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TMI Blog1973 (12) TMI 15X X X X Extracts X X X X X X X X Extracts X X X X ..... executor under the will of the deceased and as accountable person filed a statement of account under the Estate Duty Act. During the assessment proceedings the accountable person claimed exemption from assessment in respect of the 400 shares of Best Company (Private) Ltd., Pondicherry, on the ground that the deceased having died prior to April 1, 1963, on which date the Estate Duty Act was extended to Pondicherry, no estate duty was leviable on the shares held by him in Pondicherry prior to such extension. The Assistant Controller of Estate Duty rejected this claim holding that Pondicherry became part of the Indian territory with its de jure transfer on and from August 18, 1962, and that, therefore, any movable or immovable property owned by the deceased in Pondicherry will be movable or immovable property in India from August 16, 1962. Since the market value of the movable or immovable property situated in India can be included in the estate of the deceased, though he was domiciled in the United Kingdom, the shares in Best Company, Pondicherry, are liable to be included in the principal value of the estate. The extension of the Estate Duty Act to Pondicherry only from April 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dicherry was a French settlement. Under an agreement dated October 21, 1954, the Government of France transferred and the Government of India took over the administration of the territory of the French establishments in India including Pondicherry with effect from November 1, 1954. This is referred to as a de facto transfer and was intended to he followed up by de jure transfer. A Treaty of Cession providing for the de jure transfer was signed by the Government of France and the Government of India on May 28, 1956. This Treaty of Cession envisaged a ratification of the same by the respective Governments in order that the de jure transfer may take effect. Following the de facto transfer the Government of India was administering the territory under the Foreign jurisdiction Act, 1947, and in accordance with the French Establishments (Administration) Order, 1954, and other orders made under sections 3 and 4 of that Act. In exercise of these powers and with a view to bring the administration of Pondicherry so as to conform to the pattern of administration obtaining in India, a large body of Acts in forte in India were extended to Pondicherry by the Government. The de jure transfer was e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the whole of India ". The learned counsel for the revenue submitted that by the de jure transfer and the Constitution Fourteenth Amendment, Pondicherry became part of the territory of India, with effect from August 16, 1962. Under section 5 of the Act estate duty was payable upon the principal value of all the property, movable and immovable, situate in India whether the deceased was domiciled in India or outside India. Section 21(1) exempted only movable properties situated outside India if the deceased was not domiciled in India at the time of his death. He submitted further that section 5 includes all property whether movable or immovable wherever they are situated inside or outside India and only by virtue of section 21 in the case of a deceased who was not domiciled in India at the time of his death the movable properties situated outside India were exempted. He pointed out that in this case the death was after the commencement of the Act, namely, October 15, 1953, and the shares in Best Company, Pondicherry, which are movable property, were not situated outside India at the time of death in order to attract the exemption under section 21 as Pondicherry had become part ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 13) of the General Clauses Act as meaning the day on which the Act comes into force. In this case the Estate Duty Act had been notified to come into force on and from October 15, 1953. The deceased in this case died on February 2, 1963, after the commencement of the Act. He had movable properties in Madras by way of shares in Best and Company, Madras. Therefore, whether the shares in Pondicherry are includible or not, the estate of the deceased came within the charging provision under section 5. The two important ingredients for charging estate duty is the death of the person after the commencement of the Act and passing of property on the death of such person. Section 5 imposes a duty upon the principal value of all properties which pass on death irrespective of the nature of the situs of the property. We have noticed in our judgment in Ramaswamy Chettiar v. Assistant Controller of Estate Duty that a taxation statute cannot be challenged on the ground that it is extra territorial in operation if there is a connection between the person who is subjected to tax and the country, imposing a tax and where by a proper construction of an Act of Parliament extra-territorial operation was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o Pondicherry was necessary only for charging to duty movable and immovable properties situated in Pondicherry and belonging to a person domiciled in Pondicherry. In respect of those domiciled in India but outside Pondicherry territory and those domiciled outside India, relevant criteria for the purpose of attracting duty under section 5 is the death after October 15, 1953. Any other construction, in our opinion, will lead to certain anomalous results. For instance, a person domiciled in Madras though he owned movable property in Pondicherry which is part of India will escape from estate duty while a person owning such movable property in any other State in India or outside India would be liable to duty. Further, in respect of the same person for properties situated in India but outside Pondicherry, the relevant date is October 15, 1953, but for his property situated in Pondicherry the relevant date will be April 1, 1963. There cannot be two deaths for a single person as graphically put by the learned counsel for the revenue. It may be that on this construction even in respect of a person domiciled in Pondicherry if he has immovable properties in India outside Pondicherry, in a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 21 , movable and immovable properties situated in Pondicherry of a person domiciled in Pondicherry or outside India were exempted from inclusion in the estate of the deceased person. On the de jure transfer Pondicherry became part of the Indian territory and, therefore, section 21 was not applicable. Sections 4(1) and 7 of the Act, 49 of 1962, specifically stated that in the former French establishments or any parts thereof the laws in force immediately before August 16, 1962, shall continue in force until amended or repealed by a competent legislature. Though there was no Estate Duty Act in Pondicherry, a person domiciled in Pondicherry became entitled to be not subjected to estate duty by virtue of these provisions. These provisions are also consistent with the International Law. Pondicherry became the territory of India under article 1(3)(c) of the Constitution of India as an acquired territory. With respect to the application of Indian laws in respect of acquired territories, we find the following passage in Craies on Statute Law, seventh edition, page 486 : " Conquered or ceded colonies : Prima facie those colonies which were acquired by conquest or cession from a c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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