This article is written by Meenakshi Kalra. This article delves into an analysis of the facts, issues raised, arguments put forth and judgement passed in the case of Ahmed G. H. Ariff vs. Commissioner of Wealth Tax (1969). This case clarified that the right to receive income from a Wakf, even if it’s intended for maintenance and support, is a taxable asset under the Wealth Tax Act, 1957.

Introduction 

The case of Ahmed G. H. Ariff vs. Commissioner of Wealth Tax (1969) primarily revolves around the Wealth Tax Act, 1957 (hereinafter referred to as the WT Act) and tries to interpret the purview of Section 2(e) (definition of assets) of the WT Act. In the present case, the dispute arose when the appellants were taxed on their share of income arising out of a Wakf property that was set up by a Hanafi Muslim for their support and maintenance after his death.

The case reached the Supreme Court through appeals that were filled by the aggrieved appellants, who felt that their right to receive income from a Wakf-alal-aulad was being curtailed and was being termed as an “asset” incorrectly by the wealth tax officer.

This matter attempted to find solutions to issues related to the computation of wealth tax in India, by highlighting the complexities and challenges that might occur while trying to interpret these laws. In any country, taxes are one of the main sources of revenue for the government and for the development of the financial framework. Proper implementation of these taxation laws also plays an important role in making sure that there is social equity and the economy remains regulated.

By examining the facts, issues, and judgement of this case, it has been attempted to interpret the implications of wealth tax and the legal landscape surrounding it.

Details of the case

Appellants

Ahmed G.H. Ariff & Others

Respondents

Commissioner of Wealth Tax, Calcutta

Case type

Civil Appeals Nos. 2129 to 2132 of 1968.

Court

Supreme Court of India

Bench

Chief Justice J.C. Shah, Justice A.N. Grover, Justice V. Ramaswami

Judgement Date

20th August, 1969

Equivalent citations 

1971 AIR 1691, 1970 SCR (2) 19, AIR 1971 SUPREME COURT 1691, 1971 TAX. L. R. 952

Legal provisions involved

1. Section 2(e) of Wealth Tax Act, 1957
2. Section 5 of the Wealth Tax Act, 1957
3. Section 27 of the Wealth Tax Act, 1957
4. Section 3 of Mussalman Wakf Validating Act, 1913

Background of the case

This case is a result of appeals from the judgement and order dated 4th December, 1964 in Tax Matters Nos. 69, 62 and 64 of 1963 delivered by the High Court of Calcutta.

A Wakf-alal-aulad, which in simple words means a family trust, was created by a Hanafi Muslim, Golam Hossain Kasim Ariff (also referred to as the settlor), to secure benefits for his wife and his three sons and heirs after his death. It was further stated that if the descendants of the settlor die without making a will, then the benefits that were reserved for his family and descendants were to be given to the poor Muslims and Sunni community, for their betterment, as the ultimate benefit.

The appellants were already paying income tax on the amount and benefits that were being given to them under the deed of Wakf. In 1957, the WT Act was enacted and now, along with the income tax, the appellants were required to pay wealth tax as well. This would be assessed by the Wealth Tax Officer according to the income received by them and their share in the Wakf property during the assessment years 1957-58 and 1958-59.

The Wealth Tax Officer in the present case assessed the worth of the immovable property of the Wakf estate as 20 times that of the annual municipal valuation. Further, the net wealth of each assessee was assessed to be one sixteenth of the total worth of the immoveable property in the Wakf estate.

Facts of Ahmed G. H. Ariff vs. Commissioner of Wealth Tax (1971)

1. The settlor, by a deed dated 19th November, 1928 and further by a deed of rectification dated 5th July, 1930, which was altered, chose himself as the only Mutawalli (manager of a Wakf) of a Wakf-alal-aulad established by him for his properties located in Noormul Lohia Lane and Armenian Street in Calcutta. In his deed, he stated that after his death, his sons, along with his widow, would become Mutawallis together.
2. It was done with the purpose of securing benefits for his wife, sons and their successors. They would all receive a share of the net monthly income from the property. He died on 1st January, 1937 and was survived by his widow and his three sons, who became the appellants in the present case.
3. The benefits given to them would be determined by clause 5 of the modified Wakf deed, which stated that- following the payment of all charges, such as establishment charges, collections charges, revenue taxes, costs of repairs, law charges and other costs for the maintenance and management of the Wakf property, the net income arising out of the property shall be used by the Mutwalli or Mutwallis. In this case, it would be in a way where:
   1. One fifth of the net income shall be paid to Golam Hossain Kasim Ariff, by way of monthly instalments
   2. One sixth of the net income shall be paid to all three sons for their lifetime, by way of monthly instalments.
   3. One tenth of the net income shall be paid to the wife of Golam Hossain Kasim Ariff for her lifetime, by way of monthly instalments.
4. Further, it was stated that the net income arising out of the sons’ share of the said properties, was to be invested after deducting the necessary expenses for their education and sustenance till they attain the age of majority. Such investment was to be made in appropriate securities or by investing in properties in Calcutta. After the sons attain majority, these properties and securities shall be transferred to them.
5. It was also stated in the deed that if the settlor’s descendants die without a will, then all the benefits that such family and descendants are entitled to, shall be given to poor Muslims and Sunni community for their help as the ultimate benefit.
6. In 1957, the Wealth Tax Act came into force, under which the appellants, along with paying the income tax, were also said to be liable to pay a wealth tax on the income from the Wakf estate for the assessment years 1957-58 and 1958-59. The wealth tax officer, in assessing the income from the estate, determined that the total value of the immovable property was estimated at 20 times the annual municipal valuation and each assessee was to be assessed at one sixteenth of the value of the property as their net wealth.
7. The appellants, aggrieved by this, approached the Appellate Assistant Commissioner of Wealth Tax and, further, the Income Tax Appellate Tribunal, but the appeals were dismissed and no dispute was raised. The case then reached the High Court of Calcutta by way of reference under Section 27 of the WT Act. Here it was held that the right of the assessee to receive a specified share of the Wakf income is subject to wealth-tax and the decision was made against the assessee. Appeal was filed with the Supreme Court against the judgement of the Calcutta High Court in the present case.

Issues raised in the case

1. Whether the assessee’s right to obtain a share of net income arising out of the Wakf estate is an asset, monetary value of which is assessable as wealth tax?

Arguments of the parties

appellant

It was argued by the appellants that the right granted to them by the Wakf deed was merely a right to an annuity given under Section 2(e)(iv) of the WT Act, and was therefore not an asset that should be assessed as a wealth tax.

Further, it was argued that the income that was payable to the beneficiaries was non-transferrable, as stated under Section 6(d) (what may be transferred) of the Transfer of Property Act, 1882 (hereinafter referred to as TPA, 1882) and was for their maintenance and sustenance. The income and benefits conferred on them had no market value. Thus, it could not be incorporated into the net wealth of the beneficiaries. Moreover, the appellants claimed that the income received by them was for the purpose of maintenance under the Wakf deed and hence, they have the right to maintenance. 

The main argument of the appellants was that their right to receive income under the deed cannot come under the meaning of “property”, even if it is taken in a broad and liberal manner. As per the origin of the rule, which is stated by the prophet of Islam, once the property is declared Wakf, all rights of the Wakif end there and are placed in God. Merely the ownership is transferred to the Mutawalli, and that too in the sense that such a Mutawalli is basically the manager of the property and not a trustee. The Mutawalli, without obtaining the prior authorisation of the court, has no rights to sell, mortgage or exchange the Wakf property, unless the Wakf deed states otherwise. The Wakf estate lacks the basic characteristics of property, as the Mussalman Wakf Validating Act, 1913, states that in order to be in compliance with the provisions of the Act, a Hanafi Muslim should only use the income from the estate to maintain and support himself, thus making it non-transferable and non-liable to an attachment. If the income is used otherwise, then it would be against the provisions laid down in the Act and would become transferable and attachable. Hence, clause 5 of the Wakf deed should be interpreted to mean that the share of income given to the beneficiaries is for their maintenance and support. Otherwise, the deed as a whole would become void.

Respondent

It was argued from the side of the respondents that the share of net income of the appellants,  derived from the Wakf property, fell under the scope of the term “asset” under Section 2(e) of the WT Act. It was not merely a right of the beneficiaries to an annuity. Rather, there was a clear demarcation between the right of an assessee to receive a share of income from the Wakf properties and an annuity.

Further, it was argued that even if the asset was of non-transferable nature and had no real market value, it was still to be judged by the Wealth Tax Officer on the grounds that it could be sold in an open market and the value assessed accordingly. The sale of the right to share in the income does not mean the actual sale of the right. It means that it is assumed that if there was a sale that was to take place, then what price would such a right fetch in a market.

Moreover, Section 5 of the WT Act lists certain assets that are exempt from wealth tax. These assets alone are exempt from tax and the right to maintenance. The assets, as claimed by the appellants, have not been mentioned under the Section. Hence, they are not liable to be exempted.

Laws involved in Ahmed G. H. Ariff vs. Commissioner of Wealth Tax (1971)

Section 2(e) of Wealth Tax Act, 1957

This Section describes the term “assets” to mean all property which may be movable or immovable in nature and also provides for what is not included under assets:

Under sub-clause (1), with regards to assessment year beginning on 1st April, 1969 or prior to it, the scope of the term does not include-

1. agricultural land and growing crops, grass, standing trees on such land.
2. any building that is owned or occupied by a cultivator or receiver of revenue/rent arising out of agricultural land
3. animals
4. the right to annuity, where the terms state that it cannot be converted into a lump sum payment.
5. any interest in property where such interest is not for more than 6 years from the date the interest was acquired.

Under sub-clause (2), with regards to assessment year beginning on 1st April, 1970 and any year succeeding it, but before 1st April 1993 it does not include-

1. animals
2. the right to annuity (except the ones that were bought by the assessee or anyone else who entered into a contract with the assessee) that cannot be converted into a lump sum payment.
3. any interest in property where such interest is not for more than 6 years from the date the interest was acquired.

With regards to the assessment year beginning on April 1, 1981 and April 1, 1982, item number (i) of sub-clause (1), which talks about agricultural land and growing crops, grass, and standing trees on such land shall be replaced by:

1. agricultural land except the land being used to grow tea, coffee, rubber or cardamom.
2. any building that is owned or occupied by a cultivator or by someone who receives rent/ revenue arising out of agricultural land except land being used to grow tea, coffee, rubber or cardamom.
3. animals

With regards to the assessment year beginning on April 1, 1983 or any assessment year after that, item number (i) of sub-clause (1) which talks about agricultural land except the land being used to grow tea, coffee, rubber or cardamom shall be replaced by:

1. agricultural land and growing crops (including fruits growing on trees), grass and standing trees on such land.
2. building/ buildings that are owned or occupied by a cultivator or receiver of rent or revenue arising out of agricultural land.
3. animals

For the State of Jammu and Kashmir, the assets listed in items (i) to (iii) of sub-clause (1) (i.e (i) agricultural land and growing crops, grass, standing trees on such land, (ii) any building that is owned or occupied by a cultivator or receiver of revenue/rent arising out of agricultural land, (iii) animals) are to be used instead of those listed in item (i) of the above sub-clause (2) (i.e (i) agricultural land and growing crops (including fruits growing on trees), grass and standing trees on such land).

Section 5 of the Wealth Tax Act, 1957

This Section states the exemptions that might be given in the case of listed assets where the assessee is not liable to pay any wealth tax and those assets shall not be counted in the net wealth of the assessee:

1. Wealth tax shall not be payable on a property that is held by the assessee as part of a trust or any other legal obligation which is being used for any charitable or religious purpose in India.

This does not include the property being used in a business unless it is a business stated in Section 11(4A) of the Income Tax Act, 1961 such business should have separate books of accounts or it should be a business run by an institution, fund, or trust as stated in Section 10(23B) or Section 10(23C) of the Income Tax Act, 1961.

2. Wealth tax shall not be payable by the assessee for the coparcenary property of a HUF of which he is a member.
3. Wealth Tax shall not be liable to be paid on a building that was occupied by a Ruler, provided that it was his official residence immediately before the Twenty-sixth Constitutional Amendment Act, 1971, as declared by the Central Government under paragraph 13 of the Merged States (Taxation Concessions) Order, 1949, or paragraph 15 of the Part ‘B’ States (Taxation Concessions) Order, 1950.
4.  Wealth tax shall not be payable on jewellery that was in the hands of a Ruler, provided it was not his private property and was given the status of an heirloom before the enforcement of the WT Act by the Central Government. If there was no such recognition made, then the Board may, according to the rules laid down by the Central Government, recognise it as an heirloom during the first assessment to wealth-tax.

Provided that,

• The jewellery shall be permanently kept in India, except when the removal of such jewellery was authorised by the Board.
• Rational and practical steps must be taken to keep the jewellery intact and in its authentic condition as far as possible.
• Genuine provisions shall be made in favour of the officer of Government authorised by the Board to conduct examination of the jewellery at all times.

If the conditions are not conformed with, the Board can take back the acknowledgement of the jewellery as an heirloom, retrospectively, with effect from the date of the beginning of clause (b) of Section 5 of the Rulers of Indian States (Abolition of Privileges) Act, 1972 (now repealed), by stating its reasons in writing. If the recognition is withdrawn, the Ruler would be obligated to pay wealth tax for all the assessment years for which an exemption was given.

The fair market value of the jewellery for the above clause shall be the value of the jewellery on the withdrawal date of each previous assessment year.

Further,  the aggregate of the wealth tax to be paid for the jewellery, after the withdrawal of recognition shall not be more than 50% of its fair market worth on the valuation date applicable to the assessment year in which its acknowledgement was withdrawn.

5. Wealth tax shall not be payable if  the assessee is a person of Indian origin (or Indian citizen), who normally resides in a foreign country, but has returned to India with an intention to live there permanently. In such a case, the assets and money bought or acquired by him (within one year of his returning to India and anytime after returning) are exempt from falling under the ambit of asset. This exemption applies for seven consecutive assessment years, beginning from when the person returned to India.

A person is said to be of Indian origin if he, his parents or any of his grandparents were born in undivided India.

“Money” refers to the money present in the Non-Resident (external) Account in an Indian bank, conforming to the provisions stated under Foreign Exchange Regulation Act, 1973, at the time of the person’s return to India, and is considered to be money brought into India.

6. Wealth tax shall not be payable if a house or part of a house or a plot of land is provided, if the plot of land is up to 500 square metres or less and belongs to an individual or a Hindu undivided family.

Section 27 of the Wealth Tax Act, 1957

This Section talks about reference to the High Court, wherein either the assessee, the Chief Commissioner or the Commissioner, can refer any question of law arising out of an order in which they were served. The application has to be made in the prescribed form within 60 days of the date on which the order was served (before June 1, 1999), under Sections 24 (appeals) or 26 (appeals from orders of enhancement) or 35(1)(e) (rectification of mistakes). If the application has been made by the assessee, he/she will be required to submit a fee of two hundred rupees, along with the application. The Appellate Tribunal is empowered to refer to the High Court any question of law arising out of the said order, according to the other provisions stated in the Section. The Appellate Tribunal is required to make a statement of the case within 120 days of receiving the application for reference and refer it to the High Court.

If the Appellate Tribunal is convinced by the reason and the assessee has shown sufficient proof as to the failure to submit the application within the 60 days time period, the Tribunal may allow an extension up to 30 days.

The Appellate Tribunal may reject the application for reference if there is no question of law that has arisen or if the application is time barred. If the applicant is aggrieved by the refusal, then within 90 days from the receipt of such a refusal, he may approach the High Court. The High Court can direct the Appellate Tribunal to state the case to the High Court if it feels that the order of the Appellate Tribunal was incorrect.

If the Tribunal states that no question of law arises and refuses the application of the assessee, and the assessee withdraws the application within 30 days of such refusal, then he is entitled to a refund of the fees paid by him.

If a conflict arises between the decisions of the high courts regarding the question of law upon which the reference application is made, the Appellate Tribunal can directly make a statement of case and present it to the Supreme Court through its President. 

If sufficient cause is shown, then the High Court may allow an application to be filed even after the expiration of 90 days.

The statement of case made to the High Court or the Supreme Court shall include facts, the conclusion reached by the Appellate Tribunal and the question of law on which the case is based.

If the High Court or the Supreme Court feels unsatisfied by the statement of the case, as stated by the Tribunal, and is unable to infer the question of law, then it may direct the Tribunal to make changes in such a statement.

The High Court or the Supreme Court, after hearing the case, may decide on the question of law raised and, if needed, modify the question of law, decide upon it and give a judgement stating the grounds on which the decision was reached. A copy of the same is to be sent to the Appellate Tribunal with the seal of the Court and the signature of the Registrar, after which the Tribunal shall pass any other orders that are important to dispose of the case in accordance with the judgement.

The cost of reference made to the High Court or the Supreme Court, excluding the fees, shall be decided by the court.

Section 3 of Mussalman Wakf Validating Act, 1913

Section 3 talks about the power of Muslims to create certain Wakfs. According to this Section, any person professing Muslim faith can create a Wakf, but it should be in consonance with the Muslim law and for the following purposes:

1. It is created for his family’s support and maintenance which include children or descendants.
2. It is created by a Hanafi Muslim for his own support and maintenance for his lifetime or to replay the debts out of the rent or revenue from the property.

The ultimate benefit arising out of the Wakf must be secured and set aside for the poor, either expressly or impliedly, or the benefit must be for a religious, pious or charitable purpose of permanent nature recognised by Muslim Law.

Judgement in Ahmed G. H. Ariff vs. Commissioner of Wealth Tax (1971)

The Supreme Court stated that the rights and benefits in favour of the sons to receive a share of income arising out of the Wakf property were property or an interest in property and it fell under the definition of “assets” under Section 2(e) of the WT Act. Such enjoyment of property was not limited to a period of six years and hence, no exemption could be claimed under  the exception contained in Section 2(e).

It was further noted by the Supreme Court that the petitioners’ claims that their right was merely a right to an annuity were incorrect and that the right to share of the income under the Wakf deed rather fell under the scope of an asset and thus, could be assessed upon its value. 

The Court also noted that in cases where the value of the asset could not be determined, it was to undergo valuation by the Wealth Tax Officer. The value was to be estimated in such a way as if it were being sold in an open market.

The Supreme Court delivered its judgement in this case, by dismissing the appeals, with costs, filed before it, and stating that the appellants were liable to pay the wealth tax on the share of income received by them, as it fell under the definition of assets.

Rationale behind the judgement

The main point of contention in the case was whether the right to receive income from a Wakf-alal-aulad falls under the scope of the term “asset” given under Section 2(e) of the Wealth Tax Act, 1957.

The Court highlighted that the term “asset” as defined under the WT Act, is broad and includes all types of property, whether movable or immovable and therefore, it includes a wide range of interests that can be taxed under the scope of this Act. The appellants’ argument that the right to receive income cannot be valued was also rejected by the Court, and in reply, it was stated that in case the asset cannot be valued, then it is the job of the Wealth Tax Officer to assume and estimate the value of the asset, based on which it would be priced in an open market.

The right to receive a share of income was examined in this case. The Court concluded that the right of the appellants was not merely a right to maintenance. Rather, the income from the Wakf estate was being used by them for more than just maintenance and support, making it a  proprietary interest with tangible value. Due to this, the income received from the Wakf estate could be said to have the characteristics of a property, making it an asset and thus, it was held to be taxable under the WT Act.

Relevant judgements referred to in the case

Vidya Varuthi Thirtha vs. Balusami Ayyar (1921)

In the case of Vidya Varuthi vs. Balusami Ayyar (1921), the Bombay High Court stated that as soon as a Wakf is created and ownership is transferred to the Mutawalli, the right to Wakf is extinguished on the property on which it was created. The rights are taken from the Wakif and placed in the hands of the Almighty and because the Mutawalli has no rights in the property from which the Wakf was created, he cannot be called a trustee as well.

Abdul Karim Adenwalla vs. Rahimabai (1945)

In the case of Abdul Karim Adenwalla vs. Rahimabai (1945), the Bombay High Court highlighted the difference between a Hanafi Muslim settlor saving the income arising out of the Wakf property for his own support and maintenance during his lifetime, and saving income from the property for absolute use during his lifetime, which suggests that the income might be used for more than just his maintenance and support. Saving the income only for maintenance and support is permitted under the Mussalman Wakf Validating Act, 1913 and it is not considered to be transferable property under the TPA, 1882. It is also not considered attachable under the Code of Civil Procedure, 1908. However, if the income is used for more than just maintenance and support, it will attract Section 6 of TPA, 1992 and become transferable and also attachable under Section 60 of the CPC, 1908.

The Commissioner, Hindu Religious Endowments, Madras vs. Shri Lakshmindra Thirtha Swamiar of Sri Shirur Mutt (1954)

In the case of The Commissioner, Hindu Religious Endowments, Madras vs. Shri Lakshmindra Thirtha Swamiar of Sri Shirur Mutt (1954), the Supreme Court of India stated that property should not be interpreted in a narrow manner but should be given a wide and flexible interpretation to include all types of properties as well as different types of interests that are vested in different types of properties. Further, it was stated that even though a Mahantship is not heritable, like an ordinary property, it still has a few characteristics that match “property,”, which is enough to bring it under the scope of Article 19(1)(f) (right to property; now omitted).

Commissioner of Wealth Fax, Bombay City vs. Purshottam N. Amersey and Another (1968)

In the case of Commissioner of Wealth Fax, Bombay City vs. Purshottam N. Amersey (1968), the Bombay High Court stated that the definitions of “assets” and “net wealth” under Section 2(e) and Section 2(5)(m), respectively, were broad and extensive provisions. The definition of assets provided under the Act covers all property, whether movable or immovable and also lists down the items that are excluded from its ambit.

Analysis of Ahmed G. H. Ariff vs. Commissioner of Wealth Tax (1971)

The judgement in the case Ahmed G.H. Ariff & Ors vs. Commissioner Of Wealth Tax (1969), highlighted the fact that the right to receive income from a Wakf-alal-aulad is an asset under the definition provided under the Wealth Tax Act. Hence, it is liable to be assessed during the assessment of income for the purpose of determining the amount of tax payable by the assessee.

The Supreme Court considered various types of interests that fall within the definition of “property” before reaching its verdict. It concluded that the right to receive income from a Wakf property was indeed an asset under the WT Act. Firstly, it considered the broad definition of “assets” as provided by the Act, which included all types of properties and interests, both movable and immovable in nature and stated that just because the right to receive income does not fall in the conventional definition of physical property does not mean that it cannot be treated as an asset. The WT Act is by design highly inclusive and encapsulates various types of property interests to ensure extensive scope for dealing with taxation matters. The Court emphasised that the legislative intent behind the WT Act was to include not just physical, tangible properties, but also intangible interests that hold economic value. The right to receive income from a Wakf property holds serious economic worth and not making such a right taxable would be against the purposes and objectives of the WT Act. Therefore, the right to receive income from a Wakf property can be compared to how rental income from property or dividends from shares are considered assets. Secondly, the Court noted that  income arising from the Wakf estate in the present case is not a right to annuity, nor is it a right to maintenance, as the use of income from the estate went beyond support and maintenance. This cleared up any doubts about whether or not the income from the estate would be exempted under Section 2(e) of the WT Act. Thirdly, upon further analysis, it can be stated that this judgement strived to reinforce the fact that the WT Act had a wide scope, as it tried to cover all types of properties and interests within its ambit and tried to maintain fair and reasonable taxation practices.

This judgement is also important from a jurisprudential point of view, as it is based on liberal interpretation of statutes. This type of interpretation is necessary, since it provides flexibility and helps in promoting the purpose of the WT Act, that is, to address the ambiguities and inequalities in wealth of individuals with significant and weighty investments, and to bridge the gap between the rich and the poor as it helps in making sure that there is minimal evasion of tax.

Conclusion

Wakfs were developed for the fulfilment of charitable and pious purposes. Even though there is no mention of Wakf in the Holy Quran, the idea of Wakfs finds its roots in Islamic law. Under Muslim law, the ownership of the Wakf vests in the Almighty and the benefits from the Wakf property are given to the poor for their development and support.

This case tries to answer the question of law regarding whether the right to receive a share of income from a Wakf estate would be taxable under the Wealth Tax Act as an asset after the relevant assessment year. The Court concluded by stating that the income received from a Wakf-alal-aulad in the present case, indeed falls under the purview of the term “asset”, as even though the right in question was related to religious purposes and personal maintenance and support, it still held value and hence would be taxable.

Frequently Asked Questions (FAQs)

Has the wealth tax been abolished?

Yes, the wealth tax has been abolished. This was done by way of the 2015 budget introduced on 28th February, 2016, which was applicable for the financial year of 2015-2016. This move was made by the then Union Finance Minister, Arun Jaitley. The need to abolish the said tax arose because the disadvantages far outweighed the benefits of collecting wealth tax.

Whom did wealth tax apply to?

The wealth tax applies to individuals, a Hindu undivided family (HUF) or a company. Other entities are not required to pay any wealth tax on their assets. Though the individuals associated with the other entities may be required to pay wealth tax on the “assets”, as defined in the Act under Section 2(e).

How was wealth tax charged?

Section 3 of the Wealth Tax Act, 1957, talked about the charge of wealth tax. According to this Section, a wealth tax would be imposed every assessment year, beginning on 1st April, 1957 but before 1st April, 1993. The tax would be chargeable on the net wealth of all individuals, Hindu undivided families and companies, on the date of valuation. According to the other provisions laid down in the WT Act, the wealth tax would be subject to payment every assessment year, beginning on 1st April, 1993 but before 1st April, 2016. The tax would be paid on the net wealth of every individual, Hindu undivided family and company at the rate of 1% of the amount by which the net wealth exceeds ₹15 lakh, on the date of valuation. In every assessment year beginning on and from 1st April, 2010 wealth tax with respect to the net wealth payable, would be increased from 15 lakh to 30 lakh.

What is the right to property?

Article 19(1)(f) was omitted in 1978 by the 44th Amendment Act. Before that, it enshrined the right to property, which was a fundamental right. This right was then added under Article 300A as a constitutional right instead. It protected a person’s rights arising out of his property, such as the right to hold, acquire or dispose of his property.

References

1. https://indiankanoon.org/doc/115197/
2. https://www.indiacode.nic.in/bitstream/123456789/3123/1/a1957-27.pdf
3. https://groww.in/blog/wealth-tax-in-india
4. https://www.nipfp.org.in/media/pdf/books/BK_9/Chapters/3.%20Legislative%20History.pdf
5. MULLA, Commentary on Mohammedan Law, (2nd Ed, Dwivedi Law Agency, 2009, Allahabad)

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