Judgement

SIKRI, C.J.I. (with Roy and Palekar JJ.): This appeal is from the judgment of the High Court of Punjab and Haryana in Civil Writ No. 2291 of 1970 which was heard by a Bench of five Judges. Four Judges held that S.24 of the Finance Act, 1969 in so far as it amended the relevant provisions of the Wealth Tax Act, 1957, was beyond the legislative competence of Parliament. Pandit, J., however, held that the impugned Act was intra vires the legislative powers of Parliament. The High Court accordingly issued a direction to the effect that the Wealth Tax Act, as amended by Finance Act, 1969 in so far as it includes the capital value of the agricultural land for the purposes of computing net wealth, was ultra vires the Constitution of India.

2. We may mention that the majority also held that the impugned Act was not a law with respect to entry 49 List II of the Seventh Schedule to the Constitution; in other words, it held that this tax was not covered by entry 49 List II of the Seventh Schedule.

3. The Wealth Tax Act, 1957, was amended by Finance Act, 1969, to include the capital value of agricultural land for the purposes of computing net wealth. "Assets" is defined in S.2(e) to include property of every description, movable or immovable. The exclusions need not be mentioned here as they relate to earlier assessment years. "Net Wealth" is defined in S.2 (m) to mean "the amount by which the aggregate value computed in accordance with the provisions of this Act of all the assets, wherever located, belonging to the assessee on the valuation date, includes 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 owned by the assessee on the valuation date" - other than certain debts which are set out in the definition. "Valuation date" in relation to any year for which the assessment is to be made under this Act is defined in S.2(q) to mean the last day of the previous year as defined in S.3 of the Income-tax Act, if an assessment were to be made under this Act for that year. We need not set out the proviso here. Section 3 is the charging section which reads:

"3. Subject to the other provisions contained in this Act there shall be charged for every assessment year commencing on and from the first day of April 1957 a tax (hereinafter referred to as the "wealth-tax") in respect of the net wealth on the correspondent valuation date of every individual, Hindu Undivided Family and company at the rate or rates specified in the Schedule".

4. Section 4 includes certain assets as belonging to the assessee.

5. Section 5 gives certain exemptions in respect of certain assets. We need only reproduce S.5 (iv-a):

"5 (iv-a) Agricultural land belonging to the assessee subject to a maximum of one hundred and fifty thousand rupees in value:

Provided that where the assessee owns any house or part of a house situated in a place with a population exceeding ten thousand and to which the provisions of clause (iv) apply and the value of such house or part of a house together with the value of the agricultural land exceeds one hundred and fifty thousand rupees, then the amount that shall not be included in the net wealth of the assessee under this clause shall be one hundred and fifty thousand rupees as reduced by so much of the value of such house or part of house as is not to be included in the net wealth of the assessee under clause (iv).

Section 5 (iv-b), 5 (viii-a) and 5 (ix) read:

"5 (iv-b) one building or one group of buildings owned by a cultivator of, or receiver of rent or revenue out of agricultural land:

Provided that such building or group of buildings is on or in the immediate vicinity of the land and is required by the cultivator or the receiver of rent or revenue, by reason of his connection with the land, as dwelling- house store- house or out-house;"

"5 (viii-a) growing crops (including fruits on trees) on agricultural land and grass on such land:"

"(ix) The tools implement