COMMISSIONER OF INCOME-TAX Vs. DARABSHA NASARWANJI MEHTA

JUDGEMENT

(1.) This is a reference made by the Commissioner of Income-tax on his motion under Section 66(1) of the Indian Income-tax Act, 1922, in which he raises two questions, the first one being, in effect, whether Section 24B, which was added to the Indian Income-tax Act by the Indian Income-tax (Second Amendment) Act of 1933, has retrospective effect so as to apply to the case of a person dying before the Amendment Act was passed, and, secondly, whether, if the Amendment Act has retrospective effect, the Commissioner was justified in taking action against the assessee under Section 34 of the Indian Income-tax Act.

(2.) It was held by this Court in Commissioner of Income-tax V/s. Reid (1930) I.L.R. 55 Bom. 312, which was decided at the end of the year 1930, that where a person dies after the commencement of the financial year, but before his income has been assessed for the purpose of income-tax, his estate is not liable to pay the tax. The Amendment Act was passed on September 11, 1933, no doubt, with a view to removing the difficulties pointed out in that case.

(3.) In the present case the only material facts are that on April 20, 1932, a notice was served on Bai Avabai N. Mehta under Section 22 (2) of the Indian Income-tax Act requiring her to make a return in respect of her income for the year 1932-33. She died on May 6, 1932, before any return had been made, and the question which arises is whether her estate is liable for the tax in respect of the year 1932- 33 under the provisions of the Amendment Act, she having died before the Act was passed. Section 11 of the Amendment Act provides that after Section 24 of the principal Act, "the following sections shall be inserted, namely." Of the section so inserted, Section 24B is the material one for the present purpose. That provides in Sub-section (1) that- 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 tax assessed as payable by such person, or any tax which would have been payable by him under this Act if he had/ not died.