Holding

The phrase ‘for any assessment year commencing after the 31st day of March, 1964’ pertains to gift‑tax assessments, so gifts made before that date are not exempt from wealth‑tax and must be included in the net wealth.

Summary

The case concerned gifts of immovable property made by a deceased individual to his wives in 1962, which were chargeable to gift‑tax. The assessee claimed that, under the proviso to section 4(1)(a) of the Wealth‑Tax Act, 1957, such gifts should be exempt from wealth‑tax assessment for all assessment years commencing after 31 March 1964. The Revenue argued that the phrase “for any assessment year commencing after the 31st day of March, 1964” qualified only the gift‑tax assessment and therefore applied only to gifts made on or after that date. The Supreme Court applied the literal rule of statutory interpretation, holding that the phrase relates to gift‑tax assessments and not to the wealth‑tax exemption period, so gifts made before the cut‑off date are not exempt and must be included in the donor’s net wealth. Consequently, the Court allowed the Revenue’s appeal and dismissed the assessee’s appeals.

Issues considered

Whether the words ‘for any assessment year commencing after the 31st day of March, 1964’ in the proviso to s.4(1)(a) of the Wealth‑Tax Act qualify the gifts themselves or merely the commencement of the exemption from wealth‑tax.
Whether gifts made before 31 March 1964, though chargeable to gift‑tax, fall within the exemption contemplated by the proviso.
Whether the literal rule of statutory interpretation precludes a construction aimed at avoiding a possible constitutional difficulty.

Legislation cited

Subjects

Wealth taxGift taxStatutory interpretationLiteral ruleExemption provisionAssessment yearConstitutionalityTax law

Judgment

COMMISSIONER OF WEALTH-TAX
A
v.
SMT. HASHMATUNNISA BEGUM

JANUARY 17, 1989

[R.S. PATHAK, CJ & M.N. VENKATACHALIAH, J.) B

Wealth Tax Act, 1957: Section 4(1)(a) Proviso-Wea/th tax-
Assets transferred by way of gift-Exemption-Whether gifts made
before assessment year commencing after March 31, 1964 entitled to
' benefit of exemption-For any assessmeni year commencing after
March 31, 1964-lnterpretation of.
c
Statutory Interpretation: Literal rule-Meaning of statute is
plain-Court must apply regardless of result-Court not entitled to read
statute in another way anxious to avoid its unconstitutionality.

Words and Phrases: 'lnterpretation'-'Construction'-Meaning D
of.

In Civil Appeal No. 1118 of 1975 the respondent-assessee's
l_ husband gifted certain lands and buildings to bis two spouses by three
gift deeds dated 26.4.1962, 26.5.1962 and 17.8.1962. The gifts were
chargeable to gift-tax and were accordingly assessed to gift-tax In the E
assessment year 1963-64.

In the proceedings for assessment to wealth for the assessment
. year 1967-68, It was claimed on behalf of the estate of the assessee's
__ } . hhusbandb, who had later died on 16.12.1968 that as the gldfts dwere
c argea le to gift-tax, the proviso to s. 4(1)(a) was attracte an the F
assets so transferred were not lncludlble In the net wealth of the
deceased for any assessment year commencing after the 31st day of
March, 1964. The Wealth Tax Officer rejected this claim. On appeal,
the Appellate Assistant Commissioner conftnned the assessment.
Allowing the assessee's further appeal, the Appellate Tribunal, 011 a
particular construction of the proviso, held that the assets transferred, G
which had attracted gift-tax, were not lncludlble In the net wealth of the
deceased for the assessment year 1964-65 onwards.

On Ii reference made at the Instant of the Revenue, the Bish Court
agreed with the construction placed on the proviso by the Tribunal. The
Revenue ftled an appeal, by Special leave In this Court. H
155
156 SUPREME COURT REPORTS (1989) 1 S.C.R.

A The appeUant-assessee in Civil Appeal Nos. 1226 and 1227 of
1975, made a gift of certain amount to her minor daughter on
7.10.1959. The assets so transferred were included in the assessee's
wealth for the two assessment years 1964-65 and 1965-66 under s.
4(1)(a)(ii) of the Wealth-tax Act. The claim of the assessee that the
proviso to s. 4(1)(a) operated to exclude the asset from the net wealth of
B the assessee as the transfer was chargeable to gift-tax was not accepted
by the Wealth-tax Officer. The Appellate Assistant Commissioner
rejected the assessee's appeal.
However, the Appellate Tribunal, accepting the contention of the
assessee, allowed the assessee's appeal and held that, on a true construe·
lion of the proviso, so long as the gift was chargeable to or exempt under
C s. 5 from gift-tax, to that extent s. 4(l)(a) ceased to have operation and
the statutory fiction embodied in it was not attracted and that since, the
gift was chargeable to gift-tax, at the relevant time, the exemption was to
operate from the assessment year commencing after 31-3-1964.
The High Court, on a reference made at the instance of the
D Revenue reversed the Tribunal's view. Hence, the assessee filed the
appeal, by certificate, in this Court.

In the appeals before this Court, it was submitted on behalf of the
Revenue that the words "for any assessment year commencing after the
31st day of March, 1964" could, in the context only refer to the gift and
£ gift-tax assessments, that only that class of gifts which were chargeable
to gift tax for any assessment year 1964-65 or thereafter (hut subject to
the time limit fixed by the 1971 amendment) which would otherwise fall
under s. 4(1)(a) were eligible for the benefit of exemption, and that
where the enactment was clear and admitted of only one meaning, and
did not admit of two or more meanings, it would be the plain meaning
F that should be given effect to and no resort could be had to any rules of
construction which would denude the provision of its plain and or-
dinary meaning.

On behalf of the assessees, it was contended that the date of the
gift was immaterial and as long as the transfer was chargeable to gift
G tax or was exempted under s. 5 whatever may be the year in which the
gift was made, the exemption from a gift-tax must commence for any
assessment year commencing after the 31st day of March 1964", that
these words should not be read as part of the first part of the proviso
relating to gift-tax assessments but as part of the second part denoting
the commencement of the operation from Wealth-tax, and that a con-
H struction which promoted its constitutionality has to be preferred to the
COM;MR. OF WEALTH-TAX v. fiASHMATUNNISA 157

one which, if accepted, would expose the proviso to the vice of discrimi-
A
nation and unconstitutionality.

Allowi0 g the appelll of the Revenue and dismissing the appeal of
tb.e assessee.

~ELD; 1, On a rell!!ing Of the plain words of the proviso to s. B
4(l)(a) oflhe WeilltlHax Act, 1957, the clause "for any assessment year
c()mmencing after 31st day of March, 1964" can only be read as relating
to gift-tax assesssments and not to th~ wealth-tax a•sessments. I165E I

The ainendrnellt introducing the proviso was brought about by an
amending Act of 1964, but the date of .the com111encement of its opera-
tion was !eft (o be fixed by a Notification. If the construction that the
c
I .
cl.au.se should !>e read as part of the second part, denoting the
i co1D1D•ncement of the operation of exemption from Wealth tax is
accepted, effect of the Notification issued bringing the proviso into
effect from L4,1965 would be wh.oUy ig11ored, and the introduction of
the words "bot !>efore the 1st day of April, 1972", by a later amend- D
ment would operate to take away the benefit of the exemption after
1.4.1972 and the exemption confined only to the assessment years
between 1964-65and1972-73. [16Sc.DI

Therefore, the gifts in question thong!\ chargeable to gift-tax
W!ll!ld not attract the benefit of exemption ;md would be liable to be E
in~lude<I in the net wealth 11f the assessees. [163A]

T. Sarasw~!hi A chi v. C./. T., }04 ITR 195 (Mad); C. W. T. v. Seth
Nand Lal G~neriwala, 107 {Tl!. 75~ (ftID.); M. G. Kollankulam v.
C.J. T,, lTI!. 160 (H;erala), M~lti Hqrseey v. C.W. T:, 12 ITR 676 (MP)
l!Dd C. W. T. v. Rasesh N. Mafatlal, 126 ITR 173 (Born) !lpproved. F

2, 1 One of the pill;ir~ of statutory i11(erpretl1tio11 viz., the literal-
rule, demands !hat if the 1D•aning of th• Statutory h1\erpre\ation is
plain, the Courts must apply regardless of the reslllt··l !650 I

2.2 The very concept of in(erpre!atio!l con11otes the introduction G
of elements which are ne~essarily extrinsic to tile w0,r<1s. i11 the statute.
T.. ough the words "lnterpre~tio~" a~d "c9nstru~t~Q~" are used inter-
changeably, the iclea is somewlt!lt llifferent. Il 65H I

2.3 The rule of c011struction that if the statu.tllfY pfl>rision is
susceptible or ad1Dits of two reasona.llly l'ossible views, then the one H
158 SUPREME COURT REPORTS [1989) 1 S.C.R.

which would promote its constitutionality should he preferred on the
A
ground that the legislature is presumed not to have intended an excess
of its own jurisdiction, is subject to the further rule that it applies only
where two views are reasonably possible on the statutory language. If
the words of the statute, on a proper construction, can be read only in a
particnlar way, then it cannot he read in another way hy a court of
B construction anxious to avoid its unconstitutionality. ll66G-H)

2.4 In a ease, as here, where a reference arises under 'Act', the
question of the constitutionality of the Act cannot he examined and
pronounced upon hy this Court. That is the task of the Court in
judicial-review. However, the rule of preference of a particular con-
struction amongst the alternatives, in order to avoid unconstitutional-
c ity, is unavailable in the instact case. ll66H; 167A, F]

3. In a taxing measure, the legislature enjoys a wider latitude and
its dispensations are based on an interaction of diverse economic, social
and policy considerations. Further, if the proviso is bad for discrimina-
D lion, it would foUow that the converse situation brought about hy the
later amendment, a discrimination as between gifts made as betWeen
the 31st of March, 1972 and on 1st April, 1972 might also become bad.
This Court is required to notice the provision as it stood at the relevant
time. l167D-E]

E State of Punjab v. Prem Sukhdas, 11977] 3 SCR 408 and Attorney
General v. Carlton Bank, 11899] 2 Q.B. 158, referred to.

Dr. Patrick Devlin: Samples of Law Making-Oxford University
Press, p. 70-71 and Max Radin "Statutory Interpretation" 43 Har. L.R.
863 (868), referred to. -·\
F
CIVIL APPELLATE JURISDICTION: Civil Appeal No.
1118(NT) of 1975.

WITH

G Civil Appeal Nos, 1226 & 1227(NT) of 1975.

From the Judgment and Order dated 18.9.1974 and 11.10.74 of A
the Andhra Pradesh and Calcutta High Court. In case referred No. 15
of 1973 and matter No. 710 of 1970 respectively

H B.B. Ahuja, Ms. A. Subhashini, K.C. Dua for the Appellant in
C.A. No. 1118 of 1975.
COMMR. OFWEAL1H-TAX v. HASHMATUNNISA IVENKATACTIALIAH, J.I 159

Harish N. Salve, Vivek Gambhir and Prevee·n Kumar for the A
Appellant in C.A. No. 1226-27 of 1975.

A. Subba Rao for the Respondent in C.A. No. 1118 of 1975.

B.B. Ahuja, K.C. Dua and Miss. A. Subhashini for the Respon-
~- dent in C.A. Nos. 1226-27 of 1975. B

The Judgment of the Court was delivered by

VENKATACHALIAH, J. Civil Appeal No. 1118/NT/1975, by
special leave, by the Commissioner of Wealth-tax, Andhra Pradesh,
and CA Nos. 1226 & 1227/NT/1975, on a certificate, under Sec. 29(1)
of the Wealth-tax Act, 1957, (Act) by the assessee raise a question as c
to the proper construction of the proviso to Sec. 4(1)(a) of the Act,
which provides for exemption respecting transferred assets which
would otherwise be includible in the wealth of the assessee under sec.
4(1)(a) of the Act.
D
The condition for the grant of the exemption under the proviso is
that the transfer of the asset is either chargeable to gift-tax or is not
1
chargeable under sec. 5 of the Gift-tax Act, 1958. The particular point
.i... for consideration is whether, on the language of the proviso, the
exemption is attracted only to such gifts as were chargeable to tax for
any assessment year commencing "after the 31st day of March, 1964," E
as understood by the Revenue or whether the gifts even made earlier
.... would attract the benefit of the exemption as claimed by the
assessees.

_}- 2. There appears a divergence of judicial opinion on the point in
the High Courts. In C. W. T. v. Smt. Sara/a Debi Bir/a, 101 ITR 488 F
(Cal.); T. SaraswathiAchiv. C.I.T., 104ITR 185 (Mad.); C.W.T. v.
Seth Nand Lal Ganeriwala, 107 ITR 758 (Pun.); M.G. Kol/ankulam v.
C.J. T., 115 ITR 160 (Kerala) Ma/ti Harseey v. C. W. T., 12 ITR 676
(MP) and C.W.T. v. Rasesh N. Mafatlal, 126 ITR 173 (Born) several
High-Courts have construed the provision in the manner suggested by
the Revenue. C. W. T. v. Hashmatunnisa Begum, 108 ITR 98 (AP) has G
, taken the opposite view extending a wider benefit of the exemption.
'1---·
The opinion of the Calcutta High Court in 101 ITR 488, which is
representative of the view in favour of Revenue, is under appeal in CA
1226 and 1227 of 1985 and the opinion of the Andhra Pradesh High
C9urt in 108 ITR 98 which is favourable to the assessee is under appeal H
160 SUPREME COURT REPORTS 11989] 1 S.C.R.

No. CA 1118of1975 preferred by the Revenue.
A
3. In CA 1118 of 1975 the assessee Smt. Hashmatunnisa Begam,
the legal representative of the late Nawab Zaheer Yar Jung Bahadur,
claimed in respect of the assessment year 1967-68, that the value of the
immovable properties gifted by the late Nawab to his wives before
B 1.4.1964 should not be included in the net wealth of the Nawab as on
the valuation dated 31.9.1966. The Nawab under three deeds of gift
one dated 25.5.1962, in favour of Smt. Hashmatunnisa Begum, his first
wife, and two other deeds dated 17 .8.1962 and 26.4.1962, in favour of
Smt. Fareed Jehan Begum his second-wife, gifted in their favour cer- ~···
tain lands and buildings of a total value of Rs.1,96,950. The gifts were
chargeable to gift-tax and were accordingly assessed to gift-tax in the
c assessment year 1963-64. On behalf of the estate of the Nawab-who
later dies on 16.12.1968-it was claimed in the proceedings for assess- >(
ment to wealth for the Assessment Year 1967-68. That though the gifts
were otherwise includible as belonging to the Nawab under sec.
4(I)(a)(i), as the transfers made to the spouses otherwise than for
D adequate consideration, however, as the gifts were chargeable to gift-
tax, the proviso to sec. 4(I)(a) was attracted and that the assets so
transferred were not includible in the net wealth of the Nawab "for
any assessment year commencing after the 31st day of March 1964".
The Wealth-tax Officer rejected this claim. The Appellate Asst. Com- _A_
missioner, in the assessee's appeal, confirmed the assessment. In the
E assessee's further appeal before the Appellate Tribunal, the Tribunal,
on a particular construction of the proviso, allowed the appeal and
held that the assets transferred, which had attracted gift-tax, were not
includible in the net wealth of the Nawab for the assessment year
1964-65 onwards. At the instance of the Revenue, the following ques- ~
tion of law was referred to the High Court for its opinion: \.-
F
"Whether, on the facts and in the circumstances of the
case, the assessee was entitled to exclude, under the pro-
viso to section 4(1)(a) of Wealth-Tax Act, 1957, the value
of the assets gifted to his wives in the Wealth-tax assess-
r··
ment for the assessment year 1967-68?"
G
The High Court agreed with the construction placed on the proviso by
the Tribunal and answered the question in the affirmative and against
the revenue. The revenue bas come up in appeal by special leave.

4. In CA 1226 and 1227 of 1975 the assessment years concerned
H are 1964-65 and 1965-66 corresponding to the valuation dates
COMMR. OFWEAL1H-TAX v. HASHMATIJNNISA [VENKATACHALIAH, J.] 161

J 31.3.1964 and 31.3.1965. On 7.10.1959 Smt. Sarladevi Birla, the asses- A
see, made a gift of Rs.1,00 ,011, to her minor daughter Smt. Manju
Rani Birla. The assets so transferred were included in the assessee's
wealth for the two assessment years 1964-65 and 1965-66 under sec.
4(I)(a)(ii) of the Wealth-tax Act. The claim of the assessee that the
proviso to sec. 4(I)(a) operated to exclude the asset from the net B
_+- wealth of the assessee as the transfer was chargeable to gift-tax was not
accepted by the Wealth-tax Officer, who completed the assessment
including the transferred-asset in the assessee's net-wealth. The asses-
see's appeal before the Appellate Asst. Commissioner was unsuccess-
.... J ful.

However, the Appellate Tribunal accepted the contention of the c
assessee and by its appellate order dated 11.5.1970 allowed the as-
'f sessee's appeal holding that on a true construction of the proviso, so
long as the gift was chargeable to or exempt under sec. 5 from gift-tax
to that extent sec. 4(I)(a) ceased to have operation and the statutory
fiction embodied in it was not attracted and that as at the relevant time D
the gift was chargeable to gift-tax. The exemption was to operate from
the assessment year commencing after 31.3.1964. At the instance of
the revenue, the Appellate Tribunal referred the following question of
law for the opinion of the High court:
1
"Whether on the facts and in the circumstances of the case E
and on a proper interpretation of section 4(1)(a) of the
Wealth-tax Act as amended by the Wealth-tax (Amend-
ment) Act, (Act 46) of 1964, the sum of Rs. l,00,011 gifted
by the assessee to her minor daughter could be included in
computing her net wealth"?
J· The High Court of Calcutta in reversal of the view taken by the
F
Tribunal answered the question in the affirmative and against the
assessee. The assessee has come up in appeal by certificate.

5. We have heard Shri B.B. Ahuja, learned counsel for the
revenue and Shri Harish Salve and Shri Subba Rao, for the assessees. G

The controversy generated on the point leading to the diverg-
-+- what
ence of the judicial opinion on the point is attributable to the some-
inelegant and inappropriate phraseology of the provision. To
appreciate the relevant contentions it is necessary to notice the words
of the proviso: H
162 SUPREME COURT REPORTS [1989] 1 S.C.R.

"Provided that where the transfer of such assets or any part ··~
..
A
thereof ·is either chargeable to gift-tax under the Gift-tax
Act 1958 (18 of 1958), or is not chargeable under Section 5
of that Act, for any assessment year commencing after the
31st day of March, 1964, (but before the !st day of April,
1972), the value of such assets or part thereof, as the case
B may be, shall not be included in computing the net wealth
of the individual;" -+
The words "but before the !st day April 1972" was later introduced by
the Financee (No. 2) Act 1971 with effect from 1.4.1972.

C This was introduced by the amending Act of 1964, but given
effect to from 1.4.1965 by the notification. Under the various clauses
of Sec. 4( l)(a) certain transfers of assets made by an individual in
favour or for the benefit of the spouse or a minor child, not being a
married daughter, of such individual, are required to be ignored and
the transferred-assets included in the wealth of the assessee, as belong-
D ing to him. Section 4(1)(a) aims at foiling an individual's attempt to
avoid or reducing the incidence to ·wealth tax by transferring the assets
to or for the benefit of the spouse or the minor child of the individual
by requiring the inclusion of such transferred assets in computing the
net wealth of the individual.

E However, the proviso makes the provision inoperative where
and in so far as the transferred asset is either chargeable to gift-tax
under or is exempt under sec. 5 of the Gift-tax Act. The controversy
surrounds the question whether the expression "for any assessment
year commencing after 3 lst day of March 1964'', occurring in the
proviso should be read with the first part and as referring to the eligi-
F bility of the gifts for exemption with reference to the point of time at
which the gifts were made or whether that expression does not condi-
tion the identity of the eligible gifts but only signifies the starting point
for the exemption from wealth tax. Assessees contend that the date of
the gift is immaterial and as long as the transfer is chargeable to gift-
tax or is exempt under sec. 5,-whatever may be the year in which the
G gift was made,-the exemption from gift-tax must commences "for any
assessment year commencing after the 31st day of March 1964".

If the expression "for any assessment year commencing after the
+
31st day of March, 1964" is intended to qualify and determine the
gifts, the subject-matters of which are eligible for exemption, then the
H literal construction, would be that the gifts made earlier to that period,
COMMR. OFWEALTil-TAX v. HASHMATUNNISA IVENKATACHAL!Afl,J.I 163

though chargeable to gift-tax would not attract the benefit of exemp-
A
tion. But the assessees say that the clause must be read as part of the
second part of the proviso which contemplates the exemption. So read,
the clause would qualify the commencement of the benefit of the
exemption and not the point of time when the Gift is required to be
made to be eligible for the exemption from wealth-tax. The learned
. ~- Judges of the High Court of Andhra Pradesh in the course of the B
Judgment under appeal in CA 1118 of 1975 observed:

" ..... The words 'for any assessment year commenc~
ing after the 31st day of March, 1964' are referable to the
assessment to be made under the Wealth-tax Act. They
render the provisions of section 4(1)(a) inoperative irres-
pective of the fact whether the transferred asset was c
chargeable to gift-tax or not chargeable to gift-tax. The
proviso specifies the period of exemption upto 31st March,
1964. Irrespecive of the year of the gifts when the assets
were gifted, they will not be included in the computation of
the net wealth of the individual till the assessment year D
1964-65. We are, therefore, of the view that the intention
of Parliament was to exempt transfers made under clauses
(i) to {iv) of section 4(1)(a) from being computed in the net
wealth of the individual upto the wealth-tax assessment
year commencing after 31st day of March, 1964 ..... "
E
7. Sri Ahuja submitted that the words "for any assessment year
commencing after the 31st day of 1964" could, in the context, only
refer to the gift and gift-tax assessments. The proviso, he said, which
was introduced by way of an amendment, was brought into force with
effect from 1.4.1965 by a notification which specified the commence-
ment of the operation of the proviso and that, quite obviously, it F
would be redundant to read the clause under consideration as again
referring to the commencement of the operation of the proviso. While
the clause under consideration related to and qualified the Gift tax
assessments, the commencement of the exemption of the subject-
matter of the Gifts for purposes of wealth-tax was controlled and
determined by the commencement of the operation of the proviso, G
.J- which, by notification was specified as 1.4.1965 .

Sri Ahuja submitted that the proviso was intended to effectuate
the legislative policy that in respect of certain gifts made in favour of a
spouse or a minor child, during a specified period, the assets transfer-
red under the Gifts would have the benefit of exemption from the H
164 SUPREME COURT REPORTS 11989] 1 S.C.R.

A operation of Section 4(1)(a). This was because the legislature took into
consideration that from 1.4.1964 onwards there was a sharp ascent in
the rates of gift-tax· and that the assets which constituted the subject
matter of such gifts attracting such high rates of gift-tax should not also
be included in the net-wealth of the donor for wealth-tax purposes
which would otherwise be the consequence under Section 4(1)(a) of
B the Act. As the proviso originally stood, gifts chargeable to gift-tax for
any assessment year commencing after 31st March, 1964, attracted the
benefit of exemption. The outer limit for the period of such eligible
gifts was later fixed by the amendment made by Finance (No. 2) Act,
1971, w.e.f. 1.4.1972 which introduced the words 'but before the !st
day of April, 1972'. Accordingly, Sri Ahuja contends that only that
class of gifts that were chargeable to gift-tax for any assessment year
c 1964-65 or thereafter (but subject to the limit fixed by the 1971 amend-
ment) which would otherwise fall under Section 4(1)(a) were eligible x
for the benefit of the exemption. According to Sri Ahuja the plain
words of the proviso leave no room for doubt and where the enactment
is clear and admits of only one meaning and does not admit of two or
D more meanings, it would be the plain meaning that should be given
effect to. When the meaning is plain, says counsel, no resort could be
had to any rules of construction which would denude the provision of
its plain and ordinary meaning.

8. Sri Harish Salve presenting the case of the assessees sought to
E point out the intrinsic anomaly of the cases between a gift made, say,
on 31st of March 1963 and one made the very next-day i.e. 1st of April,
1963 on the other, to show that while in the first case even for the ••
assessment year 1965-66 the transferred asset is includible in the I
wealth of the assessee, in the latter case it is exempt for all time to
come thereafter. Learned counsel pointed out that the criterion of
F higher rates of Gift-tax as a justification supporting the classification
also fails in view of the fact that under the proviso it is not only the gifts
chargeable to tax but also those exempt under sec. 5 that attract the
exemption with the result that between two gifts which are both
exempt under sec. 5 of the Gift-tax Act, one is for ever exempt from
wealth-tax in the hands of the donor while the other is includible in his
G wealth for purposes of wealth-tax depending solely on the criterion of
the date of gift-whether the gift was made prior to 31st March 1963 or
thereafter. Here the criterion of classification of gifts on the basis of
the exigibility for higher rates of tax, says Sri Salve, collapses and the
cut-off date determining the difference in consequences in the two
different class of cases become wholly arbitrary. Shri Salve submitted
H that a construction which promotes its constitutionality has to be pre-
COMMR. OFWEALIB-TAX v. HASHMATUNNISA IVENKATAc:HALiAH, J.) 165
x ferred to the orie which, if accepted, would expose the provision to the A.
vice of discrimination and unconstitutionality.

The essential basis of Sri Salve's suggested construction rests on
the requirement that the words "for any assessment year commencing
after the 31st day of March 1964" should not be read as part of the first B
A· part of the proviso relating to gift-tax assessments but as part of the
second part denoting the commencement of the operation of exemp-
tion from wealth-tax.

~
···~
'
9. This, we are afraid, will imboggle itself in the quagmire of
irreconcilable constructional contradictions. The amendment intro-
ducirig the proviso was brought about by art aniending Act of 1964; but t
,. .
the date of the commencement of its operation was left to be fixed by a
Notification. The effect of the Notification issued bringing the proviso
into effect from 1.4.1965 would be wholly ignored by the construction
suggested by ~ri Salve. Secondly, the introduction of the words "but
before the 1st day of April, 1972" would, if the construction suggested D
by Sri Salve is accepted, operate to take away the benefit of the
exemption after 1.4.1972 and the exemption confined only to the as-
sessment years between 1964-65 and 1972-73. On a reading of the plain
, words of the proviso, the clause "for any assessment year commencing
.A after 31st day of March, 1964" can only be read as relating to gift-tax
assessments and not to the wealth-tax assessments. E
~
10. But, Sri Salve contends that this literal construction would
expose the provision to an attack on its constitutionality on "the ground
thal it brings about a discriininatiori between two classes of assessees
'
j on nothing more than an arbitrary cut off date. The cases of gifts
exempted under sec. 5, he says, illustrate the point as according to Sri F
Salve there could be no rational basis for discriminating between a gift
exempted under sec. 5 made on 31.3.1963 on the one hand and
1.4.1963 on the other.

11. One of the pillars of statutory interpretation viz., the literal-
rule, demands that if the meaning of the Statutory Interpretation is G
plain and the Courts must apply regardless of the result.

+ 12. The very concept of interpretation connotes the introduction
_of elements which are necessarily extrinsic to the words in the statue.
Though the words "interpretation" and "construction" are used inter-
changeably, the idea is somewhat different. Dr. Patrick Devlin says: H
166 SUPREME COURT REPORTS [1989] 1 S.C.R.

A " A better word, I think, would be construction,
because construction, although one often used it alterna-
tively with interpretation, suggests that something more is
being got out in the elucidation of the subject matter than
can be got by strict interpretation of the words used. In the
very full sense of the word 'construction' the judges have
B set themselves in this branch of the law to try to frame the
law as they would like to have it ..... ".
[See: Samples of Law Making-Oxford Universiy Press-
p. 70-71]

"A statute" says Max Radin "is neither a literary text nor a
divine revelation. Its effect is, therefore, neither an expression laid on
c immutable emotional over-tones nor a permanent creation of infallible
wisdom. It is a statement of situation or rather a group of possible
events within a situation and as such it is essentially ambiguous." [See
"Statutory Interpretation"-43 Har. L.R. 863 (868)).

D The observations of Lord Russel of Killowen in Attorney General
v. Carlton Bank, [1899] 2 Q.B. 158 though an early pronouncement, is
refreshing from its broad common-sense:

"I see no reason why special canons of construction A
should be applied to any Act of Parliament, and I know of
E no authority for saying that a Taxing Act is to be construed
differently from any other Act. The duty of the Court is, in
my opinion, in all cases the same, whether the Act to be
construed relates to taxation or to any other subject,
namely to give effect to the intention of the Legislature, as -l
that intention is to be gathered from the language em- \.-.
F ployed, having regard to the context in connection with
which it is employed ..... Courts have to give effect to
what the Legislature has said."

The rule of construction that if the statutory provision is suscep-
tible or admits of two reasonably possible views then the one which
G would promote its constitutionality should be preferred on the ground
that the legislature is presumed not to have intended an excess of its ~
own jurisdiction, is subject to the further rule that it applies only ·
where two views are reasonably possible on tlie statutory language. If
the words of the statute, on a proper construction, can be read only in
a particular way, then it cannot be read in another way by a court of
H construction anxious to avoid its unconstitutionality. In a case, as here,
COMMR OF WEALTil-TAX v. HASHMATUNNISA [VENKATACHALIAH, J.] 167

a reference arises under 'Act', the question of the constitutionality of A
the 'Act' cannot be examined and pronounced upon. In State of Pun-
jab v. Prem Sukhdas, [1977] 3 SCR 408 this Court made the point
clear:
" ..... This amounts to nothing short of legislation.
We think that the view is an impossible one. The principle B
that, where a provision is capable of one of two interpreta-
tions, the interpretation which validates rather than one
which may invalidate a prpvision applies only where two
views are possible. It cannot be pushed so far as to alter the
-~·
meanings of the clear words used in an enactment and to, in
effect, repeal statutory provisions by making them useless
without holding them to be void." C
[p. 410] .
(Emphasis Supplied)

Even in regard to constitutionality of the classification, it is not
possible to rule out arguments as to the validity of classification as D
wholly unstateable. In a taxing measure the legislature enjoys a wider
latitude and its dispensations are based on an interaction of diverse
economic, social, and policy considerations. Further, if the proviso is
bad for discrimination, it would follow that the converse situation
brought about by the later amendment, a discrimination as between
gifts made as between the 31st of March 1972 and on 1st April, 1972
might also become bad. It is true that we are required to notice the E

- provision as it stood at the relevant time.

We, however, should not be understood to have pronounced on
'J the question of constitutionality. That is the task of the Court in
judicial-review but the rule of preference of a particular construction F
amongst the alternatives, in order to avoid unconstitutionality is
unavailable here.

Accordingly, while Civil Appeal No. 1226 and 1227 of 1975 pre-
ferred by the assessee are dismissed, CA No. 1118 of 1975 of the
' revenue is allowed and in reversal of the order dated 18.9.1974 of the
Andhra Pradesh High Court the question reforred is answered in the G
4- negative and in favour of the revenue.

In the circumstances, the parties are left to bear and pay their
own costs in these appeals.
N.P.V. C.A. Nos. 1226 & 1227/75 are dismissed H
C.A. No. 1118/75 is allowed.