vil Appeals Nos
2 4 of 1975
From the Judgment and Order dated 8th 9th November 1973 of the Gujarat High Court in Estate Duty Reference Nos 2 3 and 4 of 1971
Dr V Gauri Shankar and Miss A Subhashini for the Appel lant
VS Desai Mrs AK Verma and Joel Peres for the Respondents
The Judgment of the Court was delivered by PATHAK CJ
The facts in these appeals lie within a narrow compass
One Abdulhussein Gulamhussein Merchant died on 8 February 1959
The accountable persons filed returns under the provisions of the and an assessment was made by the Deputy Controller of Estate Duty on 26 February 1960
The Estate Duty Amendment Act 1958 repealed the original sections 56 to 65
Section 59 which substituted for the original section 62 made provision for reassessment
It came into force with effect from 1 July 1960
On 21 February 1962 a notice under the new section 59 of the Act was issued to the accountable person concerned for reopening the assessment on the ground that some property had escaped the levy of estate 990 duty
The accountable persons raised objections to the reopening of the assessment under section 59
The Assistant Controller rejected the contentions of the accountable persons and reopened the assessment
Against the order of reassessment the accountable persons filed three different appeals before the Appellate Controller
The Appellate Controller allowed the appeals and set aside the reassess ment orders holding that section 59 under which action had been taken by the Assistant Controller was not retrospective in operation
On appeal by the Revenue the Tribunal upheld the view of the Appellate Controller relying on the decision of the Bombay High CoUrt in AN Mafatlal vs Deputy Controller of Estate Duty Thereafter three references were made to the High Court at the instance of the Revenue raising the identical question Whether Section 59 of the is retrospective in operation and if so in the facts and circumstances of the case the reopening of the assessment under section 59 of the said Act was bad in law Section 62 as originally enacted read as follows Rectification of mistakes relating to valua tion for estate duty 1 If after the determination of the estate duty payable in respect of any estate it appears to the Controller that by reason of any mistake apparent from the record or of any mistake in the valuation of any property in any case other than a case in which the valuation has been the subject matter of an appeal under the Act or of the omission of any property the estate duty paid thereon is either in excess of or less than the actual duty payable he may either on his own motion or on the appli cation of the person accountable and after obtaining the previous approval of the Board at any time within three years from the date on which the estate duty was first determined a refund the excess duty paid or as the ease may be b determined the additional duty payable on the property Provided that where the person accountable had fraudulently under estimated the value of any property or omitted any property the period will be six years 991 Provided further that no order shall be made under this sub section unless the person accountable has been given an opportu nity of being heard
2 Nothing contained in sub section 1 shall render any
person accountable to whom a certificate that the estate duty has been paid is granted liable for any additional duty in excess of the assets of the deceased which are still in his possession unless the person accountable had fraudulently attempted to evade any part of the estate duty in the first instance
 The provisions of section 59 introduced by the Amendment Act of 1958 are as follows 59
Properly escaping assessment  If the Controller   a has reason to believe that by reason of the omission or failure on the part of the person accountable to submit an account of the estate of the deceased under Section 53 or Section 56 or to disclose fully and truly all material facts necessary for assessment any property chargeable to estate duty has escaped assessment by reason of undervaluation of the property included in the account or of omission to include therein any property which ought to have been included or of assessment at too low a rate or otherwise or b has in consequence of any infor mation in his possession reason to believe notwithstanding that there has not been such omission or failure as is referred to in clause a that any property chargeable to estate duty has escaped assessment whether by reason of under valuation of the property included in the account or of omission to include therein any property which ought to have been included or of assessment at too low a rate or otherwise he may at any time subject to the provisions of section 73A require the person accountable to submit an account as required under section 53 and may proceed to 992 assess or reassess such property as if the provisions of Section 58 applied thereto The High Court considered the question of law referred to it at great length and after a detailed judgment answered the question in each case in favour of the assessee
The Revenue now appeals
The question is whether the newly enacted section 59 of the is retrospective in operation so as to affect the assessment already completed on the accountable persons
It is urged that the new section 59 is substantially similar in content as the old section 62 and therefore the new provision must be regarded as retrospective
The contention may be examined
The Estate Duty Amendment Act 1958 effected a sub stantial change in the parent Act
56 to 65 were substi tuted in place of the existing sections 56 to 65 and the origi nally enacted section 62 was repealed
The original section 62 provid ed essentially for the rectification of mistakes apparent from the record or in the valuation of any property or by reason of the omission of any property
The newly enacted section 59 deals with property escaping assessment
The provision is analogous to section 34 of the Indian Income Tax Act 1922 and section 147 of the Income Tax Act 1961
It seems to us that the new section 59 endeavours to cover a substantially different area from that treated by the old section 62
The only area which seems common to the two provisions relates to the omission of any property but it seems to us that the incidents of the power under section 62 relate to a situation materially different from the incidents of the power contemplated under section 59
The High Court has closely analysed the provisions of the two sections and has come to the conclusion that the power of reassessment conferred by the new section 59 is quite different from the power conferred by the old section 62
We are in agreement with the High Court
The contention on behalf of the Revenue based on the identity alleged between the new section 59 and the old section 62 and that therefore the new sec tion should be regarded as retrospective cannot be accepted
As it stands there are no specific words either which confer retrospective effect to section 59
To spell out retro spectivity in section 59 then there must be something in the intent to section 59 from which retrospective operation can be necessarily inferred
We are unable to see such intent
The new section 59 is altogether different from the old section 62 and 993 there is nothing in the new section 59 from which an intent to give retrospective effect to it can be concluded
The new section 59 came into force from 1 July 1960
Much earlier on 26 February 1960 the assessment on the account able person had already been completed
There is a well settled principle against interference with vested rights by subsequent legislation unless the legislation has been made retrospective expressly or by necessary implication
If an assessment has already been made and completed the assessee cannot be subjected to re assessment unless the statute permits that to be done
Reference may be made to Controller of Estate Duty West Bengal vs Smt
IIa Das and others where an attempt to reopen the Estate Duty assessment consequent upon the insertion of the new section 59 of the was held infructuous
We hold that section 59 of the is not retro spective in operation and that the reopening of the assess ment under section 59
of the Act is bad in law
In the result the appeals fail and are dismissed with costs
NVK Appeals dismissed


Summary:
The appellant company entered into an agreement with a Norwegian Company under which the latter was to provide technical knowhow and technical services including facili ties for the training of personnel of the appellant company in connection with the manufacture of computers for a con sideration of NOK 32 Millions Norwegian Currency equiva lent to Rs575 lakhs
The appellant company applied to the Income Tax Officer for No Objection Certificate  under Section 1952 of the Income Tax 1961 in order to remit the instalments due under the agreement without deducting the tax at source but the same was refused
The application of the appellant company to the Commis sioner of Income Tax seeking a direction to the Income Tax Officer was also rejected on the ground that having regard to Sections 91vii and 195 of the Income Tax Act 1961 the payment to the foreign company constituted deemed accru al of Income in India and therefore the appellant was obliged to deduct at source the tax payable by the foreign company
A writ petition filed by the appellant against the order of the Commissioner and assailing the constitutional validity of Section 91vii of the 995 Income tax Act 1961 was dismissed by the High Court of Andhra Pradesh
A similar writ petition filed against the order of refusal of No Objection Certificate  by the Com missioner of Income Tax in relation to disbursement made under an agreement with a US Company was also dismissed by the High Court
Against the decision of the High Court appeals were filed in this Court challenging the vires of Section 91vii of the Income Tax Act 1961 contending that i it was extra territorial in operation and ii there was no nexus between anything done in India and the persons sought to be taxed
Referring the matter to a Constitution Bench HELD 1
It is envisaged under our constitutional scheme that Parliament in India may make laws which operate extra territorially
Article 2452 declares that no law made by Parliament shall be deemed to be invalid on the ground that it would have extra territorial operation
Therefore a Parliamentary statute having extra territorial operation cannot be ruled out from contemplation
The operation of the law can extend to persons things and acts outside the territory of India
The general principle flowing from the sovereignty of States is that laws made by one State can have no operation in another State
But while the enforce ment of the law cannot be contemplated in a foreign State it can nonetheless be enforced by the courts of the enact ing State to the degree that is permissible with the machin ery available to them
They will not be regarded by such courts as invalid on the ground of such extra territoriali ty
998H 999A B D British Columbia Electric Railway Company Limited vs The King  applied
But unless nexus exists Parliament will have no competence to make the law
Article 2451 empowers Parlia ment to enact law for the whole or any part of the territory of India
The provocation for the law must be found within India itself
Such a law may have extra territorial opera tion in order to subserve the object and that object must be related to something in India
It is inconceivable that a law should be made by Parliament in India which has no relationship with anything in India
999E F 21 In view of the great public importance of the ques tion whether the ingredients of the impugned provision indicate a nexus 996 these cases are referred to a Constitution Bench
999H Corborandum Co vs CIT  referred to