Case: J. N. Sharma Vs. H.H. Vijayakuverba Maharani Of Morvi And Others

would, 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 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 enforcing liability against the estate of a person dying after the Act is brought into force. Counsel placed strong reliance upon Income-tax Commissioner, Bombay v. D.N. Mehta, 1935-3 ITR 147 : (AIR 1935 Bom 167 ) decided by the Bombay High Court, and submitted that Parliament having adopted the same phraseology as was used in S. 24B(1) of the Income-tax Act it may be inferred that it was intended to give legislative recognition to the interpretation of S. 24B insofar as it is applicable to the Expenditure-tax Act. In D. N. Mehtas case, 1935-3 ITR 147 : (AIR 1935 Bom 167 ) 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 income-tax against her legal representatives it was contended that Avabai 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. Mehtas case. 1935-3 ITR 147 : (AIR 1935 Bom 167 ). Beaumont, C J., delivering the judgment of the Court 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 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 S. 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 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."8. 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(1) 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, 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.9. 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 remaining clauses in the context of sub-sections (2) and (3) it is clear that the Parliament intended to attract the entire charge to tax and machinery prescribed by Ss. 13 and 15 so as to render the estate of a person dying before the Act liable to satisfy the tax or other liability which could have been assessed or imposed upon him if he had not died. In the context of the declared liability under sub-section (1) and the provisions of sub-section (3) of S. 18, which make Ss. 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 difficult 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 merely because he had died before the date on which the Act was brought into force.10. 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 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 the estate. Nor can the legal representative of a deceased person set up a plea that because the estate is distributed, he should not be rendered liable to pay the expenditure tax which has been imposed by the statute.11. 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.12

Court's decision (1 = petition accepted / positive for appellant, 0 = rejected / negative): 1

Reasoning from the judgment:
1[ds]9. 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 remaining clauses in the context of sub-sections (2) and (3) it is clear that the Parliament intended to attract the entire charge to tax and machinery prescribed by Ss. 13 and 15 so as to render the estate of a person dying before the Act liable to satisfy the tax or other liability which could have been assessed or imposed upon him if he had not died. In the context of the declared liability under sub-section (1) and the provisions of sub-section (3) of S. 18, which make Ss. 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 difficult 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 merely because he had died before the date on which the Act was brought into force.10. 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 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 the estate. Nor can the legal representative of a deceased person set up a plea that because the estate is distributed, he should not be rendered liable 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.