Chimanbhai K. Patel vs Commissioner of Wealth Tax, Gujarat-IV

B.K. Mehta, J.—The assessment years with which we are concerned in this reference are 1970-71 and 1972-73. The assessee, an

individual, initially filed the return of his net wealth for the respective years showing the status as resident but not ordinarily resident. He also

disclosed in his return that he was not a citizen of India. The WTO, however in advertently, adopted the status of the assessee as non-resident/not

a citizen of India. As a consequence, he granted a rebate of wealth-tax at 50% of the total wealth-tax payable by the assessee in accordance with

the provision contained in rule 3 of Part II of the Schedule appended to the W.T. Act. On realising his mistake, the WTO proceeded to rectify his

orders by adopting the status of the assessee as a resident but not ordinarily resident. Before making the rectification orders for the respective

years, the WTO issued a show-cause notice to the assessee who in his reply accepted the fact pertaining to his status that he was a resident but

not ordinarily resident/not a citizen of India, and that he had no objection against the rectification in respect of his status by the WTO. He,

however, resisted the attempt of the WTO to withdraw the rebate initially granted in respect of the wealth-tax payable by him for the respective

years. This objection did not prevail with the WTO who ultimately by his order decided to withdraw the rebate granted.

In appeal, the AAC in his ex parte order upheld the decision of the WTO. The assessee, therefore, carried the matter in appeal before the

Tribunal. Two contentions were urged before the Tribunal. Firstly, the admitted status of the assessee, namely, resident but not ordinarily resident

was at par with that of non-resident and, therefore, the rebate which was granted by the WTO initially was justified. Secondly, it was contended

that, in any case, it was a debatable question as to whether the WTO could withdraw the rebate once granted in spite of the assessee disclosing his

status correctly. The Tribunal was not impressed with these contentions and, therefore, dismissed the appeal of the assessee and upheld the

rectification orders. On the facts and in the circumstances, therefore, the assessee claimed for a reference of the following three questions of law to

us for our opinion. It was granted by the Tribunal. The questions are as follows :

Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the assessee who is not an ordinarily

resident individual could not be treated equal to a non-resident ?

Whether, on the facts and in the circumstances of the case, the Tribunal correctly interpreted the provisions of rule 3 of the Part II of the

Schedule appended to the Wealth-tax Act ?

Whether, on the facts and in the circumstances of the case, the question as regards status being a debatable one, the Tribunal was justified in

upholding the orders of the lower authorities passed u/s 35 of the Wealth-tax Act ?

The same contentions were urged before us by the learned advocate for the applicant. Firstly, he submitted that so far as rule 3 is concerned,

there is no legislative dictionary as we find in s. 6 of the I.T. Act and, therefore, the wealth-tax authorities, and for that matter the Tribunal, could

not have imported the legislative dictionary of the terms ""resident"", ""non-resident"" and ""resident but not ordinarily resident"" as given in the I.T. Act

for the purposes of the wealth-tax in cases other than those where such dictionaries are provided in the W.T. Act. In the alternative, the learned

advocate submitted that in the absence of any legislative dictionary so far as rule 3 is concerned, the words, ""non-resident in India"" which qualify

him for rebate, if he is not a citizen of India, should be literally construed and, therefore, also the assessee who was not ordinarily resident in India

should be treated as not resident in India and, admittedly, when he was not a citizen of India, he was satisfying both the conditions prescribed

under rule 3 and, therefore, the WTO rightly granted the rebate which he could not have withdrawn. In any case, he urged, this question as to what

is the correct status of the assessee for purposes of rule 3 is a debatable one and, therefore, the wealth-tax authorities could not have exercised the

rectification jurisdiction under s. 35 of the W.T. Act.

For the reasons stated hereunder, we are unable to accept this reference. We are of the opinion that on the own showing of the assessee, the

assessee is not entitled to assail this order of rectification. We have examined the question from both the aspects, namely, on assumption that there

is a legislative dictionary for the words, ""resident"", ""resident but not ordinarily resident"" and ""non-resident"", and also on the basis that there is no

legislative dictionary. The reason for examining the question on the assumption that there is a legislative dictionary is that we have got to give some

meaning to the word ""non-resident"" in rule 3 and also because the assessee has claimed status as described in the I.T. Act. It is no doubt true that

the Legislature has, in its infinite wisdom, provided a legislative dictionary for the deemed purposes under s. 5 as well as s. 6 of the I.T. Act. It is

equally true that there is no definition of these terms in the W.T. Act, nor have we got any general clause in the definition section so as to indicate

that the words and expression which are used in the W.T. Act, in the absence of their definitions, are to be construed and given the same meaning

as given in the corresponding Act, namely, the I.T. Act. In spite of these infirmities, we are of the opinion that some meaning has got to be given to

the word ""non-resident"". It is with that view to give some recognised meaning to the word ""non-resident"", that we have proceeded on the

assumption that there is legislative dictionary, namely, the same as we find in the I.T. Act, and also which have been appropriately adopted for

purpose of ss. 5 and 6 of the W.T. Act. if the word, ""non-resident"" has the same meaning as ascribed to it in the I.T. Act, the learned advocate for

the assessee fairly conceded that the assessee is out of court. The term ""non-resident"" has been defined as a person not resident in India, and

includes resident but not ordinarily resident for the limited purpose of ss. 92, 93 and 168 of the I.T. Act, 1961. The learned advocate for the

applicant was, therefore, right that if the dictionary meaning as given in the I.T. Act is adopted and applied so far as to clarify the import of the

word ""non-resident"" used in s. 3 of the Schedule appended to the W.T. Act, the assessee is not entitled to succeed. In the alternative, if there is no

legislative dictionary so far as rule 3 is concerned, we have to continue the word ""non-resident"" in rule 3 in its ordinary sense. Admittedly the

applicant claims the status of resident but not ordinarily resident. If, therefore, the applicant claims the status of a resident, he cannot then be not

resident in India provided the words, ""resident"" and ""non-resident"" are to be construed in the way in which they are understood in the popular

sense. Either way, the applicant is not entitled to successfully claim the benefit of the rebate of 50% of the tax under rule 3. The learned advocate

for the applicant, therefore, urged that in any case these are debatable questions and the wealth-tax authorities could not have invoked the

rectification jurisdiction when the questions are highly debatable. We are afraid that this contention, though it appears to be attractive, is on close

scrutiny not well-founded. The obvious reason is that the withdrawal of the rebate already granted is a consequence flowing from the admission

about the status and it is common case that not only in the return filed by the assessee but in reply to the show cause notice issued by the WTO for

purposes of the exercise of his rectification jurisdiction, the assessee clearly admitted and conceded that his status may be taken as resident but not

ordinarily resident. If that is so, then this is merely a consequence and, therefore, we cannot agree with the learned advocate that the questions are

debatable. For these reasons, we are of the opinion that the reference cannot be accepted and the questions referred to us should be answered in

the affirmative, that is, in favour of the Revenue and against the assessee. However, having regard to the facts and circumstances of this case, there

should be no order as to costs.