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G.D. Narendra Vs. Commissioner of Income-tax - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtChennai High Court
Decided On
Case NumberWrit Petition Nos. 220 of 1966 and 1774 of 1969
Judge
Reported in[1972]85ITR647(Mad)
ActsEstate Duty Act, 1953 - Sections 50 and 61
AppellantG.D. Narendra ;s. Krishnaswami Iyer
RespondentCommissioner of Income-tax;assistant Controller of Estate Duty, Estate Duty-cum-income-tax
Appellant AdvocateN.R. Chandran, Adv. in Writ Petition No. 220 of 1966 and ;M.R. Narayanaswami, Adv. in Writ Petition No. 1774 of 1969
Respondent AdvocateV. Balasubrahmanyan and ;J. Jayaraman, Advs.
Cases ReferredDirector of Public Prosecutions v. Bkagwan
Excerpt:
.....to estate of deceased whether such payment anterior or posterior to date when estate duty assessment finalised - section 61 deals with rectification of mistakes in order of assessment - section 50 confers jurisdiction on authorities to grant relief to persons who suffers probate duty contemporaneously with estate duty - no indication in act as to what means by which relief could be granted - in absence of any indication in act regarding process or means by which relief could be obtained cannot form foundation that no relief otherwise can be granted though accountable person entitled to equity, justice and good conscience - application for relief within time when time reckoned from date when central board of revenue assessed estate for estate duty. - - the application..........probate of the will of late mouna guruswami naidu, when the deputy controller finalised the estate duty assessment on august 30, 1958, he took into account a sum of rs. 87,049.60 paid as and towards probate duty and after deducting the same from the estate duty levied by him, he arrived at the net estate duly and demanded the same. as already stated, the central board of revenue, on appeal, revised the value of the estate, in consequence of which the estate duty was also reduced. after the board passed its order, a demand for estate duty was raised after deducting the probate duty already paid. subsequently, it transpires that the collector of madras by his order dated april 6, 1960, and in exercise of the powers conferred on him under the madras court-fees act, revised the quantum of.....
Judgment:

Ramaprasada Rao, J.

1. Though the point involved in these two cases are the same, the facts are slightly different. In both the writ petitions the petitioner is the accountable person. In W. P. No. 220 of 1966, the petitioner was the beneficiary under the will of late M. Mouna Guruswami Naidu, Zamindar of Neikarapatti. Mouna Guruswami Naidu died on October 23, 1956. The estate of the testator was assessed to estate duty by the Deputy Controller of Estate Duty, Southern Zone, who arrived at the principal value of the estate at Rs. 41,09,124 and levied an estate duty of Rs. 10,89,443.40. On appeal, the Central Board of Revenue, by its order dated March 3, 1960, reduced the principal value of the estate by Rs. 4,90,270. In the meantime, the petitioner had to take out a probate of the will of late Mouna Guruswami Naidu, When the Deputy Controller finalised the estate duty assessment on August 30, 1958, he took into account a sum of Rs. 87,049.60 paid as and towards probate duty and after deducting the same from the estate duty levied by him, he arrived at the net estate duly and demanded the same. As already stated, the Central Board of Revenue, on appeal, revised the value of the estate, in consequence of which the estate duty was also reduced. After the Board passed its order, a demand for estate duty was raised after deducting the probate duty already paid. Subsequently, it transpires that the Collector of Madras by his order dated April 6, 1960, and in exercise of the powers conferred on him under the Madras Court-fees Act, revised the quantum of probate duty as, according to him, the estate was under-valued and a lesser duty was paid and, therefore, an additional demand for probate duty in the sum of Rs. 51,199.14 was raised towards such duty. After full enquiry the additional probate duty was paid by the petitioner on March 3, 1964. Incidentally, it may be stated that the petitioner was allowed to pay the estate duty in annual instalments of Rs. 57,400. After the increase of the probate duty by virtue of the proceedings initiated by the Collector of Madras, the petitioner claimed a further deduction in the estate duty in the sum of Rs. 51,199.14. He in turn applied to the Assistant Controller on March 4, 1964, for a pro tanto reduction of the estate duty demand based on the supervening increased demand for payment of probate duty. In the first instance the petitioner made representations to the Central Board of Direct Taxes through the Controller of Estate Duty who ultimately dealt with this representation and dismissed the same. Contemporaneously, however, the petitioner appears to have taken action by petitioning the Assistant Controller, as already stated, on March 4, 1964, who rejected the claim as time-barred. The Assistant Controller was of the view that this application squarely came within Section 61 of the Estate Duty Act and as an order of assessment for estate duty could be rectified under Section 61 within five years from the date of final assessment and as such time has lapsed, he did not entertain the application tor relief made by the petitioner under Section 50 of the Estate Duty Act. The petitioner's contentions are two-fold. The application for relief under Section 50 is not time-barred even assuming that Section 61 would apply to the instant case as the Central Board of Revenue, as the ultimate authority, finally determined the estate duty payable only on March 3, 1960, and the petitioner having applied for relief under Section 50, if it is taken to be an application for rectification of the assessment under Section 61 on March 4, 1964, which is well within five years from the date of the final assessment, the Assistant Controller failed in his statutory duty to give the necessary relief. In fact, the Deputy Collector, passed the order on March 28, 1964. The other alternative ground on which the petitioner seeks for the issue of a writ of certiorari to quash the ultimate order of the Controller who conveyed the ultimate order of rejection of the request for relief dated November 8, 1965, is based on the plain meaning of Section 50 of the Estate Duty Act. Notwithstanding the fact that no machinery is provided expressly upder the Act for grant of such relief and as the application for such relief does not squarely fall under the caption 'rectification' contemplated in Section 61 of the Act, the petitioner would urge that under the general principles of law the respondent can be compelled to give such relief as without it the statutory relief obtainable by the petitioner would remain in the statute book only as an empty formality and cannot be secured in reality. The facts in W. P. No. 1774 of 1969 are as follows J The petitioner as the accountable person and as the beneficiary under the will of late R. V. Rajagopala lyer is seeking for a similar relief as above, but in the following circumstances. The testator died on April 9, 1961, and the estate duty assessment was finally made on February 20, 1962. The estate duty as levied and demanded was paid on March 7, 1962. For some reason or other, probate of the will was sought quite late in 1969 and the probate was granted by an order of this court on March 7, 1969. The estate duty paid amounted to Rs. 1,755.68. The probate duty paid consequent upon the grant was Rs, 3,020.20. In this situation the petitioner applied to the Assistant Controller again under Section 50 of the Estate Duty Act for refund of the estate duty as provided in Section 50 of the Act. This was rejected on the ground that the request was beyond time and the application for refund or relief under Section 50 of the Act was treated as one for rectification of the estate duty assessment made on February 20, 1962. On June 25, 1969, the Assistant Controller rejected the application on the ground that the time for refund under Section 61 of the Estate Duty Act expired by February 20, 1967. Hence, the petitioner's request for grant of relief under Section 50 was held to be time-barred. It is to quash this order that the petitioner has filed this application for the issue of a writ of certiorari. But the prayer is for refund of a sum of Rs. 1,510.10, which is one-half of the probate duty paid by the petitioner, on the ground of the probate granted by this court in O. P. No. 22 of 1969, on March 7, 1969.

2. The common question- involved in both the cases depends on the Interpretation of Section 50 of the Estate Duty Act. The other poser is whether persons who are entitled to relief under Section 50 of the Estate Duty Act could only be dealt with under Section 61 of the Act and in no other way. The Revenue's contention is that as there is no express provision whereby the relief contemplated under Section 50 of the Act could be granted, such applications can be dealt with and only dealt with as applications for rectification under Section 61 of the Estate Duty Act, and if so dealt with, the bar of limitation expounded in the provision has to be applied, and, thus applied, the request for relief in both the cases has to be negatived.

3. The two principal sections in the Estate Duty Act which are relevant are sections 50 and 61. Section 50 runs as follows :

'Where any fees have been paid under any law relating to court-fees in force in any State for obtaining probate, letters of administration or a succession certificate in respect of any property on which estate duty is leviable under this Act, the amount of the estate duty payable shall be reduced by an amount Which is equal to one-half of the court-fees so paid.'

4. It appears ia Part VI of the Act dealing with deductions. This section affords relief from estate duty where court-fees has been paid for obtaining representation to the estate of the deceased. For obtaining representation to the estate of a deceased, a probate or letters of administration or a succession certificate is generally sought for. In so far as the State of Madras is concerned, the fees payable in connection with applications lor the grant of probate, letters of administration or succession certificate is provided under the Madras Court-fees and Suits Valuation Act, 1955. Chapter VI o.f the Madras Court-fees and Suits Valuation Act deals with probates, letters of administration and certificates of succession. The charging section under the Court-fees Act is Section 56. Section 56 lays down different fees for applications made within one year from the date of death of the deceased and for applications made after the expiry o( one yeai. In the former case the computation at the prescribed rate is made on the market value of the estate on the date of death of the deceased. In the latter case it is computed on the market value of the estate on the date of the application. I have referred to this section only to impress that no time limit is prescribed either under the Indian Succession Act or under the Madras Court-fees Act for filing applications for the grant of probate or letters of administration. Normally applications received by courts for the grant of probate- shall be forwarded to the Collector of the district in which the estate is situate. But such a reference to the Collector shall not bar the issue of the grant. Even so, the Collector to whom the application for probate has been referred may be of the opinion that the applicant has under-estimated the value of the property of the deceased and in such a situation he might hold an enquiry into the matter and re-estimate the value of the estate and ultimately amend the valuation and call for a higher court-fee, if one such occasion arises. But this right vested in the Collector again is no bar to the court to issue the grant. These provisions, therefore, make it clear that the probate duty paid by an individual for obtaining a probate of a will as called for by the court which is in seisin of the matter is provisional and is subject to revision by the Collector exercising his powers under Section 59 of the Act. In a case where an estate is liable both to estate duty and is the subject-matter of a grant under a will made by a testator owning such an estate, then the question arises whether probate duty should have been paid either before or contemporaneously with the assessment proceedings undertaken by the appropriate authority under the Estate Duty Act to gain a relief under Section 50 of the Estate Duty Act. In fact, the argument of the revenue is that unless probate duty has been paid on or before the date when the final assessment under the Estate Duty Act is made, no relief can be claimed by the accountable person under Section 50 of the Act at any later point of time, notwithstanding the fact that probate duty has been paid at some point of time later than the date of assessment under the Estate Duty Act or additional probate duty has been paid in the circumstances stated above and at the instance of the Collector of the district concerned. This argument ignores the right of a person to apply for a probate of a will at any time he desires. It is well accepted that the executor or any other person interested in applying for probate of a will cannot be compelled to prove the will until he chooses to do so, which depends upon various circumstances. This being the enabling legal provision, I am unable to accept the contention of the revenue that unless probate duty has been paid in point of time earlier than the date when the estate duty is computed and levied, no relief as contemplated in Section 50 of the Act can be sought or asked. The word 'paid' in Section 50 has to be understood in the context and in the light of the chapter for which the provision has been made as 'payable'. Otherwise an unsatisfactory state of affairs would result. Relief from estate duty can only be obtained by persons when they have paid the court-fe^e prior to the imposition of the estate duty and for others who pay such court-fee after the estate duty assessment is finalised, no such relief can be given. This would amount to discrimination under Artilce 14 of the Constitution and any interpretation which revolts against any provision of the Constitution of India ought not to be thought of or given effect to. Section 50 speaks of a relief. The Parliament which gave the relief cannot be expected to say that relief which is so generally couched in the text of Section 50 of the Act should only be granted under certain peculiar circumstances. If, as urged by the revenue, the relief from estate duty is conditional upon past payment of court-fee for obtaining representation, and not in cases where such probate duty is paid at a later date, then the object with which this provision has been made cannot be advanced. It is the duty of courts to see that the real meaning and purport of a statutory provision is understood in its correct perspective and its object advanced. Here, in this case, if it were to be said that only those who paid the probate duty before the estate duty is reckoned are entitled to the relief, then such an interpretation, far from advancing the purport of Section 50, would be to hinder it. No doubt, as stated in Director of Public Prosecutions v. Bhagwan, [1970] 3 All E.R. 97 ; [1970] 3 W.L.R. 501 :

'The constitutional function of the courts in relation to enacted law is limited to interpreting and applying it. It is the duty of the judge to ascertain what are the means which Parliament has enacted by the Act. In construing the enacting words he may take account of what the Act discloses as the purpose that those means were intended to achieve and, in the case of ambiguity alone, he may interpret them, in the sense in which they are more likely to promote than hinder its achievement. But it is no function of a judge to add to the means which Parliament has enacted in derogation of rights which citizens previously enjoyed at common law, because he thinks that the particular case in which he has to apply the Act demonstrates that those means are not adequate to achieve what he conceives to be the policy of the Act.'

5. These observations, with greatest respect, are based on sound principles of interpretation. In the instant case an ambiguity is created if the argument of the revenue is accepted that persons entitled to the relief under Section 50 are only those who paid the court-fee prior to the finalisation of the estate duty assessment and not those who are to pay the same when they apply for probate under the Madras Court-fees Act. In my view, this dichotomy is never intended and cannot, therefore, be introduced into the text of the Act. It, therefore, follows that relief from estate duty has to be granted in cases where court-fees have been paid for obtaining representation to the estate of a deceased, whether such payment was anterior or posterior to the date when the estate duty assessment is finalised. The Mysore High Court had occasion to consider a converse case in Mrs. Ethel Rodrigues v. Assistant Controller of Estate Duty, : [1963]49ITR128(KAR) . There the Assistant Controller assessed the estate for estate duty on March 27, 1957, after valuing the estate at a certain figure for purposes of estate duty. Subsequently, it was discovered that the valuation of the estate made in the probate proceedings was much higher. The Assistant Controller purported to reopen the assessment under Section 61 of the Estate Duty Act on the ground that a mistake has occurred in the order and that he wished to rectify the mistake. The learned judges held that, for the purpose of determining the estate duty leviable, the record in the probate proceeding is not relevant. It is only after the estate duty due is determined the question of deduction arises. The question of deduction has nothing to do with the determination of the estate duty due. The operation of Section 50 comes in at a stage after the estate duty is determined. These observations in a way support my view that the proceedings under the Estate Duty Act for purposes of assessment and levy are different and independent from proceedings under which a relief could be obtained by an accountable person on the fact that probate duty has been paid over the same estate at some point of time.

6. Mr. Balasubrahmanyan relying upon a decision of the Calcutta High Court in Bhubaneswar Sarkar v. Union of India, : [1965]58ITR1(Bom) , urges that in the absence of specification of some means for the grant of relief in cases where probate duty is paid in point of time later than the levy of the estate duty, the petitioner cannot be granted any relief. In the above case, Banerjee J. of the Calcutta High Court took the view that I

'What probate duty is payable or has been paid can never be made part of the estate duty records, unless the probate duty has been assessed and paid and the evidence of payment has been put on the record of the estate duty proceedings. If the estate duty be assessed very quickly and the probate duty be assessed and paid later on, an assessee never can get advantage of Section 50 of the Estate Duty Act, because at the time of assessment of estate duty, he may not be able to put in evidence of probate duty pafld by him. This seems to me a lacuna, which requires consideration. It is not necessary for me, however, to go into that question because, as I have already found, the application for rectification or refund must fail on the ground of limitation and on the ground of other defects noticed by me.'

7. Prima facie, the principal observations contained in the excerpt appear to be obiter dictum. Even otherwise, I am unable, with respect, to agree with the learned judge. In the words of Lord Diplock in Director of Public Prosecutions v. Bkagwan, already referred to, the judge is bound to takeinto account the purpose of any statutory provision and the means intended to achieve the purpose and in case of a latent or patent ambiguity he is bound to interpret them in the sense in which they are more likely to promote rather than obstruct its achievement. 'Relief' means a release from an obligation. By the mere fact that there is no prescribed procedure in the Act or the rules for achieving its purpose, courts should not be insensitive to their duty to give such reliefs if justice of the case requires and if the purpose of the statutory provision has to be achieved and advanced. In this view of the matter, the petitioners are entitled to succeed.

8. The further argument of the revenue is that if at all the petitioners could gain any relief, it could only be by invoking Section 61 of the Estate Duty Act. Section 61 deals with rectification of mistakes in an order of assessment. It provides that at any time within five years from the date of any order passed by the appropriate authority, such authority may on its own motion rectify any mistake apparent from the record and shall, within a like period rectify any such mistake which has been brought to the notice of such authority by the person accountable. It is urged that if probate duty has not been paid on the date when the estate duty assessment is completed and, therefore, the probate duty was not deducted as provided from the estate duty leviable under the Act, and if an occasion arises where probate duty is paid at a later point of time, then the accountable person can only seek relief under Section 61 and thus incidentally seek relief under Section 50. The same position is urged in cases where an additional probate duty is paid by the accountable person long after the estate duty assessment where-under a portion of the probate duty paid at or about that time has only been given credit to Section 61 would only apply to cases where the estate duty records disclose a mistake. The mistake may be due to an erroneous appreciation of facts or law by the assessing authority ; it may also be equally attributable to any act or omission on the part of the accountahjd person. But it is not understandable as to how a claim for relief under Section 50 based on the actual fact of payment of probate duty or additional probate duty could be brought in under Section 61 of the Act and the closed assessment reopened on the ground of rectification of a mistake. As pointed out by the Privy Council in Commissioner of Income-tax v. Khemchand Ramdas, [1938] 6 I.T.R. 414, a final assessment once made cannot be reopened except in circumstances detailed in sections 34 and 35 of the Act (old Act) and within the time limited by those sections. By asking for relief under Section 50 of the Act, it cannot be said that the assessment is sought to be reopened. What exactly is asked for is that theaccountable person is entitled to a relief which when reckoned in terms of money he would be entitled to a refund of a certain amount. No doubt, the said amount has to be mathematically worked out with reference to the final assessment made. This has no impact on the passing of the assessment as such. The final assessment is only kept as the basis and in order to render relief under Section 50 of the Act the appropriate authority calculates the amount refundable to the accountable person without in any manner disturbing the final assessment of estate duty under the Act. In point of time relief under Section 50 occurs only after the final assessments are completed. On the only ground that probate duty has not been paid on the date of assessment, a relief if it is available to the accountable person as per the provisions of Section 50, cannot be negatived on the technical plea that to undertake to grant such a relief under Section 50 an investigation into the correctness of the original order of assessment is necessary, which technically means rectification of the order. In my view, the order is not rectified at all. On the other hand, it is kept up, respected and implemented. But, when the accountable person applied for relief under Section 50 on the ground that he paid additional probate duty over and above the probate duty already paid at the time of the assessment proceedings or that he has paid such duty for the first time after the finalisation of the assessment, the accountable person is only praying for a just relief which Parliament has granted to him by way of set-off against the estate duty already levied on him, the grant of which is incidental and telescoped in the primary power to give relief.

9. The further contention of the revenue is that, in the absence of means to grant such a relief, the court has no power to embark on an investigation of other available means by interpreting Section 50 in favour of the accountable person. I have already referred to the observations of Lord Diplock. In Craies on Statute Law, fifth edition, page, 105, it is observed :

'If a statute is passed for the purpose of enabling something to be done, but omits to mention in terms some detail which is of great importance. ... to the proper and effectual performance of the work which the statute has in contemplation, the courts are at liberty to infer that the statute by implication empowers that detail to be carried out.'

10. Again, Maxwell on the Interpretation of Statutes, eleventh edition, at page 350, states ;

'Where an Act confers a jurisdiction, it impliedly also grants the power of doing all such acts', or employing such means, as are essentially necessary to its execution.'

11. It is common ground that Section 50 is the section whereunder the Act confers jurisdiction on the authorities to grant relief to persons who suffer probate duty contemporaneously with estate duty. No doubt, there is noindication in the Act as to what are the means by which the relief could be granted. But, on that score, it cannot be assumed that the appropriate authority has no jurisdiction to do such incidental acts or things or employ such ancillary means so as to achieve the object as are so intricately connected with the grant of relief contemplated under Section 50. Adopting, with respect, the principles laid down by the above eminent authors, I am of the view that the absence of any indication in the Act regarding the process or means by which relief could be obtained cannot form the foundation of the contention that no relief otherwise can be granted though the accountable person is entitled thereto in equity, justice and good conscience.

12. One other contention in W. P. No. 220 of 1966 can also be noted. Alternatively, the petitioner's case is that even if Section 61 is the proper section under which relief could be granted, his application for relief was within time when the time is reckoned from the date when the Central Board of Revenue finally assesed the estate for estate duty. This alternative argument, though it is not accepted by me in the main, is also well-founded. Even on this ground the petitioner in W. P. No. 220 of 1966 is entitled to succeed.

13. In the view that I hold on all the aspects urged before me, the rule nisi in each of these writ petitions has to be made absolute and the writ petitions allowed. There will be no order as to costs. The quantum of relief and the amount to be refunded has to be worked out by the department.


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