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TMI Blog1973 (12) TMI 15X X X X Extracts X X X X X X X X Extracts X X X X ..... xtension. The Assistant Controller of Estate Duty rejected this claim holding that Pondicherry became part of the Indian territory with its de jure transfer on and from August 18, 1962, and that, therefore, any movable or immovable property owned by the deceased in Pondicherry will be movable or immovable property in India from August 16, 1962. Since the market value of the movable or immovable property situated in India can be included in the estate of the deceased, though he was domiciled in the United Kingdom, the shares in Best & Company, Pondicherry, are liable to be included in the principal value of the estate. The extension of the Estate Duty Act to Pondicherry only from April 1, 1963, in his view, was of no significance and it will be relevant only in determining the liability of a resident of Pondicherry. In the case of persons not domiciled in Pondicherry the only relevant consideration is the location of the property within the territory of India. The exemption under section 21(1) of the Act was available only in respect of properties situated outside India at the time of death of the deceased and that the exemption was not availaled in respect of properties which were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... May 28, 1956. This Treaty of Cession envisaged a ratification of the same by the respective Governments in order that the de jure transfer may take effect. Following the de facto transfer the Government of India was administering the territory under the Foreign jurisdiction Act, 1947, and in accordance with the French Establishments (Administration) Order, 1954, and other orders made under sections 3 and 4 of that Act. In exercise of these powers and with a view to bring the administration of Pondicherry so as to conform to the pattern of administration obtaining in India, a large body of Acts in forte in India were extended to Pondicherry by the Government. The de jure transfer was effected on August 16, 1962. In N. Masthan Sahib v. Chief Commissioner, Pondicherry , the Supreme Court considered the question as to whether the Pondicherry settlement was part of the territory of India prior to the de jure transfer. After noting the constitutional changes made in articles 1 and 2 and the First Schedule to the Constitution of India by the Constitution (Seventh Amendment) Act, the Supreme Court held that the term " territory of India " has been used in the several articles of the Const ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was not domiciled in India at the time of his death. He submitted further that section 5 includes all property whether movable or immovable wherever they are situated inside or outside India and only by virtue of section 21 in the case of a deceased who was not domiciled in India at the time of his death the movable properties situated outside India were exempted. He pointed out that in this case the death was after the commencement of the Act, namely, October 15, 1953, and the shares in Best & Company, Pondicherry, which are movable property, were not situated outside India at the time of death in order to attract the exemption under section 21 as Pondicherry had become part of the territory of India on August 16, 1962. In order to understand the argument of the learned counsel for the accountable person, it is necessary to notice at this stage the provisions of Central Act 49 of 1962 and Central Regulation 3 of 1963. The Pondicherry Administration Act, 1962 (Act 49 of 1962), came into force on August 16, 1962. Section 4(1) of this Act provided that all laws in force immediately before August 16, 1962, in the former French establishments or any part thereof shall continue to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ingredients for charging estate duty is the death of the person after the commencement of the Act and passing of property on the death of such person. Section 5 imposes a duty upon the principal value of all properties which pass on death irrespective of the nature of the situs of the property. We have noticed in our judgment in Ramaswamy Chettiar v. Assistant Controller of Estate Duty that a taxation statute cannot be challenged on the ground that it is extra territorial in operation if there is a connection between the person who is subjected to tax and the country, imposing a tax and where by a proper construction of an Act of Parliament extra-territorial operation was intended, the courts in India must give effect to such an Act without questioning the competence of Parliament with reference to any rule of International law. We have also held that if a person is domiciled in India the Estate Duty Act has sufficient nexus to operate on his assets wherever situate. Equally, Parliament's power to legislate is beyond question where the properties are situated inside India, whether the person is domiciled in India or outside India. Section 5, therefore, proprio vigore attracted the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le property in Pondicherry which is part of India will escape from estate duty while a person owning such movable property in any other State in India or outside India would be liable to duty. Further, in respect of the same person for properties situated in India but outside Pondicherry, the relevant date is October 15, 1953, but for his property situated in Pondicherry the relevant date will be April 1, 1963. There cannot be two deaths for a single person as graphically put by the learned counsel for the revenue. It may be that on this construction even in respect of a person domiciled in Pondicherry if he has immovable properties in India outside Pondicherry, in addition to his properties in Pondicherry he would be subject to levy on the date of coming into force of the Act, namely, October 15, 1953, in respect of all his properties while in the case of a person domiciled in Pondicherry owning properties only in Pondicherry the commencement of the Act would be only April 1, 1963. But this is due to historical reasons and could not be avoided. We are concerned with a case of a person domciled outside India dying after the coming into force of the Act leaving properties in Indi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d or repealed by a competent legislature. Though there was no Estate Duty Act in Pondicherry, a person domiciled in Pondicherry became entitled to be not subjected to estate duty by virtue of these provisions. These provisions are also consistent with the International Law. Pondicherry became the territory of India under article 1(3)(c) of the Constitution of India as an acquired territory. With respect to the application of Indian laws in respect of acquired territories, we find the following passage in Craies on Statute Law, seventh edition, page 486 : " Conquered or ceded colonies : Prima facie those colonies which were acquired by conquest or cession from a civilised Power remain under the laws of the Power to which they originally belonged, subject to the modifications introduced since the conquest or cession ; . . . . " In Halsbury's Laws of England, third edition, volume 5, at page 693, the law is stated thus : "Continuance of ancient law, until abrogation : In conquered or ceded countries which, at the time of their acquisition, had already laws of their own, the Crown has power to alter and change those laws, but until that is actually done the ancient laws of the count ..... 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