# I. N. SHARMA v. H.H. VUA Y AKUVERBA MAHARANI OF MORVI AND OTHERS

- **Citation:** [1966] 2 S.C.R. 618
- **Court:** Supreme Court of India
- **Decided:** 1965-11-17
- **Case number:** Civil Appeal No. 841 of 1964
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/i-n-sharma-v-h-h-vua-y-akuverba-maharani-of-morvi-and-others-3726
- **Pages:** 8

## Headnote

618
I. N. SHARMA
v.
H.H. VUA Y AKUVERBA MAHARANI OF MORVI AND
OTHERS
November 17, 1965
[K. SUBBA RAO, J. C. SHAH AND s. M. Snoo, JI.]
Expenditure Tax Act 1957 (29 of 1957), s. 18-A<sessee dying
before Act came into force-Whet.her expenditure incurred by deceased
liable to tax-Liability of legal representatives to be assessed.
The Expenditure Tax Act, 1957 was brought into force with effect
from April 1, 1958. The respondents executors under the will of Mwere served a notice under s. 13(2) of the Act requiring them to furnish a return in respect of the expenditure incurred by M
between
April 1, 1957 and August
1957 the date of his death.
The respondents objected that the Act did not apply to M because he had died
before the date on which the Act came into force and on that account
the respondents as executors of his will were not liable to submit the
return demande.d. The contention was overruled by the Expenditure-tax
Officer whereupon the respondents filed a writ petition in the High Court
praying that the proceedings be quashed. The High Court held that the
charge under the Act in respect of expenditure incurred in the relevant
previous year to the assessment year 1958-59 was not on tbe estate of any
individual or any Hindu undivided family: it was on the individual or
the Hindu undivided family incurring the expenditure, and as it was imposed for the first time on April 1, 1958, unless the unit of assessment
was in existence1 on the date when the Act came into force, no tax could
be levied.
With certificate ,granted by tlJe. High Court the Revenue
came to this Court.
HELD : (i) In terms sub-s. (1) of s. 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 opera·
tion of the sub-section to cases of persons dying after the Act was brought
into force.
[622. C·Dl
(ii) In the context of the declared liability under sub-s. (1) and the
provisions of sub-s. (3) of s. 18 which make sections 13, 14 and 15
of the Expenditure Tax applicable to the executor, adm.inistr:ator or
legal representative, as they apply to any person, it would be difficult
to hold that the legislature has not expressed its intention clearly so as to
render the estate of a deceased pe,rson liable to be assessed to expenditure
tax merely because he had died before that date in which this Act was
brought into force.
[625 D-E]
Ellis Reid v. Commissioner of Income-tax, 5 I.T.C. 100 : I.L.R. 55
Born. 312 and Income-tax Commissioner Bombay v. D. N. Mehta, 3
LT.R. 147, considered.
HJ
The judgment of the High Court had therefore to set aside.
[625

## Text

618
I. N. SHARMA
v.
H.H. VUA Y AKUVERBA MAHARANI OF MORVI AND
OTHERS
November 17, 1965
[K. SUBBA RAO, J. C. SHAH AND s. M. Snoo, JI.]
Expenditure Tax Act 1957 (29 of 1957), s. 18-A<sessee dying
before Act came into force-Whet.her expenditure incurred by deceased
liable to tax-Liability of legal representatives to be assessed.
The Expenditure Tax Act, 1957 was brought into force with effect
from April 1, 1958. The respondents executors under the will of Mwere served a notice under s. 13(2) of the Act requiring them to furnish a return in respect of the expenditure incurred by M
between
April 1, 1957 and August
1957 the date of his death.
The respondents objected that the Act did not apply to M because he had died
before the date on which the Act came into force and on that account
the respondents as executors of his will were not liable to submit the
return demande.d. The contention was overruled by the Expenditure-tax
Officer whereupon the respondents filed a writ petition in the High Court
praying that the proceedings be quashed. The High Court held that the
charge under the Act in respect of expenditure incurred in the relevant
previous year to the assessment year 1958-59 was not on tbe estate of any
individual or any Hindu undivided family: it was on the individual or
the Hindu undivided family incurring the expenditure, and as it was imposed for the first time on April 1, 1958, unless the unit of assessment
was in existence1 on the date when the Act came into force, no tax could
be levied.
With certificate ,granted by tlJe. High Court the Revenue
came to this Court.
HELD : (i) In terms sub-s. (1) of s. 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 opera·
tion of the sub-section to cases of persons dying after the Act was brought
into force.
[622. C·Dl
(ii) In the context of the declared liability under sub-s. (1) and the
provisions of sub-s. (3) of s. 18 which make sections 13, 14 and 15
of the Expenditure Tax applicable to the executor, adm.inistr:ator or
legal representative, as they apply to any person, it would be difficult
to hold that the legislature has not expressed its intention clearly so as to
render the estate of a deceased pe,rson liable to be assessed to expenditure
tax merely because he had died before that date in which this Act was
brought into force.
[625 D-E]
Ellis Reid v. Commissioner of Income-tax, 5 I.T.C. 100 : I.L.R. 55
Born. 312 and Income-tax Commissioner Bombay v. D. N. Mehta, 3
LT.R. 147, considered.
HJ
The judgment of the High Court had therefore to set aside.
[625
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 841 of
1964.
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3. N. SHARMA V. MAHARANI (Shah, J.)
619
A
Appeal from the judgment and order dated October 12, 1961
of the Bombay High Court in Misc. Application No. 379 of 1959.
A. V. Viswanatha Sastri, N. D. Karkhanis, R.H. Dhebar and
R. N. Sachthey, for the appellants.
N. A. Palkhivala, 0. P. Malhotra, 1. B. Dadachanii, for the
B respondents .
The Judgment of the Court was delivered by
Shah, J. The Expenditure-tax Act 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
c 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
D appeal as executors of his estate. The Expenditure-tax Officer
issued a notice under s. 13 (2) of the Expenditure-tax Act, 1947,
requiring the respondents to furnish a r.eturn of the expenditure
incurred by Mahendrasinghji for the period between Aprill, 1957
to August 17, 1957. The respondents submitted that the Act
K did not apply to Mahendrasinghji because he had died before the
date on which the Act came into force, and on that account the
respondents as executors of his will were not liable to submit the
return demanded. By letter dated November 19, 1959, the Expenditure-tax Officer rejected the contention raised by the respondents.
F
The respondents then filed a petition in the High Court of
Bombay under Art. 226 of the Constitution praying that the proceedings started by the Expenditure-tax Officer for assessing and
levying tax on the expenditure incurred by the late Mahendrasinghji during the previous year be quashed and that the Officer be
restrained by an injunction from taking further steps or proceed0
ings under the Act. The High Court held that the charge under
the Act in respect of expenditure incurred in the relevant previous
year to the assessment year 1958-59 was not on the estate of any
individual or any Hindu undivided family : it was on the individual
or the Hindu undivided family incurring the expenditure, and as
H
it was imposed for the first time on April 1, 1958, unless the unit
of assessment was in existence on the date when the Act came into
force, no tax could be levied.
With certificate granted by the
High Court, this appeal has been preferred.
620
SUPREME COURT REPORTS
[1966] 2 S.C.R.
Section 2 ( c) of the Expenditure-tax Act 29 of 1957 defines
A
an assessee as meaning an individual or a Hindu undivided family
by whom expenditure-tax or any other sum of money is payable
under the Act, and includes every individual or Hindu undivided
family against whom any proceeding under the Act has been
taken for the assessment of his expenditure.
"Assessment year"
under the Act means the year for which tax is chargeable under
B
s. 3, and "previous year" is defined in relation to any assessment
year as meaning the previous year as defined in cl. ( 11 ) of s. 2
of the Income-tax Act if an assessment were to be made under the
said Act for that year.
The relevant part of s. 3 which is the
charging section provides.
c
" ( 1) 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 unD
divided family in the previous year : "
Section 13 deals with returns of expenditure for the purpose of
assessment of tax. It provides :
"(1) Every 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 expendituretax, then, notwithstanding anything contained in subsection ( 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 3nd verified in the prescribed manner and setting forth such other particulars
as may be required in the notice relating to the expenditure of such persons for the previous year mentioned in the notice.
(3)
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J, N. SHARMA V. MAHARANI (Shah, J.)
621.
A 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 Officer to assess tax. If the Officer is satisfied
without requiring the presence of the assessee or production by
him of any evidence that a return made under s. 13 or s. 14 is
B correct and complete, he must assess the taxable expenditure of
the ass.essee and determine the amount payable by him as expenditure-tax. If the Expenditure-tax Officer is not so satisfied,
he may serve a notice on the assessee requiring him either to
attend in person or to produce any evidence on which the assessee
C may rely in support of his return. By sub-s. (3) of s. 15 the
Expenditure-tax Officer is authorised to determine the
taxable
expenditure of the assessee and the amount payable by him as
expenditure-tax.
By sub-s. ( 5) the Expenditure-tax Officer is
authorised to make the assessment to the best of his judgment
and to determine the amount payable by the person as expendiD
ture-tax on the basis of such assessment. Section 18 provides :
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" ( 1 ) Where a person dies, his executor, administrator or other legal representative shall be liable to pay
out of the estate of the deceased person to the extent
to which the estate is capable of meeting the charge, the
expenditure-tax assessed as payable by such person,
or any sum which would have been payable by him·
under this Act if he had not died.
(2) Where a person dies without having furnished
a return under the provisions of section 13 or after
having furnished a return which the Expenditure-tax
Officer has reason to believe to be incorrect or incomplete, the Expenditure-tax Officer may make an as,essment of the expenditure of snch person and determine
the expenditure-tax payable by the person on the basis
of such assessment, and for this purpose may, by the
issue of the appropriate notice which would have had to
be s~rved upon the deceased person if he had survived,
reqmre from the executor, administrator or other legar
representative of the deceased person any
accounts,
documents or other evidence which might under theprovisions of section 15 have been required from the
deceased person.
(3) The provisions of section 13, section 14 and
section 15 shall apply to an executor, administrator or
•.622
SUPREME
COURT
REPORTS
[1966) 2 S.C.R.
other legal representative as they apply to any person
referred to in those sections.".
A
Power of the Parliament to enact legislation for assessing tax
:against the representatives of a person who died before the date
.on which the Act was brought into force and for collecting it
from his estate is not challenged. It is however submitted that B
.the Parliament has failed to set up effective machinery for assess-
:ing tax against the estate of a person who died during the pre-
'Vious year relevant to the assessment year 1958-,59 so as to
.render his estate liable under the Act.
In terms, sub-s. (1) of s. 18, imposes liability upon the legal C
irepresentatives 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 con-
·text in which it occurs which suggests that it was intended thereby to restrict .the operation of the sub-section to cases of persons
D
·dying after the Act was brought into force. Sub-section (2) sets
up machinery for assessing liability to tax where the person
1iable to pay tax has died before submitting a return, or after
submitting a return, but before the assessment is completed. It
<'.onfers powers upon the Expenditure-tax Officer
exercisable
agains~ the legal representatives which but for death of the E
person liable, would have been exercised under s. 13(2) and
s. 15 against such person.
Sub-section ( 3) which makes
the
provisions of ss. 13, 14 & 15 applicable to legal representatives
as they apply to any person referred to in those sections clearly
indicates that the legal representatives of a person who had died
are under the same obligations as the deceased was to make a F
return under s. 13(1), and that the Tax Officer is invested with
power to call for return from the legal representative of a deceased person and to assess, which could have been exercised against
that person, if he had not died. The scheme of s. 18 is that by
sub-s. (1) liability of the estate of a person who dies, to satisfy
the tax liability if his expenditure in the previous year exceeds the
G
amount which renders him liable to the expenditure-tax, is declared, and by sub-ss. (2) & (3) the Expenditure-tax Officer is
invested with power to require a return to be made by the legal
representative of a deceased person whose estate is liable to pay
the tax, or to deal with a return already made, and to determine
after assessment the tax payable.
The legal representative of H
the person dying may therefore be called upon by the Tax Officer
to make a return, and on the return so made the expenditure-
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J, N, SHARMA v. MAHARANI (Shah, J.)
623
A tax or any other sum which would have been declared payable,
if he had not died, may be assessed or determined, and collected from the estate in the hands of the legal representative. ff
the legal representative fails to make a return, a best judgment
assessment may be made by the Tax Officer .
The operative terms of sub-s. (1) of s. 18 are identical with
the terms of s. 24B (1) of the Indian Income-tax Act, 1922.
Section 24B was added in the Income-tax Act, 1922, by the
Income-tax (Second Amendment) Act 18 of 1933 with effect
from September 11, 1933, to remedy a lacuna which was pointed
out by the Bombay High Court in the machinery provisions of the
·C
Income-tax Act insofar as th.ey related to assessment of tax against
the estate of a person who died before assessment was completed.
In Ellis Reid v. Commissioner of Income-tax('), the Bombay
High Court held that where a person dies after the issue of a notice
under s. 22(2) of the Income-tax Act, 1922, to·make a return of
his income, but b.efore he makes a return, assessment proceedings
D
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
1E
person by whom or 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, s. 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
F of tax from his estate. The Parliament adopted the scheme of
s. 24B with some variations in enactincr ss. 18(1) & (2) for
rendering the estate of a person who w~uld, if he had not died,
have been liable to pay expenditure-tax. This is not denied. But
counsel for the. respondent said that s. 18 of the Expenditure-tax
A:ct does not bring within the net of taxation cases of persons who
·G died ?efore the Act was brought into force : it only sets up
m~chmery for enforcing liability against the estate of a person
dy~ng after the Act is brought into force. Counsel placed strong
reliance upon Income-tax Commissioner, Bombay v. D.
N.
Meh.ta(
2
) decided by the Bombay High Court, and submitted that
Parliament having adopted the same phraseology as was used in
'H
~· 24B ( 1) of the Income-tax Act, it may be inferred that it was
intended to give legislative recognition to the interpretation of
(I) 51.T.C. IOO : l.L.R. 55 Bo'l'. 312.
(2) 3 l.T.R. 147
624
SUPREME
COURT
REPORTS
[ i 966] 2 S.C.R.
s. 24B insofar as it is applicable to the Expenditure-tax Act. In
A
D. N. Mehta's case(') one Avabai died on May 6, 1932 after she
was served with a notice requiring her to make a return of her
income under s. 22(2) of the Indian Income-tax Act,
1922.
Section 24B was thereafter inserted in the Income-tax Act on
September 11, 1933. In proceedings for assessment of incometax against her legal representatives it was contended that
B
Avaba.i had died before the date on which the amendment was made, her estate was not liable to be taxed under the
machinery incorporated in the Act in s. 24B. This contention
found favour with the Bombay High Court in D. N. Mehta's
case('). Beaumont, CJ., delivering the judgment of the Court
C
observed:
" ........ that s. 3 of the Income-tax 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 crystallized 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 applfed in construing a taxing Act is that the Government must show
that the tax sought be recovered has been imposed in
language which admits of no reasonable doubt. The
opening words of each sub-section to Section 24-B :
"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 would have been very easy to
have said, "dies whether before or after the passing of
this Act". Inconvenience and hardship might be caused
by making the tax payable out of an estate which has
been distributed on the basis of the then existing law."
Counsel for the respondents maintained that as with this
judicial interpretation of s. 24B before it, the Parliament adopted
the same phraseology and scheme in enacting s. 18 (I) of the
Expenditure-tax Act, Parliament must be deemed to have intended
to enact the rule laid by the Bombay High Court in its application to the Expenditure-tax Act. It was open to the Parliament,
(0 3 l.T.R.147.
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J, N. SHARMA v. MAHARANI (Shah, J.)
625
A
B
said counsel, to use adequate phraseology such as "dies whether
before or after the passing of this Act" and the 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 s. 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
c remaining clauses in the context of sub-ss. (2) & (3) it is clear
that the Parliament intended to attract the entire charge to tax
and machinery prescribed by ss. 13 & 15 so as to render the estate
of a person dying before the Act liable to satisfy the tax or other
liability which would have been assessed or imposed upon him if
he had not died. In the context of the declared liability
D
under sub-s. (1) and the provisions of sub-s. (3) of s. 18, which
mak.e sections 13, 14 and 15 of the Expenditure-tax Act applicable to the executor, administrator or legal representative, as they
apply to any person, it would be d:lficult to hold that the Legislature has not expressed its intention clearly so as to render the
estate of a deceased person liable to be assessed to expenditure-tax
E merely because he had died before the date on which the Act was
brought into force.
The argument of inconvenience has no substance. A person
who has rendered himself liable to pay tax on the expenditure
incurred by him in the previous year may, not being aware of the
F proposal to enact a statute like the Expenditure-tax Act, part with
his estate. But on that account he cannot set up a defence against
the levy of the tax that he has parted with tlle estate. Nor can
the legal representative of a deceased person set up a plea that
because the estate is distributed, he should no~ be rendered liable
G
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to pay the expenditure-tax which has been imposed by the statute.
We are unable therefore to agree with the High Court that
by enacting s. 18 of the Act the Parliament has not rendered the
estate of a person liable to expenditure-tax, if such person had died
before the date on which the Act was brought into force .
The appeal is therefore allowed and the order passed by the
Hi~ 0urt is .set aside! an~ the petition filed by the respondents
IS d1sffil5Sed wrth costs m thu Court and the High Court .
Appeal cl/owed.