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PETITIONER: SHRI MOHAMMAD ALI KHAN & OTHERS

       Vs.

RESPONDENT: THE COMMISSIONER OF WEALTH TAX.NEW DELHI

DATE OF JUDGMENT:       04/03/1997

BENCH: S.C. AGRAWAL, G.B. PATTANAIK

ACT:

HEADNOTE:

JUDGMENT:                       J U D G M E N T PATTANAIK. J.      In this  appeal by  grant of  certificate by Delhi High Court interpretation  of Section 5(1)(iii) of the Wealth Tax Act.  1957   (hereinafter  referred  to  as  ‘The  Act’)  is involved. On  an application being filed under Section 27(1) of the  Act the  Tribunal referred the following question to the High Court for being answered:-      "Whether on  the facts  and in  the      circumstances  of   the  case   the      Tribunal was  justified in  holding      that the buildings of the Khas Bagh      Palace  which   were  let   out  to      different  persons   from  whom   a      rental income  was received  by the      assessee were not in the occupation      of the  assessee within the meaning      of Section  5(1)(iii) of the Wealth      Tax Act  1957 and  hence the  value      thereof was  includible in  the net      wealth of the assessee?"      The assessee  Late H.H  Nawab Sir  Syed Raza  Ali Khan. Newab of  Rampur is  the owner of Khan Bagh Palace. The said Palace was declared by the Central Government in exercise of power under  paragraph 13  of the  Merged  States  (Taxation Concessions) Order 1949. to be the official residence of the Ruler. During  the  assessment  year  1961-62  the  assessee claimed exemption  of the aforesaid Palace in computation of the wealth  under the Wealth Tax Act under Section 5(1)(iii) of the  Act. The  Wealth Tax officer on consideration of the materials before  him came to the conclusion that the Palace having consisted  of number  of buildings the assessee would be entitled  to exemption only in respect of the building or the portions  of the  building which is in the occupation of the Ruler  and on  the said  conclusion he  found  that  the estimated market  value of  several buildings which had been let out  to be  Rs. 3,55,000/-.  This valuation obviously he found out  on the  basis of the rental income derived by the assessee. He  accordingly took  that into  consideration  in computation and  levying  wealth  tax  on  the  same.  Being

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aggrieved by  the order of the Officer the assessee moved an appeal and  the Asstt. Commissioner in appeal as well as the Tribunal in Second Appeal confirmed the assessment made. But on an  application being  filed under  Section 27 of the Act Tribunal made  the reference  on the  question.  as  already stated. The  High Court in the impugned decision came to the conclusion that a restrictive interpretation of Section 5(1) of the  Act would  disentitle the  assessee of any exemption since the  building in  question is not under the occupation of the  Ruler fully.  It also  came to  the conclusion  that liberal interpretation  of the  said provision would entitle the  assessee  to  exemption  to  the  extent  the  assessee occupies the  building or  the portion  of the  building and therefore. the  liberal interpretation  should be preferred. with this  finding the  High  Court  answered  the  question referred to  in  favour  of  the  revenue  and  against  the assessee.      Mr. Sharma,  the  learned  counsel  appearing  for  the appellant contended  that the expession "anyone building" in Section 5(1)(iii) is not susceptible of an interpretation by making a  further disection to import into it the portion of the  building   or  whole  of  the  builing  as  that  would tantamount to  a fresh  legislation which  the Court  is not empowered to  do.  According  to  the  learned  counsel  the Central Government having declared the Ram Bagh palace to be the official  residence of the assessee in exercise of power under  paragraph   13  of   the  Merged   Stated   (Taxation Concessions) Order 1949, the said building would be excluded from the  purview of  the Act by virtue of Section 5(1)(iii) of the Act. This being  the position.  the High Court committed an error in answering  the question  posed in  favour of the Revenue. The learned  counsel urged  that in  interpreting the taxing statute it  is not  permissible for the Court to look to the policy behind the statute and the court would be entitled to give a  plain meaning  to the  words used in the Statute. In support of  this  contention  reliance  was  placed  on  the decisions of this Court in JUPUDI KESAVA RAO VS. PULAVARATHI VENKATA SUBBARAO AND OTHERS- 1971(1) Supreme Court Cases 545 and M/S  BAIDYANATH AYURVED BHAWAN (PVT) LTD. vs. THE EXCISE COMMISSIONER, U.P. & ORS. 1971 (1) Supreme Court Cases 4. It is, therefore,  urged that  a plain  literal  meaning  being given to  each part of Section 5(1)(iii). the said provision is  susceptible  of  only  one  construction,  namely,  that building which  has been  declared by the Central Government to be the official residence of the Ruler cannot be included in the assets of the assessee for the purpose of determining the wealth tax payable by an assessee.      Dr. Gauri Shankar. the learned senior counsel appearing for the  Revenue, on  the  other  hand,  contended  that  in interpreting Section 5(1)(iii) of the Act the expression "in the occupation  of a  Ruler" has  to be borne in mind and if each and  every word used in Section 5(1)(iii) of the Act is given  its   literal  grammatical   meaning  then  the  only conclusion possible  is the  building or  the  part  of  the building in  occupation of  the Ruler  and  which  has  been declared by the Central Government as the official residence of the Ruler would be exempted under the said provision.      In order to appreciate the rival contention it would be appropriate to notice Section 5(1)(iii) of the Act:      "5(1)  Wealth   Tax  shall  not  be      payable by  an assessee  in respect      of the  following assets  shall not      be included  in the  net wealth  of      the assessee.

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    (i).................      (ii).................      (iii)  any   one  building  in  the      occupation of  a Ruler  declared by      the  Central   Government.  as  his      official residence  under paragraph      13 of  the merged  States (Taxation      Concessions)   order    1949,    or      paragraph 15  of the  part B States      (Taxation Concessions) order 1950".      It is  a cardinal  principle of  construction that  the words of  a statute  are first  understood in their natural. ordinary or  popular sense  and phrases  and  sentences  are construed according to their grammatical meaning unless that leads to  some absurdity or unless there is something in the context or  in the  object of  the   statute to  suggest the contrary. It  has been  often held that the intention of the legislature is  primarily to  be gathered  from the language used, which  means that attention should be paid to what has been  said  as  also  to  what  has  not  been  said.  As  a consequence a  construction which  requires for  its support addition or  substitution  of  words  or  which  results  in rejection  of  words  as  meaningless  has  to  be  avoided. Obviously the  aforesaid rules of construction is subject to exceptions. Just as it is not permissible to add words or to fill in  a gap  or lacuna,  similarly  it  is  of  universal application that  effort should  be made  to give meaning to each and every word used by the legislature. In J.K. COTTTON WEAVING AND SPINNING COMPANY LTD. vs. STATE OF U.P. (1961) 3 S.C.R. 185  it was observed by this Court:-      "The Courts always presume that the      legislature  inserted   every  part      thereof  for   a  purpose  and  the      legislative intention is that every      part   of   statute   should   have      effect."      In case  of taxing  statute it  has been  held by  this Court in  several cases  that one  must have  regard to  the strict letter  of the  law and  if the revenue satisfies the Court that  the case fall strictly in the provisions of law, the subject  can be  taxed. This  being the position, a fair reading of  Section 5(1)(iii)  of the  Act would reveal that only the  building or the part of the building in occupation of  the  Ruler  which  has  been  declared  by  the  Central Government to  be the  official residence  under the  merged States  (Taxation  Concessions)  Order  1949.  will  not  be included in  the net  wealth of the assessee. The contention advanced by  the learned counsel for the appellant that once a building has been declared as the official residence and a portion of  the said  building is  under occupation  of  the assessee then  the  said  building  should  come  under  the purview  of  Section  5(1)(iii)  of  the  Act  even  if  the substantial portion  of the  same has been rented out by the assessee to  the tenant  or for any other purpose would make the expression  in the  occupation of a Ruler" redundant and those words in the provision would not have its play.      We  have   carefully  considered   the  principles   of construction of  statute enunciated  by this  Court  in  the decisions cited by the learned counsel for the appellant and we do  not find  any  principle  stated  therein.  which  is contrary to  the principle  we have  adopted in this Case in interpreting Section  5(1)(iii) of the Act. In the aforesaid premises. We  are of  the considered  opinion that  the High Court rightly  answered the  question  posed  in  favour  of Revenue and  against the  assessee and  the said judgment of

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the High  Court does  not require  any interference  by this Court.      This  appeal  is  accordingly  dismissed.  But  in  the circumstances, there will by no order as to costs.