967.
850 Appeals from, the jadgment and orders dated September 28, 1964 of the Punjab High Court in civil writ Nos. 2159 and.
2309 of 1963.
V. D. Mahajan, and R. N.Sachthey, for the appellants (in all the appeals).
Hardev Singh, for the respondents (in C.As.
2517 and 2519 of 1966) and for the respondents (in C.As.
Nos. 806 and 807 of 1967).
Civil Appeal No. 2518 of 1966 The Judgment of the Court was delivered by Ramaswami, J.
In this case the respondent is a partnership firm carrying on the business of buying and selling cotton and also of ginning and pressing cotton at Bamala.
The respondent purchased unginned cotton and after ginning the cotton by a mechanical process and removing the seeds sold the ginned cotton to customers outside, the State.
For the period from 1st April, 1961 to 31st March, 1962 the respondent paid purchase tax on the purchase turnover.
In respect of cotton seeds sold by it to registered dealers, the respondent claimed deduction from the purchase turnover under section 5 (2) (a) (vi) of the Punjab Sales Tax Act, 1948 (Act No. 46 of 1948).
But, the assessing authority did not allow the deduction holding that the goods sold viz., cotton seeds were not the goods in respect of which purchase tax had been levied.
In other words, the assessing authority took the stand that the uncotton underwent a manufacturing process and the goods produced were different from those purchased.
So the respondent firm was assessed to pay a tax of Rs. 16,452 by the order of the assessing authority dated 11th September, 1963.
The respondent firm thereafter filed a writ petition No. 1917 of 1963 in the Punjab High Court for quashing the assessment.
The writ petition was allowed by the High Court which quashed the assessment and directed the assessing authority to redetermine the tax in the light of its judgment.
In allowing the writ petition of the respondent the High Court followed its previous decision in Patel Cotton Company Private Ltd. vs State of Punjab & Ors.(1).
The appellants preferred a Letters Patent Appeal which was dismissed.
The present appeal is brought by, certificate from the judgment of the Punjab High Court dated 31st March, 1965.
It is necessary at this stage to set out the relevant provisions ,of the Punjab Sales Tax Act, 1948 (Act No. 46 of 1948) (hereinafter called the Act).
Section 2(ff) omitting immaterial portions defines 'purchase ' thus: (1) 15 S.T.C. 865.
851 "Purchase, with all its grammatical cognate expressions means the acquisitions of goods specified in Schedule C. . " Schedule C Entry (1) and Entry (3) read thus "(1) Cotton, that is to say, all kinds of cotton (indigenous or imported) in its unmanufactured state whether gined or unginned, baled, pressed or otherwise, but not including cotton waste". " (3) Oil seeds that is to say, seeds yielding nonvolatile oils used for human consumption or in or in the manufacture of varnishes, soaps and the like or in lubrication and volatile oils used chiefly in medicines, perfumes, cosmatics and the like".
Section 5 (2) (a) (vi) of the Act is to the following effect "5 (2).
In this, Act the expression "taxable, turnover" means that part of dealer 's gross turnover during any period which remains after deducting therefrom (a) his turnover during that Period on (vi)the purchase of goods which are sold not later than six months after the close of, the year, to a Registered Dealer, or in the course of inter State trade or commerce, or in the course of export out of the country".
Section 2(c) of the (Act No. 74 of 1956) defines 'declared goods ' to mean goods declared under section 14 to be of special importance in inter State trade or commerce.
Under section 14 of this Act certain goods were declared to be of special importance in inter State trade or commerce and they included cotton, that is to say all kinds of cotton (indigenous or imported) in its unmanufactured state, whether ginned or unginned, baled, processed or otherwise, but not including cotton waste.
Section 15 of the has been amended from time to time.
Originally section 15 read as follows : "15, Restrictions and conditions in regard to tax on sales or Purchases of declared goods : Notwithstanding anything contained in the sales tax law of any State the tax payable by any dealer, under that law in respect of any sales or purchases of declared goods made by him inside the State shall not exceed two per cent of the sale price thereof, and such tax shall not be levied at more than one stage in a State".
(1) Sup.
C.I.169 5 852 This section was amended by the Central Sales Tax (Amendment) Act (No. 16 of 1957) and again by Central Act No. 31 of 1958 and the amended section reads as follows : "15.
Restrictions and conditions in regard to tax on sale or purchase of declared goods within a State : Every sales tax law of a State shall, in so far as it imposes or authorises the imposition of a tax on the sale or purchase of declared goods, be subject to the following restrictions and conditions, namely : (a)the tax payable under that law in respect of any, sale or purchase of such goods inside the State, shall not exceed two per cent of the sale or purchase price there of, andsuch tax shall not be levied at more than one stage; (b)where a tax has been levied under that law in respect of the sale or purchase inside the, State of any declared goods and such goods are sold in the course of inter State trade or commerce, the tax so levied shall be refunded to such person in such manner and subject to such conditions as may be provided in any law in force in that State".
On behalf of the appellants the argument was stressed that ginning process was a manufacturing process, and ginned cotton and cotton seeds were different commercial commodities and the respondent was not entitled to the exemption under section 5 (2) (a) (vi) of the Act.
It was said that unginned cotton was transformed into two distinct commercial commodities and there was no substantial identity between unginned cotton and ginned cotton or cotton seeds.
It was argued that the ginning process required complicated machinery of manufacture.
Reference was made in this connection to the mechanical aspect of the ginning process described in Encyclopaedia Britannica, Vol.
6: "Hand separation of lint and seed was replaced rapidly use of saw type gins in the United States after the inventions of Eli Whitney in 1794 and of Hokden Holmesin 1796.
Whitney 's gin was improved upon by Holmes.who substituted toothed saws for the hooked cylinder and flat metal ribs for the slotted bar used by Whitney.
The saws, metal ribs and doffing brush in these early models persist in modem gins, with no basic change in ginning principle having be en made, although some modem gins substitute an air blast for the doffing brushes.
853 Additional gin machinery has been developed to keep pace with changes in harvesting practices which have resulted in a trend from careful hand picking to, rougher hand and machine harvesting.
These developments include seed cotton driers, seed cotton cleaners, burr extractors, greenboll traps and magnetic devices for removing metal.
Line cleaners, designed to remove trash from lint after it had been removed from the seed, were added to modem gins in the late 1940s and 1950s.
Improvement in grade, which resulted in a higher price for the lint, was, in some cases, offset by the loss in weight.
Gin installations include presses for baling the lint and equipment for moving the seed away from the gin stands.
While some of the seed is saved for planting purposes, most of it moves directly to an oil mill for processing"(1).
In our opinion, the appellants are right in their contention that the ginning process is a manufacturing process.
But the question presented for determination in the present case is somewhat different viz., whether the respondent is entitled to the exemption under section 5 (2) (a) (vi) of the Act in the context and setting of the language of sections 14 and 15 of the . "Declared goods" in section 14 of the are individually specified under separate items.
"Cotton ginned or unginned" is treated as a single commodity under one item of declared goods.
It is evident that cotton ginned or un ginned being treated as a single commodity and as a single species of declared goods cannot be subject under section 15 (a) of the to a tax exceeding two per cent of the sale or purchase price thereof or at more than one stage.
But so far as cotton seeds are concerned, it is difficult to accept the contention that the sale of cotton seeds must be treated as a sale of declared goods for the purpose of section 15 (a) or (b) of the .
It is true that cotton in its unginned state contains cotton seeds.
But it is by a manufacturing process that the cotton and the seed are separated and it is not correct to say that the seeds so separated is cotton itself or part of the cotton.
They are two distinct commercial goods though before the manufacturing process the seeds might have been a part of the cotton itself.
There is hence no wan ant for the contention that cotton seed is not different from cotton.
It follows that the respondent is not entitled to deduct the sale price of the cotton seeds from the purchase turnover under section 5 (2) (a) (vi) of the Act.
In our opinion, the assessing authority was right in holding that the respondent was not entitled to deduction in respect of cotton seeds sold by it to registered dealers.
It is conceded that the assessing authority had (1) Encyclopaedia Britannica, Vol. 6, page 614. 854 already granted deduction under section 5 (2) (a) (vi) so far as ginned cotton is concerned.
For these reasons we hold that the judgment of the Punjab High Court dated 31st March, 1965 in Letters Patent Appeal No. 100 of 1965 should be set aside and the writ petition No. 1917 of 1963 filed by the respondent should be dismissed.
The appeal is accordingly allowed with costs.
Civil Appeals Nos. 2516 2517 & 2519 of 1966 and Civil Appeals Nos. 806 and 807 of 1967 The question of law arising in these appeals has been the subject matter of consideration in Civil Appeal No. 2518 of 1966.
For the reasons given in that judgment we hold that these appeals also should be allowed and the judgments of the Punjab High Court should be set aside and the writ petitions filed by the respondents in each case should be dismissed.
These appeals are accordingly allowed with costs.
There will be one hearing fee for these appeals and for Civil Appeal No. 2518 of 1966.
Y.P. Appeals allowed.

summary/full:
The respondent a dealer purchased unginned cotton and after ginning the cotton and removing the seeds sold the ginned cotton to customers outside the State.
The respondent paid parchase tax on the purchase turnover.
In respect of cotton seeds sold by it to registered dealers,the respondent claimed deduction from the parchase turnover under section 5 (2) (a) (vi) of the Punjab Sales Tax Act, 1948.
But the assessing authority did not allow the deduction holding that the goods sold viz., cottonseeds were not the goods in respect of which purchase taxhad been levied as the unginned cotton underwent a manufacturing process and the goods.
produced were different from those purchased.
The respondent filed a writ petition in the High Court, which was allowed and the State 's Letters.
Patent Appeal was dismissed.
Allowing the State 's appeal, this Court; HELD : The respondent was not entitled to deduction under section 5(2) (a) (vi) of the Act in respect of cotton seeds sold by it to registered dealers.
"Declared goods" in section 14 of the are individually specified under separate items.
"Cotton ginned ' or unginned" is, treated as a single commodity under one item of declared goods.
It is.
evident that cotton ginned or unginned being.
treated as a single commodity and as a single species of declared goods cannot be subject unders.
15(a) of the to a tax exceeding two per cent of the sale or purchase price thereof or at more than one state.
But so far as cotton seeds are concerned it cannot be held that the sale of cotton seeds must be treated as a sale of 'declared goods for the purpose of is.
15(a) or (b) of the .
Cotton in its unginned state contains cotton seeds, but it is by a manufacturing process that the cotton and the seed are separated and it is not correct to say that the seed so separated is cotton itself or part of the cotton.
They are two.
distinct commercial goods though before the manufacturing process the seeds might have been a part of the cotton itself.
[853 E] Patel Cotton Company Private Ltd. vs State of Punjab & Ors., 15 S.T.C. 865, disapproved.


judgement:
l Appeals Nos.
1477 to 1479 of 1968.
Appeals from the judgment and order dated November 30, 1964 of the Andhra Pradesh High Court in Case Referred No. 49 of 1962.
S.T. Desai and K. Jayaram, for the appellant (in all the appeals).
D.Narsaraju, G. C. Sharma, R. N. Sachthey and B. D. Sharma, for the respondent (in all the appeals).
The Judgment of the Court was delivered by Ramaswami, J.
These appeals are brought by certificate from the judgment of the Andhra Pradesh High Court, dated 30th November, 1964 in Reference Case No. 49 of 1962.
N. V. Rangarao, the father of the appellant, was the holder of an impartible estate called the "Munagala Estate" in the Krishna District in the State of Andhra Pradesh.
This estate was abolished under the Madras Estates (Abolition and Conversion into Ryotwari) Act, 1948, and compensation under ' section 45 of the Act was paid severally to the appellant, his father and his brothers.
Other properties belonging to the joint family of the appellant, his father and brothers were also partitioned between them from time to time.
The assets forming the subject of reference to the High Court consisted of investments made from the compensation amount received by the appellant in securities, shares etc.
and also other assets such as deposits in Banks.
The appellant filed returns for the assessment years 1957 58, 1958 59 and 1959 60 in the status of a Hindu Undivided Family.
The appellant 's family during the material time consisted of himself, his wife and his two minor daughters and there was no other male member.
The appellant claimed to be assessed in the status of a Hindu Undivided Family inasmuch as the wealth returned consisted of ancestral property received or deemed to have been received by him on partition with his father and brothers.
The Wealth Tax Officer did not accept the contention of the appellant and assessed him as an individual for the assessment years 1957 58, 1958 59 and 1959 60.
On appeal to the Appellate Assistant Commissioner of Wealth Tax the finding that he must be assessed as an individual was confirmed.
L 11 Sup.
CI/69 7 884 The Income Tax Appellate Tribunal however on appeal by the appellant held that he should be assessed in the status of a Hindu Undivided Family.
Thereupon, the Commissioner of Wealth Tax applied to the Tribunal to state a case to the High Court under section 27(1) of the Wealth Tax Act (Act No. 27 of 1957) (hereinafter called the Act).
The Tribunal accordingly referred the following question of law for the opinion of the High Court : "Whether the status of the assessee was rightly determined as Hindu Undivided Family ?" The High Court disagreed with the view of the Appellate Tri bunal and hold that as the appellant 's family did not have any other male coparcener all the assets forming the subject matter of the returns filed by the appellant belonged to him as an individual and not to a Hindu Undivided Family.
The High Court answered the question in favour of the appellant and against the Commissioner of Wealth Tax.
It is necessary at this stage to set out the relevant provisions of the Act as they stood at the material time : "Section 2 : In this Act, unless the context otherwise requires (e)"assets" includes property of every description, movable or immovable, but does not include (i) agricultural land and growing crops, grass or standing trees on such land; (ii) any building owned or occupied by a cultivator or receiver of rent or revenue out of agricultural land (iii)animals; (ix)a right to any annuity in any case of where the terms and conditions relating thereto preclude the commutation of any portion thereof into a lump sum grant; (v)any interest in property where the interest is available to an assessee for a period not exceeding six years; (m)"net wealth" means the amount by which the aggregate value computed in accordance with the provisions of this Act of all the assets, wherever located, 885 belonging to the assesses on the valuation date, including assets required to be included in his net wealth as on that date under this Act, is in excess of the aggregate value of all the debts owed by the assesses on the valuation date other than, (i)debts which under section 6 are not to be taken into account; and (ii)debts which are secured on, or which have been incurred in relation to, any asset in respect of which wealth tax is not payable under this Act.
Section 3 Charge of Wealth tax Subject to the other provisions contained in this Act, there shall be charged for every financial year commencing on and from the first day of April, 1957, a tax (hereinafter referred to as wealth tax) in respect of every individual, Hindu Undivided Family and company at the rate or rates specified in the Schedule.
Section 5 : Exemption in respect of certain assets: (i)Wealth tax shall not be payable by an assesses in respect of the following assets and such assets shall not be included in the net wealth of the assessee (ii)the interest of the assessee in the coparcenary property of any Hindu Undivided Family of which he is a member".
Under section 3 of the Wealth Tax Act not a Hindu coparcenary but a Hindu Undivided Family is one of the assessable legal en tities.
A Hindu joint family consists of all persons lineally descended from a common ancestor, and includes their wives and unmarried daughters.
A Hindu coparcenary is a much narrower body than the Hindu joint family; it includes only those persons who acquire by birth an interest in the joint or coparcenary property, these being the sons, grand sons and great grand sons of the holder of the joint property for the time being.
In Kalyanji Vithaldas vs Commissioner of Income Tax,(1) Sir George Rankin observed : "The phrase "Hindu Undivided Family" is used in the statute with reference, not to one school only of (1) 886 Hindu law, but to all schools; and their Lordships think it a mistake in method to begin by pasting over the wider phrase of the Act the words "Hindu co parcenary", all the more that it is not possible to say on the face of the Act that no female can be a member".
The first question involved in this case is whether the status of the appellant was that of a Hindu undivided family consisting of himself, his wife and his daughters.
In our opinion, there is no warrant for the contention of the respondent that there must be at least two male members to form a Hindu Undivided Family as a taxable unit.
The expression "Hindu Undivided Family" in the Wealth Tax Act is used in the sense in which a Hindu joint family is understood in the personal law of Hindus.
Under the Hindu system of law a joint family may consist of a single male member and his wife and daughters and there is nothing in the scheme of the Wealth Tax Act to suggest that a Hindu Undivided Family as an assessable unit must consist of at least two male members.
The next question is whether the assets which came to the share of the appellant on partition ceased to bear the character of joint family properties and became the individual property in his hands.
In this connection, a distinction must be drawn between two classes of cases where an assesses, is sought to be assessed in respect of ancestral property held by him : (1) where property not originally joint is received by the assessee and the question has to be asked whether it has acquired the character of a joint family property in the hands of the assessee and (2) where the property already impressed with the character of joint family property comes into the hands of the assessee as a single coparcener and the question required to be considered is whether it has retained the character of joint family property in the hands of the assessee or is converted into absolute property of the assessee.
In Kalyanjis(1) case there were six appeals presented before the Judicial Committee by six partners of the firm of M/s. Moolji Sicka and Co., viz., Moolji, Purshottam, Kalyanji, Chaturbhuj, Kanji and Sewdas.
Moolji, Purshottam and Kalyanji each had a son or sons from whom he was not divided.
It was found by the appellate tribunal that the capital supplied by them to the partnership business belonged to them in their individual capacities and was their self acquired property.
Hence the income of the firm which had to be assessed to super tax was the separate income of each of these partners.
Chaturbhuj had a wife and daughter but no son.
Kanji and Sewdas, sons, of Moolji, were married men but neither had a son.
It was found by the appellate tribunal that Chaturbhuj Kanji and Sewdas had (1) 887 received by gift from Moolji their respective share capital in the firm, that the, share capital belonged to them in their individual capacities and was self acquired.
The question at issue was whether the existence of a son and a wife or a wife and a daughter made the income of the partners the income of the Hindu Undivided Family rather than the income of the individual partner.
The Judicial Committee held that though the income was from an ancestral source, the fact that each partner had a wife or daughter did not make that income from ancestral source income of the Hindu Undivided Family of the partner, his wife and daughter.
Different considerations would be applicable, where property already impressed with the character of joint family property comes into the hands of a single coparcener.
The question to be asked in such a case is whether the property retains the character of joint family property or whether it sheds the character of joint family property and becomes the absolute property of the single coparcener.
In Commissioner of Income Tax vs Gomedalli Lakshminarayan,(1) the property was ancestral in the hands of the father and the son had acquired an interest in it by birth.
There was a subsisting Hindu Undivided Family during 'the life time of the father and that family did not come to an end on his death.
On these facts, the Bombay High Court held that the income received from the property was liable to super tax as the income of the Hindu Undivided Family in the hands of the son who was the sole surviving male member of the Hindu Undivided Family in the year of assessment.
The reasoning was that the property from which income accrued originally belonged to a Hindu Undivided Family and on the death of the father it did not cease to be property of that Hindu Undivided Family but continued to belong to that Hindu Undivided Family and its income in the hands of the son was, therefore, assessable as income of the Hindu Undivided Family.
There was a vital distinction between the facts of this case and the facts in Kalyanjis case(1).
This distinction was not noticed by the Judicial Committee in Kalyanji 's case(2) when it observed that the Bombay High Court "arrived too readily at the conclusion that the income was the income of the family".
When Gomedalli 's case(1) was carried on appeal the Judicial Committee once again failed to notice the distinction and wrongly reversed the decision of the Bombay High Court holding that the facts of the case were not materially different from the facts in Kalyanji 's case(2) [See the decision of the Judicial Committee in Commissioner of Income Tax vs A. P. Swamy Gomedalli(3)].
(1)(1935) (2) (3) 888 The recent decision of the Judicial Committee in Attorney General of Ceylon vs AR.
Arunachalam Chettiar(1) is important,.
One Arunachalam Nattukottai Chettiar and his son constituted a joint family governed by the Mitakshara school of Hindu law.
The father and son were domiciled in India and had trading and other interests in India, Ceylon and Far Eastern countries.
The undivided son died in 1934 and Arunachalam became the sole surviving coparcener in the Hindu Undivided Family to which a number of female members belonged.
Arunachalam died in 1938 shortly after the Estate Ordinance No. 1 of 1938 came into operation in Ceylon.
By section 73 of the Ordinance it was provided that property passing on the death of a member of the Hindu Undivided Family was exempt from payment of estate duty.
On a claim to estate duty in respect of Arunachalam 's estate in Ceylon, the Judicial Committee held that Arunachalam was at his death a member of the Hindu Undivided Family, the same undivided family of which his son, when alive, was a member and of which the continuity was preserved after Aruna chalam 's death by adoptions made by the widows of the family and since the undivided Hindu family continued to persist, the property in the hands of Arunachalam as a single coparcener was the property of the Hindu Undivided Family.
The Judicial Committee observed at page 543 of the Report ". . .though it may be correct to speak of him as the owner ', yet it is still correct to describe that which he owns as the joint family property.
For his ownership is such that upon the adoption of a son it assumes a different quality; it is such, too, that female members of the family (whose members may increase) have a right to maintenance out of it and in some circumstances to a charge for maintenance upon it.
And these are incidents which arise, notwithstanding his so called ownership, just because the property has been and has not ceased to be joint family property.
Once again their Lordships quote from the judgment of Gratiaen, J. (2) "To my mind it would make a mockery of the undivided family system if this temporary reduction of the coparcenary unit to a single individual were to convert what was previously joint property belonging to an undivided family into the separate property of the surviving coparcener".
To this it may be added that it would not appear reasonable to impart to the legislature the intention to discriminate, so long as the family itself subsists, between property in the hands of a single copar (1) (2) (1953) 55 C.N.L.R. 496 501. 889 cener and that in the hands of two or more coparceners".
The Judicial Committee rejected the contention of the appellant that since a single coparcener had full power over the property ,held by him, he must be held to be the absolute owner and observed that fact that he possesses a large power of alienation ". . . appears to their Lordships to be an irrelevant consideration.
Let it be assumed that his power of alienation is unassailable : that means no more than that he has in the circumstances the power to alienate joint family property.
That is what it is until he alienates it and, if he does not alienate it, that is what it remains.
It is only by analysing the nature of the rights of the members of the undivided family, both those in being and those yet to be born, that it can be determined whether the family property can properly be described as joint property ' of the undivided family.
"(1) The basis of the decision was that the property which was the joint family property of the Hindu Undivided Family did not cease to be so because of the "temporary reduction of the coparcenary unit to a single individual".
The character of the property, viz., that it was the joint property of a Hindu Undivided Family, remained the same.
The same principle was applied by this Court in Gowali Bud danna 's (2 ) case.
In that case, one Buddappa, his wife, his two unmarried daughters and his unmarried son, Budanna, were members of a Hindu Undivided Family.
Buddappa died and after his death the question arose whether the income of the properties held by Buddanna as the sole surviving coparcener was assessable as the individual income of Buddanna or as the income of the Hindu Undivided Family.
It was held by this Court that since the property which came into the hands of Buddanna as the.
sole surviving coparcener was originally joint family property, it did not cease to belong to the joint family and income from it was assessable in the hands of Buddanna as income of the Hindu Undivided Family.
In the course of the judgment Shah, J. speaking for the Court examined the decision of the Judicial Committee in Kalyanji 's case(") and Gomedalli 's (4 ) and pointed out that there was a clear distinction between the two classes of cases : "It may however be recalled that in Kalyanji Vithaldas 's case(3) the income assessed to tax belonged separately to four out of six partners; of the remaining two (1) (2) (3) (4) 890 it was from an ancestral source, but the fact that each such partner had a wife or daughter did not make that income from an ancestral source income of the undivided family of the partner, his wife and daughter.
In Gomedalli Lakshminarayan 's case(1), the property from which income accrued belonged to a Hindu Undivided Family and the effect of the death of the father, who was a manager, was merely to invest the rights of a manager upon the son.
The income from the property was and continued to remain the income of the undivided family.
This distinction, which had a vital bearing on the issue falling to be determined, was not given effect to by the Judicial Committee in A. P. Swami Gomedalli 's case(1).
At page 302 Shah, J. referred to the decision of the Judicial Committee in Arunachalam 's (2) case and concluded as follows: "Property of a joint family, therefore, does not cease to belong to the family merely because the family is represented by a single coparcener who possesses rights which an owner of property may posesss.
In the case in hand the property which yielded the income originally belonged to a Hindu Undivided Family.
On the death of Budappa, the family which included.
a widow and females, born in the family was represented by Buddanna alone, but the property still continued to belong to that undivided family and income received therefrom was taxable as income of the Hindu undivided family".
In the present case the property which is sought to be taxed in the hands of the appellant originally belonged to the Hindu Undivided Family belonging to the appellant, his father and his brothers.
There were joint family properties of that Hindu Undivided Family when the partition took place between the appellant, his father and his brothers and these properties came to the share of the appellant and the question presented for determination is whether they ceased to bear the character of joint family properties and became the absolute properties of the appellant.
As pointed out by the Judicial Committee in Arunachalam 's case(2) "it is only by analysing the nature of the rights of the members of the undivided family, both those in being and those yet to be born, that it can be determined whether the family property can properly be described as "joint property of the undivided family".
Applying this test it is clear that, though in the absence of male issue the dividing coparcener may be properly described in a sense as the owner of the properties, that upon the adoption of a son or birth of a son to him, it would assume a different quality.
It con (1) (2) 891 tinues to be ancestral property in his hands as regards his male issue for their rights hid already attached upon it I and the partition only cuts off the claims of the dividing coparceners.
The father and his male issue still remain joint.
The same rule would apply even when a partition had been made before the birth of the male issue or before a son is adopted, for the share which is taken at a partition by one of the coparceners is taken by him as representing his branch.
Again the ownership of the dividing coparcener is such "that female members of the family may have a right to maintenance out of it and in some circumstances to a charge for maintenance upon it".
(See Arunachalam 's(1) case).
It is evident that these are the incidents which arise because the properties have been and have not been ceased to be joint family properties.
It is no doubt true that there was a partition between the assessee, his wife and minor daughters on the one hand and his father and brothers on the other hand.
But the effect of partition did not affect the character of these properties which did not cease to be joint family properties in the hands of the appellant, Our conclusion is that when a coparcener having a wife and two minor daughters and no son receives his share of the joint family properties on partition, such property in the hands of the coparcener belongs to the Hindu Undivided Family of himself, his wife and minor daughters and cannot be assessed as his individual property.
It is clear that the present case falls within the ratio of the decision of this Court in Gowali Buddanna 's case (2) and the Appellate Tribunal was right in holding that the status of the respondent was that of a Hindu Undivided Family and not that of an individual.
On behalf of the respondent reference was made to the decision of this Court in T. section Srinivasan vs Commissioner of 'Income Tax(3), and it was contended that the decision proceeded on the basis that property received by the coparcener on partition cannot be regarded as property of a Hindu Undivided Family if he has merely a wife or daughter and no son.
It is therefore necessary to examine the material facts and find out what is the ratio decidendi of that case.
The appellant was a member of the Hindu Undivided Family with his father and brothers.
As a result of partial partition of properties belonging to the Hindu Undivided Family the appellant received certain shares and with tsese shares as nucleus he acquired house properties, shares and deposits.
His first son was born on 11 th December, 1952 and it was common ground that the conception of the child must have taken place some time in March, 1952.
For the assessment year 1953 54 the relevant accounting year being the financial year 1st April 1952 to 31st March, 1953, the (1) (2) (3) 8 92 appellant claimed that the income from the assets should be assessed in the hands of the Hindu Undivided Family consisting of himself and his son which, according to him, had come into existence in or about March, 1952 when the son was conceived.
The Income Tax Officer recognised the Hindu Undivided Family only from the date of the birth of the son, viz. 11th December, 1952 and assessed the income till 11th December, 1952 in the hands of the appellant as an individual.
The Appellate Assistant Commissioner and the Tribunal upheld this view on appeal.
Before the High Court the question debated was whether the Hindu Undivided Family came into existence in or about March 1952 when the son was conceived and whether the assesses could be assessed in the status of an individual for any part of the relevant accounting year.
, The question was answered against the assessee by the High Court.
The assessee appealed to this Court and the contention of the appellant was that according to the doctrine of Hindu law a son conceived is in the same position as a son actually in existence.
The argument was rejected by this Court which held that the Hindu Undivided Family did not come into existence on the conception of the son as claimed by the appellant, but came into being when the son was actually born.
It was suggested on behalf of the respondent that the decision of this case must be taken to be implicitly, if not explicitly that there was no Hindu Undivided Family prior to the date of the birth of the son.
But we do not think that any such implication can be raised.
The case of the appellant throughout the course of the proceedings was that the Hindu Undivided Family came into existence for the first time in or about March, 1952 when the son was conceived and it was not his case at any time that a Hindu Undivided Family was in existence prior to the conception of the son.
Indeed, it was common ground between the parties that there was no Hindu Undivided Family in existence prior to the conception of the son.
The only dispute was whether the Hindu Undivided Family came into existence for the first time when the son was conceived as claimed by the assessee or whether it came into existence when the son was born as claimed by the Income Tax Department.
The appellant relied on the doctrine of Hindu law that the son conceived is in the same position as the son born and the respondent contended that this doctrine was inapplicable.
That was the only question raised before this Court which it was called upon to decide and which in fact it decided.
The question whether there was in any event even without a son conceived or born, a Hindu Undivided Family consisting of the appellant and his wife and whether the properties received on partition belonged to that Hindu Undivided Family was neither raised nor argued before this Court which had no occasion to consider it.
The decision of T. section Srini 893 vasan 's case(1) has therefore no bearing on the question now presented for determination in the present case.
For the reasons already.expressed we hold that the status of the appellant was rightly determined as that of a Hindu Un divided Family by the Income Tax Appellate Tribunal and the question of law referred to the High Court must be answered ill the affirmative and against the Commissioner of Wealth Tax.
These appeals are accordingly allowed with costs.
One hearing fee.

summary/full:
In respect of his assessment to wealth tax for the assessment years 1957 58, 1958 59 and 1959 60, the appellant filed returns in the status of a Hindu Undivided Family.
His family at the material time consisted of himself, his wife and two minor daughters.
The appellant claimed to be assessed in the status of a Hindu Undivided Family inasmuch as the wealth returned consisted of ancestral property received or deemed to have been received by him on partition with his father and brothers.
The Wealth Tax Officer did not accept the contention of.
the appellant and assessed him as an individual.
The Appellate Assistant Commissioner confirmed this view.
However the Appellate Tribunal held that the appellant should be assessed in the status of Hindu Undivided Family but the High Court, upon a reference, disagreed with the view of the Appellate Tribunal and held that as the appellant family did not have any other male coparcener, all the assets forming the 'subject matter of the returns filed by the appellant belonged to him as an individual and not to a Hindu Undivided Family.
On appeal to this Court, HELD:Allowing the appeal: The status of the appellant was rightly determined as that of a Hindu ,Undivided Family by the Appellate Tribunal.
The expression "Hindu Undivided Family" in the Wealth Tax Act is used in the sense in which a Hindu joint family is understood in the personal law of Hindus.
Under the Hindu system of law a joint family may consist of a single male member and his wife and daughters and there is nothing in the scheme of the Wealth Tax Act to suggest that a Hindu Undivided Family as an assessable unit must consist of at least two male members.
[886 C] Under section 3 of the Wealth Tax Act not a Hindu coparcenary but a Hindu Undivided Family is one of the assessable legal entities.
A Hindu joint family consists of all persons lineally descended from a common ancestor, and includes their wives and unmarried daughters.
A Hindu coparcenary is a much narrower body than the Hindu joint family; it in cludes only those persons who acquire by birth an interest in the joint or coparcenary property, these being the sons, grand sons and great grand sons of the holder of the joint property for the time being.
[885 F H] Kalyanji Vithaldas vs Commissioner of Income Tax, 5 I.T.R. 90, Commissioner of Income Tax vs Gomedalli Lakshminarayan considered.
88 3 Commissioner of Income Tax vs A. P. Swamy Gomedalli, , Attorney General of Ceylon vs A.R. Arunachallam Chettiar , Gowali Buddanna 's [1960] 6 I.T.R. 203 referred to.
T.S. Srinivasan vs Commissioner of Income Tax 60, I.T.R. 36 distinguished.