TMI Blog1961 (10) TMI 101X X X X Extracts X X X X X X X X Extracts X X X X ..... er died and Mr. Palkhivala, counsel for the petitioners, requested that his name be removed. No objection to it has been raised by counsel for the respondents. We, therefore, direct that the name of the 2nd petitioner be removed. The first respondent to this petition is mentioned as S. Narayanan, 1st Expenditure-tax Officer, D. I. Ward, having his office at Aayakar Building, Queens Road, Bombay-1. It has been stated before us that Mr. S. Narayanan is not now the Expenditure-tax Officer but Mr. G.N. Sharma is the 1st Expenditure-tax Officer. The name of Shri G.N. Sharma shall, therefore, be substituted in place of Shri S. Narayanan. The second respondent is the Union of India. Mr. Palkhivala, at the commencement of the arguments, stated that though in the petition relief has been claimed against 2nd respondent, the petitioners do not now seek any relief against the 2nd respondent, but the prayers made are restricted only as against the 1st respondent. The following facts give rise to this petition : The late Maharaja of Morvi died testate on 17th August, 1957. The three original petitioners were appointed by him in his will as the executors of his estate. The probate of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the date on which the Act came into force. Correspondence in this matter ensued between the petitioners and the Central Board of Revenue. The contentions raised by the. petitioners have, however, not been accepted by the department: vide letter dated 19th November, 1959, addressed by the Deputy Secretary to the Government of India to the attorneys of the petitioners. The petitioners, therefore, have moved this court by this petition seeking the aforesaid reliefs. Mr. Palkhivala contends that the notice issued, by the 1st Expenditure-tax Officer under sub-section (2) of section 13 of the Act is with out jurisdiction inasmuch as the Act has no application to the case of the petitioners. The Act is prospective in operation, i.e., it affects the, persons, who were in existence, at the time the Act came into force. The late Maharaja of Morvi had died prior to the date the Act came into force and, therefore, the expenditure incurred by him during the financial year 1957-58 is not assessable to tax under the Act. He also referred us to a decision reported in Commissioner of Income-tax v. D.N. Mehta [1935] 3 ITR 147. Mr. Joshi, on the other hand, contends that on a true constructio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 3. Clause (h) defines expenditure to mean any sum in money or money's worth spent or disbursed or for the spending or disbursing of which a liability has been incurred by an assessee, and includes any amount which under the provisions of this Act is required to be included in the taxable expenditure. Clause (n) defines previous year and for the relevant period as the definition stood, in relation to any assessment year, means the previous year as defined in clause (11) of section 2 of the Income-tax Act if an assessment were to be made under the said Act for that year. These defining clauses are hardly of any assistance in the matter of deciding the question, which we have to decide. Sub-section (1) of section 3 is a charging section and it reads : Subject to the other provisions contained in this Act, there shall be charged for every financial year commencing on and from the first day of April, 1958, a tax (hereinafter referred to as, expenditure-tax) at the rate or rates specified in the Schedule in respect of the expenditure incurred by any individual or Hindu undivided family in the previous year. The other provisions of section 3 are not relevant. Sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... difficult, in our opinion, to sustain the argument of Mr. Joshi on the terms of sub-section (i) of section 3 and sub-section (1) of section 18. It is true that the charge under the Act is also in respect of the expenditure incurred in the relevant previous year of the assessment year 1958-59 and to that extent the Act is retrospective in operation. But the charge is not on the estate of any individual or of Hindu undivided family. It is on an individual or on a Hindu undivided family incurring that expenditure and it is for the first time imposed on 1st April, 1958. The word individual has not been defined in the Act. In sub-section (1) of section 3, it is used in conjunction with a Hindu undivided family . It would, therefore, be reasonable to assume that it means only a human being. Dealing with the word individual , the Supreme Court in Commissioner of Income-tax v. Sodra Devi [1957] 3 ITR 615, 620 (SC), observed : . . . and there is authority for the proposition that the word 'individual' does not mean only a human being but is wide enough to include a group of persons forming a unit. It has been held that the word 'individual' includes a corporation cre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 39;s argument is to be accepted we will have to read in sub-section (1) of section 18 words whether before or after the Act has come into force after the expression where a person dies . As already stated, that would amount to rewriting the section, which is not open to this court. The decision in D.N. Mehta's case (supra) relates to the construction of section 24B of the Indian Income-tax Act. In our opinion, by virtue of the analogy in the language of section 246(1) of the Income-tax Act and that of section 18(1) of the Act in material respects the ratio of the said decision would be of assistance in construing sub-section (1) of section 18. It would, however, be convenient, before we proceed to deal with this case, to refer to the decision in Commissioner of Income-tax v. Ellis C. Reid [1931] 55 ITR 312 (Bom.) to which Mr. Joshi has invited our attention to bring to our notice the infirmity in the Indian Income-tax Act that led to the introduction of section 24B into the Income-tax Act. In that case a notice had been served on the assessee under section 22(2) of the Income-tax Act requiring him to make a return of his income of the previous year. He, however, died befo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urt upheld the contention of the legal representatives of the deceased assessee. The learned Chief Justice at page 148 of the report observed: It is, I think, correct to say that section 3 of the Principal Act charges the tax upon every one coming within the purview of the Act who was alive at the beginning of the financial year, but in the case of a person dying before assessment, that liability was inchoate only, and crystallised into an enforceable liability for the first time on the passing of the Amendment Act. It is, therefore, not quite accurate to say that the Amendment Act merely deals with machinery; it does for the first time impose an enforceable liability. The principle which must always be applied in construing a taxing Act is that the Government must show that the tax sought to be recovered has been imposed in language which admits of no reasonable doubt. The opening words of each sub-section to section 24B : 'Where a person dies', though the use of the present tense is not altogether appropriate on any reading of the Act, seem to me more appropriate to future than to past deaths. If the legislature had intended the Act to have a retrospective effect, it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0. Thereafter the Indian Finance Act of 1950 amended the Indian Income-tax Act in certain respects and made it applicable to the whole of India except the State of Jammu Kashmir. In May, 1950, the respondent was required to file a return of his income for the year ending 31st March, 1950. He was later asked to produce his account books. The assessee thereupon filed a petition under article 226 of the Constitution challenging this action on the ground that his income was not liable to be charged to tax under the provisions of any law validly in force in Rajasthan during the period he earned that income. The contention of the assessee was accepted by the High Court. On appeal to the Supreme Court, the decision of the High Court was reversed. The Supreme Court held that it was com petent for the Parliament to authorise levy of tax on income accruing in the territory of Rajasthan in the year 1949-50. It is to be noticed that the assessee, whose income was being brought to tax, was alive on the date the Indian Finance Act of 1950 was enacted. The question, which we have to consider, Was not, therefore, the subject-matter of that decision. Mr. Joshi read to us the following observat ..... X X X X Extracts X X X X X X X X Extracts X X X X
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