TMI Blog1965 (11) TMI 37X X X X Extracts X X X X X X X X Extracts X X X X ..... into force. Appeal allowed. - - - - - Dated:- 18-11-1965 - Judge(s) : K. SUBBA RAO., J. C. SHAH., S. M. SIKRI JUDGMENT The judgment of the court was delivered by SHAH J.--The Expenditure-tax Act, 1957 (29 of 1957), which received the assent of the President on September 17, 1957, was brought into force on April 1, 1958. The Act provides for levy of tax on expenditure at the rate or rates specified in the Schedule to the Act, for every financial year commencing on and from the first day of April, 1958, in respect of the expenditure incurred by any individual or Hindu undivided family in the previous year. His Highness Mahendrasinghji, Ruler of Morvi, died on August 17, 1957, having made a will appointing the respondents to this appeal as executors of his estate. The Expenditure-tax Officer issued a notice under section 13(2) of the Expenditure-tax Act, 1947, requiring the respondents to furnish a return of the expenditure incurred by Mahendrasinghji for the period between April 1, 1957, to August 17, 1957. The respondents submitted that the Act did not apply to Mahendrasinghji because he had died before the date on which the Act came into force, and on that accou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry person whose expenditure for the previous year was of such an amount as to render him liable to expenditure-tax under this Act shall, before the thirtieth day of June of the corresponding assessment year, furnish to the Expenditure-tax Officer a return in the prescribed form and verified in the prescribed manner setting forth his expenditure for the previous year. (2) If the Expenditure-tax Officer is of the opinion that the expenditure of any person for any year is of such an amount as to render him liable to expenditure-tax, then, notwithstanding anything contained in sub-section (1), he may serve a notice upon such a person requiring him to furnish within such period, not being less than thirty days, as may be specified in the notice, a return in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be required in the notice relating to the expenditure of such person for the previous year mentioned in the notice.... " Section 14 enables a return to be made, if it is not furnished within the time allowed, or to be modified, at any time before the assessment is made. Section 15 confers power upon the Expenditure-tax Offi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on which the Act was brought into force and for collecting it from his estate is not challenged. It is however submitted that Parliament has failed to set up effective machinery for assessing tax against the estate of a person who died during the previous year relevant to the assessment year 1958-59, so as to render his estate liable under the Act. In terms, sub-section (1) of section 18 imposes liability upon the legal representatives of a person who dies, to pay out of his estate, expenditure-tax assessed as payable by such person, or any sum which would have been payable by him if he had not died. There is nothing in the expression " where a person dies " or in the context in which it occurs which suggests that it was intended thereby to restrict the operation of the sub-section to cases of persons dying after the Act was brought into force. Sub-section (2) sets up machinery for assessing liability to tax where the person liable to pay tax has died before submitting a return, or after submitting a return, but before the assessment is completed. It confers powers upon the Expenditure-tax Officer exercisable against the legal representatives which, but for the death of the per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ings commenced against him under the Income-tax Act cannot be continued and his legal representative will not be liable to pay tax which such person may, if he had not died, have been assessed to pay. In the view of the High Court the definition of " assessee " applies only to a living person, the expression used by the legislature being " a person by whom income-tax is payable " and not " a person by whom or by whose estate income-tax is payable ". With a view to remove the defect pointed out by the High Court in the scheme of the Act, section 24B was inserted providing machinery for assessment of tax against the estate in the hands of the legal representative of a person liable to pay tax and for levy and collection of tax from his estate. Parliament adopted the scheme of section 24B with some variations in enacting section 18(1) and (2) for rendering the estate of a person who would, if he had not died, have been liable to pay expenditure-tax. This is not denied. But counsel for the respondent said that section 18 of the Expenditure-tax Act does not bring within the net of taxation cases of persons who died before the Act was brought into force : it only sets up machinery for en ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the basis of the then existing law. " Counsel for the respondents maintained that as, with this judicial interpretation of section 24B before it, Parliament adopted the same phraseology and scheme in enacting section 18 (1) of the Expenditure-tax Act, Parliament must be deemed to have intended to enact the rule laid down by the Bombay High Court in its application to the Expenditure-tax Act. It was open to Parliament, said counsel, to use adequate phraseology, such as " dies whether before or after the passing of this Act " and Parliament not having done so, it must be deemed to have accepted the interpretation placed by the Bombay High Court and to have evinced an intention not to render the estate of the person, who died before the date on which the Act was brought into force, liable to expenditure-tax. We are unable to agree with this contention. The expression "where a person dies" standing by itself in section 18 does not suggest that thereby it was intended to refer only to death of the person liable after the Act was brought into force : and read with the remaining clauses in the context of sub-sections (2) and (3), it is clear that Parliament intended to attract the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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