ACCOUNTANT GENERAL Vs. COMMISSIONER OF INCOME-TAX

JUDGEMENT

(1.) THE question raised by this reference is whether the Baroda State is entitled to a refund of income-tax paid by several companies as assessees on their respective total incomes in which the Baroda State is a shareholder. THE second question raised refers to the refund of super-tax paid by the companies in which also the Baroda State is a shareholder.

(2.) NOW it cannot be disputed that the Ruler of the Baroda State has certain attributes of sovereignty and as a sovereign he is not subject to the municipal laws of India. Therefore, the Indian Income-tax Act does not apply to him. He is not liable to pay tax on his income and he cannot be treated as an assessee for any purposes under the Income-tax Act. Sir Jamshedji's contention is that the Ruler of the Baroda State has been subjected to taxation contrary to International law. He says that when the companies paid tax on their profits prior to the distribution of dividends they paid tax on behalf of the different shareholders including the Ruler of the State and by taxing the companies the shareholders including the Ruler himself have been taxed, and, therefore, Sir Jamshedji says that he is entitled to ask for a refund having been wrongfully taxed.

(3.) I would, therefore, answer both the questions raised by the Tribunal in the negative. The assessee must pay the costs of the reference. Tendolkar, J.