judgement:
roviso will take in more than one residential house, if the assessee is able to establish that all the houses are occupied by him for purposes of his own residence.
[15A B] & CIVIL APPELLATE, JURISDICTION: Civil Appeals Nos. 1488 to 1491 of 1969.
Appeals from the judgment and order dated August 1, 1968 of the Punjab and Haryana High Court in Income tax reference No. 20 of 1964.
K. C. Puri, section K. Mehta and K. L. Mehta, for the appellant (in all the appeals).
B. Sen, P. L. Juneja and R. N. Sachthey, for the respondent (in all the appeals).
The Judgment of the Court was delivered by Vaidialingam, J.
These four appeals, on certificate, are directed by the assessee against the judgment and order dated August 1, 1968 of the High Court of Punjab and Haryana at Chandigarh in Income tax Reference No. 20 of 1964.
Two questions of law were referred bY the Income tax Appellate Tribunal, Delhi Bench 'C ' to the high Court.
, Both 3 the questions were answered in favour of the Revenue and against the assessee.
The appellant assessee was the Ruler of Faridkot and he was assessed in the status of an individual for the assessment years 1957 58 to 1960 61, corresponding to the accounting years being the period ending 12 4 1957, 12 4 1958, 12 4 1959 and 12 4 1960 respectively.
The assessee had executed a registered trust deed dated April 1, 1955 marked Annexure "A" whereunder he had transferred the United Kingdom Government 's Securities of the face value of pound 1,80,000 to the Grindlays Bank, London, as trustee, to be held in trust in accordance with the terms and conditions set out therein.
As there is no dispute that these Government securities were transferred to the Bank and also regarding the provisions contained therein for distribution of the income accruing from the securities, it is not necessary for us to set out the various clauses in the trust deed.
By clause (2) the trustee was directed to divide the trust property into two equal parts.
By clause (3) the trustee, after meeting all outstanding and contingent liabilities, was required to pay the balance income to all or any of the children of the Settlor other than his eldest son, living at the respective dates of payment in equal shares.
Similarly, under clause (4) the trustee after meeting all outstanding and contingent liabilities, was directed to pay the balance income to the eldest son of the Settlor Tikka Harmohinder Singh of Faridkot, during his life.
Clauses 3(b) and 4(c) provided that at the termination of the period of distribution, the Bank shall stand possessed of the capital and income of both parts upon trust for the person who, at the date of such termination, shall be the successor of the Settlor according to the Rule of Primogeniture applicable to the dynasty of the Settlor absolutely.
Clause (5) defined the period of distribution to be the life of the Settlor and the children of the Settlor living at the date thereof and the lives and life of the survivors and survivor of them and the period of 21 years after the death of such survivor.
The assessee owned a house known as Faridkot House situated at Lytton Road, New Delhi, during the assessment year 1960 61.
During the same period, the assessee also owned a second property known as Faridkot House, situated in Diplomatic Enclave, New Delhi.
Rajkumari Maheepinder Kaur, minor daughter of the assessee received from the trustee as per the provisions of the trust deed dated April 1, 1955, Rs. 15,570/ , Rs. 15,570/ .
Rs. 12,446/ and Rs. 10,310/ during the relevant accounting years, corresponding to the assessment years 1957 58 to 1960 61.
In the assessment of the assessee as an individual during the ' said 4 assessment years, the Income tax Officer District 'A ' Ward, Bhatinda, notwithstanding the objections raised by the assessee, included the amounts received by the minor daughter in the total assessable income of the appellant for each of the assessment years under section 16 (3) (b) of the Indian Income tax Act, 1922 (hereinafter to be referred to as the Act).
The order of assessment for the assessment year 1957 58 was passed on April 27, 1959 and for the other three assessment years on March 23, 1961.
On appeal by the assessee, the Appellate Assistant Commis sioner of Income tax, Rohtak Range, confirmed the orders of the Income tax Officer.
The order of the Appellate Assistant Commissioner for the assessment year 1957 58 is dated July 25, 1961 and for the remaining years, the orders were passed on November 4, 1961.
The Appellate Assistant Commissioner accepted the contention of the appellant that section 16(1)(c) of the Act has no application, but agreed with the view of the Income tax Officer that the income received by the minor daughter is to be included in the total taxable income of the assessee under section 16(3) (b).
The assessee carried the matter in further appeal before the Income tax Appellate Tribunal, Delhi Bench 'C ', in Income tax Appeals Nos.
6075, and 8423 8425, all of 1961 62, regarding the assessment years 1957 58 to 1960 61 respectively.
The Appellate Tribunal agreed with the view of the lncome tax Officer and the Appellate Assistant Commissioner that the inclusion of the minor daughter 's income under section 16(3)(b) was correct.
The order of the Appellate Tribunal for all the assessment years is dated August 7, 1962, though a separate order has been passed in respect of the assessment year 1960 61.
From the narration of the above facts, it will be seen that the Income tax Officer, the Appellate Assistant Commissioner and the Appellate Tribunal have all held that the income received by the minor daughter of the assessee under the trust deed has to be included under section 16(3) (b) of the Act in 'the total taxable income of the assessee for each of the assessment years.
We have earlier referred to the fact that the appellant owned two houses in New Delhi, both known as Faridkot House, one at Lytton Road and the other in Diplomatic Enrlave, during the accounting year ending April 12, 1960.
The assessee claimed reduction of the annual letting value in respect of both these houses on the ground that they were, used as his residence.
This claim regarding the houses arises only in the assessment year 1960 61, The Income tax Officer allowed the reduction in the, annual letting value only in respect of one house at Lytton Road.
5 There is no discussion in the order as to, why the claim for the second house at Diplomatic Enclave was rejected.
The Appellate Assistant Commissioner held that as deduction has already been given by the Income tax Officer in respect of the Faridkot House in Lytton Road, the assessee is not entitled to a further allowance in respect of the house at Diplomatic Enclave.
It is the further view of the Appellate Assistant Commissioner that under section 9 (2) of the Act, the assessee is not entitled to a further allowance in respect of the second house and that both the houses occupied for residential purposes have to be treated as one unit.
On this ground he rejected the claim of the assessee regarding the allowance in respect of the Faridkot House in Diplomatic Enclave.
The Appellate Tribunal, when dealing with 'the appeal relating to the assessment year 1960 61 dealt with this claim of the assessee a little more elaborately.
After a reference to the provisions of section 9 (2) of the Act, the Appellate Tribunal held that there is nothing in the said provision which entitles the assessee to claim benefit in respect of more residential houses than one.
But the Appellate Tribunal was prepared to accept the position that the second proviso to section 9(2) indicates that the property referred to in the first proviso may consist of more than one residential houses, but that by itself does not lead to the conclusion that the benefit under the first proviso can be claimed in respect of more than one property.
In this view, the Appellate Tribunal also agreed with the rejection, by the two officers, of the claim made by the appellant in respect of the house situated in Diplomatic Enclave.
The assessee filed four applications before the Appellate Tribunal praying to refer to the High Court, with a statement of case, two questions of law one relating to the inclusion in the four assessment years of the income received by the minor daughter in the total income of the assessee; and the other relating to the rejection by the Revenue, of the assessee 's claim for allowance for the assessment year 1960 61 in respect of the Faridkot House in Diplomatic Enclave.
The Income tax Appellate Tribunal ' accordingly, referred, for the opinion of the High Court the following two questions of law : "(1) Whether on the facts and in the circums tances of the case, the amounts of Rs. 15,570, 15,570, 12,446 and 10,310 received by the assessee 's minor daughter Rajkumari Maheepinder Kaur in the assessment years 1957 58, 1958 59, 1959 60 and 1960 61 under the terms of the Trust Deed dated the 1st April, 1955 have been rightly included in the hands of the assessee under Section 16 (3) (b) of the Indian Income tax Act, 1922 ? 6 (2) Whether on the facts and in the circums tances of the case the assessee is entitled to the reduction of the annual letting value of the Faridkot House in Diplomatic Enclave New Delhi, by Rs. 1,800/ under the first proviso to Section 9(2) of the Income tax Act, 1922 notwithstanding the fact that the annual letting value of the Faridkot House situated at Lytton Road, New Delhi, is already reduced by Rs. 1,800/ ?" The High Court, by its judgment and order under attack, has answered the first question in the affirmative and the second in the negative.
The answers in respect of both the questions given by the High Court are against the assessee.
Before the High Court, the appellant appears to have urged that section 16 (1 ) (c) of the Act is the only provision that could apply in the present case of settlement and that, as such, the amounts received by the minor daughter of the assessee under the trust deed could not be added to the income of the assessee under section 16 (3) (b) of the Act.
The High Court rejected this contention of the assessee.
The assessee further contended before the High Court that section 16 (3) (b)will apply only if assets had been transferred for the benefit of the wife or minor child and that as the wife or minor child was not entitled to the corpus of the trust property, that provision does not apply.
This contention was also rejected by the High Court.
The further contention of the assessee was that to attract section 1 6 ( 3 ) (b) the transfer should be one exclusively for the benefit of the wife or minor child and that the said provision will have no application when the benefit that is sought to be conferred, takes in as in the case of the present trust deed other persons like the major children.
This contention again was rejected by the High Court.
The last contention on this aspect that was urged appears to have been that, in any event, under section 16 (3) (b) what could be included is only so much of the income of any person or association of persons to whom the property had been transferred for the benefit of the wife or the minor child and not the income received by the minor child.
This contention again was not accepted by the High Court.
The High Court ultimately held that the amounts received by the minor daughter of the assessee under the trust deed have been rightly included under section 16 (3) (b) of the Act in the total assessable income of the appellant in all the four assessment years.
Regarding the deduction claimed during the assessment year 1960 61 in respect of the house situated at Diplomatic Enclave, the High Court is of the view that the assessee can claim such a benefit by way of allowance under section 9 (2) only in respect of one house.
Such allowance having been given by the Revenue in 7 respect of the residential house at Lytton Road, New Delhi, it is the view of the High Court that the appellant 's claim with regard to the house at Diplomatic Enclave has been rightly rejected by the Revenue.
Before we refer to the contentions of the counsel for the assessee and the Revenue, it is necessary to refer to the relevant provisions of the Act in respect of the two points arising for consideration, one relating to the amounts received by the minor daughter and the other relating to an allowance in respect of a second residential house.
Though the relevant provision in respect of the 1st aspect is only clause (b) of section 16(3), it is desirable to quote all the provisions of section 16(3) which run as follows : section 16.
(3) In computing the total income of any individual for the purpose of assessment, there shall be included (a) so much of the income of a wife or minor child of such individual as arises directly or indirectly (i) from the membership of the wife in a firm of which her husband is a partner; (ii) from the admission of the minor to the benefits of partnership in 'a firm of which such individual is a partner; (iii) from assets transferred directly or in directly to the wife by the husband otherwise than for adequate consideration or in connection with an agreement to live apart; or (iv) from assets transferred directly or indirectly to the minor child, not being a married daughter, by such individual otherwise than for adequate consideration; and (b) so much of the income, of any person or association of persons as arises from assets transferred otherwise than for adequate consideration to the person or association by such individual for the benefit of his wife or a minor child or both.
" 8 The relevant provisions bearing on the claim in respect of the house in Diplomatic Enclave, are the to provisos in section 9(2).
Section 9(2) with the relevant two provisos is as follows "9(2) For the purposes of this section, the annual value of any property shall be deemed to be the sum for which the property might reasonably be excepted to, let from year to year.
Provided that, where the property is in the occupation of the owner for the purposes of his own residence, the annual value thereof shall first be determined in the same manner as if the property had been let to a tenant and the amount so determined shall be reduced by one half of it or eighteen hundred rupees, whichever is less, so however that where the sum so reduced exceeds ten per cent of the total income of the owner the annual value of the property shall be deemed to be ten per cent of such total income.
Provided further that where the property referred to in the preceding proviso consists of one residential house only and it cannot actually be occupied by the owner by reason of the fact that owing to his employment, business, profession or vocation carried on at any other.
place, he has to reside at that other place in a building not belonging to him and the residential house is not actually let and no other benefit therefrom is derived by the owner, the income of such property under this section shall, if the property was not occupied during the whole of the previous year be taken to be nil and if it was occupied for a part of the previous year be computed proportionately, so however that the income in respect of such property shall in no case be a loss.
" We will first deal with the point covered by question No. 1 regarding the inclusion in the relevant assessment years in the taxable income of the appellant, the amounts received by his minor daughter under the trust deed dated April 1, 1955.
Though several contentions have been raised before the High Court and the Appellate Tribunal, Mr. K. C. Puri, learned counsel for the appellant, has raised before us only two contentions, namely, (1) the assets of pound 1,80,000 covered by the trust deed not having been transferred to the wife or minor daughter in question, but to the Grindlays Bank, as trustee, section 16(3) (b) of the Act has no application; and (2) even if section 16(3) (b) of the Act applies, what is to be included in computing the total income of the assessee is not the income that has been received by the minor 9 daughter under the trust deed, but only so much of the income of any person or association of persons (in this case the trustee) to whom the assets have been transferred for the benefit of the wife or the minor child.
The counsel referred to the decisions of this Court in Commissioner of Income tax, Bombay vs Manilal Dhanji(1); Commissioner of Income tax, Gujarat vs Keshavlal Lallubhai Patel(2) and Commissioner of Income. tax, West Bengal III vs Prem Bhai Parekh and others(3) and urged that section 16(3) of the Act created an artificial income and had to be construed strictly.
That is, according to the learned counsel, the wordings of section 16 (3) (b) have to be construed strictly and literally.
On the basis of such a strict and literal construction, the counsel urged that the two propositions urged by him earlier are ample borne out by section 16(3) (b).
It is no doubt true that the above decisions lay down the proposition that section 16 (3) of the Act creates an artificial income and it must receive a strict construction.
We may also point out that the first decision, referred to above dealt with a case under section 16(3) (b) and has specifically laid down the proposition that the said provision creates an artificial liability to tax and must be strictly construed.
But in construing section 16(3)(b) the Courts cannot ignore the clear and unambiguous expressions contained therein and all those expressions must receive a proper interpretation.
Taking the first contention of Mr. Puri, according to him the corpus of the property covered by the trust (in this case the Government Securities) should have been transferred for the benefit of the wife or the minor child.
The minor daughter, in this case, was not entitled to the corpus of the trust property, namely, the securities.
We understood Mr. Puri to urge that section 16 (3) (b) of the Act will apply only to those cases where ultimately the corpus of the trust property is also transferred to the wife or the minor child, as the case may be.
We have no hesitation in rejecting this contention of Mr. Puri.
The provisions of section 16(3)(b) are very clear and the only requirement, so far as this aspect is concerned, is that the assets must be transferred to any person or association of persons and that transfer of assets must be for the benefit of the wife or the minor child or both.
In this connection it is pertinent to note the wordings of section 16 (3) (b)(iii) and section 16 (3) (a) (iv).
The former provision clearly refers to assets transferred directly or indirectly to the wife by the husband and the latter provision refers to assets transferred directly or indirectly to the minor child not being a married daughter.
But in cl.
(b) of section 16(3) the transfer of assets is not to the wife or the minor child or both but to (1) (2) (3) 2 L256Sup CI/72 10 any person or association of persons.
Therefore, it is clear that when the legislature intended to provide for a direct transfer of assets either to the wife or to the minor child, it has used the expressions as are found in section 16(3) (a) (iii) and section 16(3) (a) (iv).
The different phraseology used in cl.
(b) of section 16(3) makes it clear that the transfer of assets need not be to the wife or the minor child.
Nor does the said clause require that the corpus of the property, so transferred to any person or association of persons, should ultimately vest in the wife or the minor child.
Mr. Puri quite frankly admitted that there is no decision to support his contention.
On the other hand, we find that there is a decision of the Bombay High Court in Commissioner of Income tax, Bombay vs Sir Mahomed Yusuf Ismail(1) which is against the contention advanced by Mr. Puri.
In that decision one of the questions that arose for consideration was whether the income received by the wife of the assessee under a deed of wakf can be included in the assessment of the husband under section 16(3) (b).
The assessee therein had executed a deed of wakf.
Under the terms of the said deed, the assessee 's wife was to get 21% of the income accruing from the property which was the subject of the wakf deed.
It was contended that as no part of the assets or the corpus had been transferred to the wife, the income received by the latter cannot be included in the taxable income of her husband, the assessee.
A Division Bench of the Bombay High Court rejected this contention and held that as assets had been transferred, under the wakf deed, to the trustees and as the transfer was beneficial to the wife and that as she had, got 21 % of the income from the properties, section 16 (3) (b) of the Act was properly applied by the Revenue.
We are in agreement with this decision of the Bombay High Court and as such the first contention of Mr. Puri will have to be rejected.
Coming to the second contention, according to Mr. Puri under section 16 (3) (b) of the Act, only so much of the income of the person or association of persons to whom the property has been transferred for the benefit of the wife or the minor child and not the income received by the minor that can be included in the taxable income of the assessee.
According to the counsel, what has been done by the Revenue is to include in the assessment Of the appellant 's the income received by the minor daughter in the relevant accounting years.
That procedure is opposed to section 16 (3) (b) of the Act.
Here again, the contention of the learned counsel cannot be accepted.
If this contention is accepted, the position will be that the Revenue might have included the whole of the income arising from the assets transferred to the Grindlays Bank and not merely that portion of the income which has been received by the minor daughter.
Such a construction (1) 11 in totally opposed to the clear provisions of the scheme of section 16 (3) and in particular the clear wording of cl.
(b) of section 16(3) of the Act.
From a plain reading of section 16(3) (b) it is clear that what is to be included, in computing the total income of the assessee, is that part of the income of the trust which is received for the benefit in this case of the minor daughter.
It is the share income which has accrued to or has been received by the minor daughter under the trust deed, in the relevant accounting year, that has to be included in the total income of her father, the assessee.
The expression "so much of the income" occurring in this clause also makes it clear that the said provision relates to the share income of the minor daughter, in this case, and not that of the Grindlays Bank, the trustee.
Section 16 sub section
(3) of the Act provides specifically for assets transferred to the wife or the minor child.
The income from assets transferred to the wife is still to be included in the total income of the husband, if the assets have been transferred directly or indirectly to the wife by the husband other wise than ,for adequate consideration [vide sub section (3) (a) (iii)].
Again so much of the income of any person or association of persons, as arises from assets transferred, otherwise than for adequate con sideration, to the person or association, by the husband, for the benefit of his wife has to be included in the husband 's taxable income.
, [vide sub section (3) (b)].
The same sub section (3) of section 16 of the Act provides for the income, from the assets transferred by a father to his minor child, to be included in the total income of the father, if the assets have been transferred, directly or indirectly to the minor child, not being a married daughter, otherwise than for adequate consideration [vide sub section (3) (a)] (iv) 1.
Again, so much of the income of any person or association of persons, as arises from assets transferred, otherwise than for adequate consideration, to the person or association by the father, for the benefit of his minor child has to be included in the father 's taxable income.
[vide sub section (3) (b)].
The above is the scheme of section 1 6 (3) of the Act.
It must also be noted that under section 16(3) (a) sub clauses (iii) and (iv) and also clause (b) of sub section 3, the transfer contemplated thereunder should have been "otherwise than for adequate consideration.
" The words "adequate consideration" denote consideration, other than mere love and affection.
There is no controversy, in the case before us, that the transfer, by way of trust, is one "otherwise than for adequate consideration.
" It is true that when assets are transferred to the trustees, as in the case before us, there was income in the hands of the trustees and the latter were liable to pay tax thereon.
That, however, is not the question before us.
The question before us is whether the income, representing the share 12 of the minor daughter, which has accrued in the, hands of the trustee, or was received by the said minor could be included in the total income of the appellant under cl.
(b) of sub section
(3) of section 1 6.
For a proper appreciation of cl.
(b) of section 16(3), in our opinion, that clause must be read in the context of the scheme of s.16; and the two clauses (a) and (b) of sub section (3) of section 16, must be read together.
So read, the reasonable interpretation to be placed on cl.
(b) appears to be that the scheme of the section requires that an assessee can only be taxed, on the income, from a trust fund created for the benefit of his wife or minor child or both, provided that in the year of account, the wife or the minor child, or both, have derived some benefit under the trust deed.
That is, the wife or the minor child, either has received the income or the income has accrued to them or they have a beneficial interest, in the income in the relevant year of account.
From this it follows, that if no income accrues or benefit is derived and there is no income at all, so far as the minor child, in the case before us, is concerned, then it is not consistent with the scheme of section 16, that the income or the benefit which is nonexistent, so far as the minor child is concerned, is to be included in the income of his or her father.
In the case before us, there is no controversy that the minor daughter has received the income in all the relevant accounting years.
Mr. B. Sen, learned counsel for the Revenue, has drawn our attention to the two decisions of this Court, wherein it has been held that section 16 (3) (b) of the Act applies, to cases of trust, like the one before, us, and that under such circumstances, what is to be included in the total income of the assessee is the share of the income that has accrued to or has been received by the assessee 's wife or minor child, or both.
The first decision is Tulsidas Kilachand and others vs Commissioner of Income tax, Bombay City I(1).
In this case A, the husband, had created a trust in respect of certain shares owned by him in two companies.
Under the said trust the wife of A was to receive the income.
A sum of Rs. 30,404/ was received by the wife, as dividend income, in respect of the shares, regarding which a trust had been created.
This amount was added to the taxable income of the husband under section 16 (3) (b).
This Court held that as the transfer of the shares by way of trust, had been effected and as there was a provision for payment of the income accruing from the shares to the wife, and as the latter had received the dividend income, during the relevant accounting year, that amount had been rightly included by the Revenue in the taxable income of the husband.
(1) 13 This Court further held that such a case falls squarely within the special rules concerning the wife and the minor child as laid down in section 16 (3) (b) of the Act.
The second decision referred to by Mr. Sen is Commissioner 'Of Income tax, Bombay vs Manilal Dhanji(1).
In that decision the assessee had created a trust in 1953 in respect of a, sum of Rs. 25,000/ and the trustees had also been nominated for the purpose of administration of the trust.
Under the trust deed, it was provided that the interest accruing on the, trust amount of Rs. 25,000/ was to be accumulated and added to the corpus Of the trust and that a minor daughter of the assessee was to receive the income from the corpus increased by addition of interest, every year, on her attaining the age of 18 years.
It was further provided that after attaining the age of 18 years, the daughter was to receive the income during her life time; and after her death the corpus was to go to certain other persons.
The daughter, in that case, was to attain the age of 18 years only on February 1, 1959.
In the accounting year 1953 54, a sum of Rs. 410/ was received as interest income on the trust fund and it was added by the trustees, in accordance with the provisions of the trust deed, to the corpus.
The Income tax Authorities.
however, included this interest income of Rs. 410/ in the total income of the father, the assessee under section 16 (3) (b) of the Act.
The High Court held that on a true construction of cl.
(b) of section 16(3) of the Act, as no benefit has accrued to the minor daughter in the year of account, the sum of Rs. 410/ could not be included in the total income of the assessee.
This Court agreed with the view of the High Court.
It is clear from the above two decisions that when a trust is created, though the income is, in the hands of the trustees, the underlying principle of cl.
(b) of section 16(3) is that so much of the income as represents the shares of the wife or the minor child, as the case may be, is to be included in computing the total income of the husband or the father.
This is consistent with the ,scheme of section 16 and in particular sub section (3) thereof, which is intended to foil an individual 's attempt to avoid or reduce the extent of tax, by transferring his assets to his wife or minor child.
From the above discussion it follows, that the second contention ,of Mr. Puri cannot also be accepted.
Now coming to the second question, referred to the High Court, which relates to the reduction claimed by the assessee of the annual letting value of Faridkot House in Diplomatic Enclave, New Delhi, we have already pointed out that the said claim has been rejected by the Revenue, as well as by the High (1) 14 Court.
It is admitted by the Revenue as well as the assessee that the claim of the appellant in this regard in respect of the residential house in Lytton Road, New Delhi, has been allowed by the Revenue.
The question regarding the house in Diplomatic Enclave arises only for the assessment year 1960 61.
The Income tax Officer has not given any reason for rejecting the claim of the assessee.
The Appellate Assistant Commissioner has held that as the appellant has been granted the usual allowance in respect of Faridkot House in Lytton Road, he is not entitled to any further allowance in respect of another house.
In fact the officer has said that both the houses have to be treated as one unit for purposes of computing the annual letting value.
But there is one finding, in the order of the Appellate Assistant Commissioner, which is to be noted, namely, that the houses in Lytton Road and Diplomatic Enclave are used and occupied by the assessee for residential purposes.
The Income tax Appellate Tribunal has not differed from the finding of the Appellate Assistant Commissioner that both the houses are used and occupied for residential purposes by the assessee.
But the Appellate Tribunal has also ' taken the view that the assessee is entitled to the necessary allowance only in respect of one residential house, under the first proviso to section 9(2) and that the second proviso thereto does not help the assessee.
According to the Appellate Tribunal, the second proviso to section 9 (2) of the Act will take in cases where the property, in the occupation of an assessee for purposes of residence, consists of more than one residential house, but so situated as to form one property.
The Appellate Tribunal has given an illustration of a palace or a bungalow with various out houses.
In such a case, according to the Appellate Tribunal, all the buildings situated in one compound are to be treated 'Collectively, as one property, for the purpose of the first proviso.
In this view, the Appellate Tribunal also rejected the claim of the assessee in respect of the house in Diplomatic Enclave.
The High Court has very summarily rejected the claim of the appellant in this regard.
After referring to the contention of the assessee that the second proviso to section 9 (2) clearly indicates that the first proviso contemplates an assessee having more than one residential houses, it has held that the said contention cannot be accepted.
Mr. K. C. Puri, learned counsel for 'the appellant has urged that the finding of the Appellate Assistant Commissioner that the two houses in Lytton Road and Diplomatic Enclave are used for residential purposes by the assessee, has not been departed from by either the Appellate Tribunal or the High Court.
On this basis, Mr. Puri urged that a reading of the first and second provisos, 15 to section 9 (2) of the Act clearly shows that the allowance, to an assessee, is not confined only to one residential house, as held by the Revenue and the High Court.
A reading of the second proviso to sub section (2) clearly, in our opinion, indicates that the first proviso will take in more than one residential houses, if the assessee is able to establish that all the houses are occupied by him for purposes of his own residence.
So far as this is concerned, we have already pointed out that the finding is in favour of the assessee.
Mr. B. Sen, learned counsel for the Revenue, found conside rable difficulty in supporting the order of the High Court, answering question No. 2 in the negative and against the appellant.
But he attempted to argue that the question, whether the assessee is actually occupying the house in Diplomatic Enclave also for, purposes of his own residence, has not been investigated.
We are not inclined to accept this contention of Mr. Sen.
We have already referred to the finding of the Appellate, Assistant Commissioner to the effect that both the houses one in Lytton Road and the other in Diplomatic Enclave are used and occupied by the appellant for purposes of his own residence.
This finding has not been disturbed either by the Appellate Tribunal or by the High Court.
If so, on a proper construction of the first proviso to sub section (2) read with its second proviso clearly supports the contention of Mr. Puri that the view of the Revenue and 'the High Court that the assessee can claim allowance only for one residential house, is erroneous.
To conclude, we are in agreement with the view of the High Court when it answered the question No. 1 in the affirmative and against the assessee.
But we answer the question No. 2 in the affirmative in favour of the assessee.
Our answer to question No. 2 will be substituted, in the place of that given by the High Court.
The judgment and order of the High Court are modified to the extent indicated above, and the appeals are, allowed in part.
The parties will bear their own costs.
G.C. Appeals partly.
allowed.

summary/full:
The appellant created a trust in 1955 by transferring certain securities held by him to a bank as trustee.
One of the beneficiaries of the trust was the appellant 's minor daughter M.
The income accruing to M under the trust during the previous years relevant to the assessment years 1957 58, 1958 59, 1959 60 and 1960 61 was included in the assessments made on the appellant as an individual for those years by applying the provisions of section 16(3)(b) of the Indian Income Tax Act 1922.
In the assessment for the year 1960 61 the Income tax Officer had also to deal with the appellant 's claim for the allowance under section 9(2) off the said Act in respect of two separate houses owned by the appellant and maintained by him for residential purposes in New Delhi.
The Income tax Officer allowed the claim only in respect of one of the houses.
The appellant 's appeals.
before the authorities under the Act failed.
The High Court decided the questions referred to it against the appellant.
In appeals before this Court on certificate the contentions of the appellant which fell for consideration were : (i) (a) that section 16(3) (b) must be strictly construed; (b) that the assets covered by the trust deed not having been transferred to the wife or minor daughter but to a bank as trustee, section 16(3) (b) of the Act had no application; (c) even if section 16(3) (b) of the Act applied, what was to be included in computing the total income of the appellant was not the in come that had been received by the minor daughter under the trust deed but only so much of the income of the trustee as arose from the assets transferred to the trustee for the benefit of the minor child; (ii) that a reading of the first and second provisos to section 9(2) of the Act clearly showed that the allowance to an assessee is not confined only to one residential house HELD : (i) (a) it is true that section 16(3) (b) creates an artificial liability and must therefore be strictly construed.
But in construing section 16(3)(b) Courts cannot ignore the clear and unambiguous expressions contained therein and all those expressions must receive a proper interpretation.[9 C D] C.I.T. Bombay vs Manual Dhanji, , C.I.T.,.
Gujarat vs Keshavlal Lallubhai Patel, and; C.I.T., West Bengal II vs Prem Bhai Parekh (b) The contention that section 16(3) (b) applies only to those cases where ultimately the corpus of the trust property is also transferred to the wife or the minor child, must be rejected.
The provisions of section 16(3)(b) are very clear, and, the only requirement so far as this aspect is concerned is that the assets Must be transferred.
to, any person or association of persons and that transfer of assets must be for the benefit of the wife or the 2 minor child or both.
In this connection it is pertinent to note the wordings of section 16(3) (a) (iii) and section 16(3) (a) (iv).
The former provision clearly refers to assets transferred directly or indirectly to the wife by the husband and the latter provision refers to assets transferred directly or indirectly to the minor child not being a married daughter.
But in cl.
(b) of section 16(3) the transfer of assets is not to the wife or the minor child or both but to any person or association of persons.
Therefore it is clear that when the legislature intended to provide for a direct transfer of assets either to the wife or to the minor child, it has used the expressions as are found in section 16(3) (a) (iii) and section 16(3) (a) (iv).
The different phraseology used in cl.
(b) of section 16(3) makes it clear that the transfer of assets need not be to the wife or the minor child.
Nor does the said clause require that the corpus of the property so transferred to any person or association of persons should ultimately vest in the wife or the minor child [9G 1OB] C.I.T. Bombay vs Sir Mahomed Yusuf Ismail, [1944] 12 I.T.R. 8 approved.
(c) From a plain reading of section 16(3) (b) it is clear that what is to be included in computing the total income of the assessee is that part of the income of the trust which is received for the benefit in this case of the minor daughter.
It is the share income which has accrued to or has been received by the minor daughter under the trust deed in the relevant accounting year, that has to be included in the total income of the father, the assessee.
The expression "so much of the income" occurring in this clause also makes it clear that the said provision relates to the share income of the minor daughter, in this case, and not that of the trustee bank.
[11 B C] Tulsidas Kilachand and ors.
vs C.I.T. Bombay City 1, and C.I.T. Bombay vs Manilal Dhanji, applied.
(ii)A reading of the second proviso to sub section (2) of section


judgement:
Appeals Nos. 1689 and 1690 of 1968.
Appeals from the judgment and order dated January 19, 1967 of the Madras High Court in Writ Petitions Nos.
1030 and 1031 of 1963.
T A. Ramachandran, for the appellant (in both the appeals).
section C. Manchanda, R. N. Sachthey, B. D. Sharma and section P. Nayar, for the respondents (in both the appeals).
The Judgment of the Court was delivered by Hegde, J.
These appeals by certificate arise from the decision of the High Court of Madras in Writ Petitions Nos.
1030 and 1031 of 1963.
Therein the petitioner Invoked the extraordinary jurisdiction of the High Court under Article 226 of the Constitution to quash the orders of the Respondents wherein he was not granted the abatement he sought to obtain in the assessment years 1959 60 and 1960 61 The High Court came to the conclusion hat the appellant is not entitled to any in ore abatement than that was given by the authorities under the 'Assessment for Relief or for Avoidance of double Taxation in India and Ceylon ' which will be hereinafter referred to S the "agreement".
It accordingly dismissed the Writ Petitions but gave a certificate under article 133(1)(c) of the Constitution of India certifying that this is a fit case )r appeal to this Court.
The appellant is a resident in this country.
But he carrying on business in Ceylon.
During the assessment car 1959 60 he earned a gross income of Rs. 39,473/ id in the assessment year 1 '960 61 he earned a gross income of Rs. 39,047/ .
He had only a house in India hose annual rental value was Rs. 38,/ .
The entire assessable income of his was that what he earned in Ceylon.
in his income in Ceylon, he was taxed in a sum of Rs. 919/ for the assessment year 1959 60 and in a sum of section 6,036/ for the assessment year 1960 61.
For the ,.me income, in India, under the Indian Jaw his tax was computed for the assessment year 1959 60 at Rs. 10,282 62P id for the assessment year 1960 61 at Rs. 9,521 35P 90 The tax payable by him in Ceylon was given as abatement and he was called upon to pay only the balance.
The tax payable by him in Ceylon as a non resident would have been Rs. 9,889/ in the assessment year 1959 60 and Rs. 9,983/ in the assessment year 1960 61.
But in view of section 45(2) of the Ceylon Income Tax ordinance 1932 and also in view of the 'Agreement ' he was taxed as if he was a resident in Ceylon.
Two questions arising for decision are whether he was not liable to be taxed at all in India and if he was liable to be taxed in India, what should have been the proper abatement given to him.
Mr. Ramachandran appearing for the assessee contended firstly that in view of the 'Agreement ' entered into between India and Ceylon as provided in section 49C of the Indian Income Tax Act, 1922 he was not liable to be taxed in India at all.
In the alternative, he contended ' that while determining the tax payable by him in this country, the department should have deducted the entire tax that he would have had to pay had been taxed as a non resident.
For this contention also he relies on the terms of the agreement entered into between India and Ceylon.
He does not dispute the fact but for the agreement the assessee would have been liable to pay in this country a tax of Rs. 10,282 62 p. in the assessment year 1959 60 and Rs. 9,521 35p.
in the assessment year 1960 61.
In order to consider the correctness of the contention,, advanced by Mr. Ramachandran, we will now turn to the relevant provisions of the 'Agreement '.
That 'Agreement ' was notified in Modification SRO 456 dt.
the 6th February, 1957.
The portion of the notification which is relevant for our present purposes is contained in Article 3 and column 8 of the Schedule to that agreement.
Article 3 reads "Each country shall make assessment in the ordinary way under its own laws; and where either country under the operation of its laws charges any income from the sources or categories of transactions specified in column 1 of the Schedule to this Agreement (hereinafter referred to as the Schedule) in 91 excess of the amount calculated according to the percentages specified in column II and III thereof, that country shall allow an abatement equal to the lower of the amounts of tax attributable to such excess in either country." SCHEDULE Sources of income or nature of Percentage of income Remarks transaction from which income is which each country derived is entitled to charge under the Agreement.
I II III IV 8.
Any income derived from a source 100 per cent Nil by ,or category of transactions not men by the country the other.
tioned in any of the foregoing items in which of the Schedule.
the income actually ac crues or arises.
The first portion of article 3 says that "each country shall make an assessment in the ordinary way under its own laws." This means to begin with both India and Ceylon were required to assess the assessee in accordance with law prevailing in each of these countries.
Thus far it is plain.
From this it is clear that first contention advanced on behalf of the assessee has no basis.
Hence it must fail.
Now we come to the second part of that article to the extent necessary for determining the second contention.
It reads : " and where either country under the opera tion of its laws charges any income from the sources or categories of transactions specified in column 1 of the schedule to this Agreement . in excess of the amount calculated according to the percentages specified in columns 11 and III thereof, that country shall allow an abatement equal to the lower of the amounts of tax attributable to such excess in either country.
" The language employed in this part of the article 'is quite confusing.
That part of the article has to be read with the 92 schedule.
On a proper reading of that provision alongwith the schedule, which means in the present case, item 8 of the schedule, it appears to us that what it says is From out of the amount ascertained under the first part of the Article deduct the tax payable by the assessee in the other country in respect of the whole or any portion of the amount brought to tax under the first part of article.
The word 'attributable ' in that Article merely means 'payable Applying the principle mentioned above to the facts of the present case, the following result is reached.
The tax payable under the Indian law as seen earlier was Rs. 10,282.62p.
in the assessment year 1959 60.
The tax payable under the Ceylonese law in that year was Rs. 5,919/ .
That has to be deducted from the tax computed under the Indian law.
The balance alone is leviable.
Similarly in the assessment year 1960 61 the tax computed under the Indian law is Rs. 9,521 35 p. and the tax levied under the Ceylonese is being Rs. 6,036/ .
In levying tax in this country the tax payable in Ceylon has to be deducted.
It was urged by Mr. Ramchandran that what we have to take into consideration is not the actual tax levied in Ceylon but the tax leviable in Ceylon on a non resident.
He says that the deduction given under section 45 (2) of the Ordinance promulgated in Ceylon is only an allowance.
Hence the same does not form part of the actual taxation.
We are unable to accede to that contention.
In considering what taxes are attributable to the tax laws of a particular country, one has to take into consideration all the provisions of the statutes levying tax.
In other words for determining the tax due from an assessee, we have not merely to look to the charging section but also to the provisions providing exemptions and 'allowances.
If so read, it is quite clear that the amount of tax attributable to the Ceylonese law is that which was ultimately levied on the assessee.
The agreement that was entered into between India and Pakistan is similar in terms with the agreement, with which we are concerned in these appeals, except that in article 4 therein which corresponds to article 3 in the agreement before us in the place of the word 'attributable ' the word 'payable ' is used.
But this change does not make any difference in substance.
Interpreting that 93 agreement this Court in, Ramesh R. Saraiva vs Commissioner of India Tax, Bombay City 11 held that article IV of the Indo Pakistan Agreement for the avoidance of Double Taxation clearly shows that each Dominion can make an assessment in the ordinary way regardless of the Agreement.
The restriction which is imposed on each Dominion under the Agreement is not on the power of assessment but on the liberty to retain the tax assessed.
Nor does the Schedule to the Agreement limit the power of each Dominion to assess, in the normal way all the income that is liable to taxation under its laws.
The Schedule has been appended only for the purpose of calculating the abatement to be allowed by each Dominion.
The ratio of this decision, in our opinion, governs the facts of this case.
We also do not see any reason for treating the appellant in a manner different from other assessees, who are resident in this country.
In the result these appeals fail and the same are dismissed.
No costs.
V.P.S. Appeals dismissed.

dataset_name: IN-Abs

summary/full:
The appellant was a resident in India and was carrying on business in Ceylon.
His entire assessable income for the years 1959 60 and 1960 61 was what he earned in Ceylon.
He was liable to be assessed :as a non resident, but, in view of section 45(2) of the Ceylon Income tax Ordinance, 1932, and of the Agreement for 'Assessment for Relief or for Avoidance of Double Taxation in India and Ceylon ' as provided in section 49A of the Indian Income tax Act, 1922, he was taxed as if he was a resident in Ceylon and assessed to pay a smaller sum as tax.
The Income tax authorities in India computed the tax under the Indian law :and gave as abatement, the tax payable by him in Ceylon as per the Agreement, and called upon him to pay the balance.
On the questions: (1) whether he was not liable to be taxed at all in India, and (2) if he was liable to be taxed in India, what should have been the proper abatement, the High Court confirmed the order of the Income tax authorities.
In appeal to this Court, HELD: (1) Article 3 of the Agreement begins with the words 'Each ,country shall make an assessment in the ordinary way under its own laws. ' Therefore, the appellant was liable to be taxed in India.
[91E F] (2) The Article read with item 8 of the Schedule to the Agreement shows that from out of the amount ascertained under the first part of the Article the tax payable by the assessee in the other country in respect of the whole or part of the amount brought to tax under the first part of the Article, should be deducted.
The word 'attributable ' in the Article means 'payable '.
In considering what taxes are attributable to the tax laws of a particular country, one has to take into consideration all the provisions of the statutes levying tax, that is, for determining the tax ,due from an assessee, one has not merely to look to the charging section, but also to the provisions providing exemptions and allowances.
So read, the amount of tax attributable to the Ceylonese law is that which ,was ultimately actually levied on the assessee and not the leviable in Ceylon on a non resident.
[92B G] Ramesh B. Saraiya vs C.I.T. Bombay applied. 89


judgement:
Appeals Nos. 34 and 35 of 1969.
Appeals by special leave from the judgment and order dated August 5, 1968 of the Punjab and Haryana High Court in Income tax Reference No. 40 of 1964.
K. C. Puri, K. L. Mehta, section K. Mehta and section section Hussain, for the appellant (in both the appeals).
B. Sen, P. L. Juneja, Badri Das Sharma for R. N. Sachthey, for the respondent (in both the appeals).
The Judgment of the Court was delivered by P. Jaganmohan Reddy, J.
These two Appeals are by Special Leave against the Judgment Of the Punjab & Haryana High Court answering the Reference under Section 66(1) of the Indian Income tax Act 1922 (hereinafter referred to as 'the Act ') against the assessee the Appellant.
The Appellant who was admittedly a Ruler of the erstwhile Faridkot State challenged the assessments made against him for the years 1946 47 and 1947 48 with respect to which the accounting years were Vikram year 2002 and.2003 corresponding to the period 13th April 1945 to 12th April 1946, and 13th April 1946 to 12th April 1947 respectively.
The; assessment in each of these years was made under Sec.
34 read with Sec. 23 of the Act, as the assessee 's income from dividends and interest and capital gains earned by the assessee during the relevant accounting year in what was then British India had not been brought to tax.
The assessee objected to these proceedings and contended before the Income tax Officer that he 'being a Ruler of the Faridkot State was immune from taxation on every source of income.
He could not therefore, by virtue of his sovereignty be treated as an assessee for any purpose under the Act.
It was also contended that the notices under Sec. 34 were time barred.
The Income tax Officer however, rejected these objections and held that though under the 18 International Law the Rulers of Indian States were sovereigns and immune from Municipal Laws of other countries, there was no exemption at far as the personal incomes of the Rulers are concerned from being taxed under the Act.
In that view he held that notices under Sec.
34 were valid and accordingly made an assessment.
The Appeal to the Appellate Assistant Commissioner was without success, though similar contentions were raised before him with particular reference to the privileges which the Rulers enjoyed under International Law both in respect of Civil and Criminal matters.
The assessee appealed against this order to the Income tax Appellate Tribunal where, however,, there was a divergence of view between the two Members and therefore the matter was referred to the President of the Tribunal.
After considering the decisions in regard to the exemption of the sovereign from all Civil and Criminal Laws of another State, the Judicial Member held that no assessment could be made on the assessee under the Act as he was the Ruler of a sovereign State during the assessment years under consideration.
In this view he did not express any opinion on the question of the legality of the proceedings under Sec.
34 of the Act.
The Accountant Member however, after considering the various provisions in the Act whereby exemption was granted to the Rulers in regard to certain types of income and the various decisions held that the assessee was liable to assessment in respect of his personal income arising or accruing to him from British India from his private properties.
He also held that the proceedings under Sec.
34 of the Act were perfectly legal and valid.
In view of the difference of opinion,, the matter was referred to the President of the Tribunal under Sec. 5A(7) of the Act on the following question "Whether on the facts and in the circumstances of the case the assessee was immune from tax under the Indian Income tax Act on his private income viz., dividends and interest income as also the Capital Gains earned in British India.
" The President of the Tribunal held in favour of the assessee by relying on a decision of the Andhra Pradesh High Court in the case of H. E. H. Mir Osman Ali Khan Bahadur Nizam & Raj permukh of Hyderabad vs Commissioner of Income Tax(1), where it was stated thus : "Indisputably, a sovereign ruler enjoys immunity from taxation under International Law and it is only in cases where this rule is superseded by express words that this should be denied to him.
If a legislature wants to depart from these principles and bring such (1) Case No. 35 of 1959.
19 ruler to tax, there must be clear indication in the enactment itself.
In the absence of such express words, the statute must be interpreted in conformity With International Law.
Simply because the Municipal Law did ' not provide for such an exemption, the principles of International Law should not be regarded as having been superseded".
In the aforesaid view the Andhra Pradesh High Court had held that notwithstanding the fact that His Exalted Highness the Nizam had lost the character of a sovereign ruler after 26 10 1950, he is still immune from taxation in respect of the income derived by him prior to that date.
Following this decision the President held that the assessee was immune from taxation under the Act on his private income.
In view of this decision on an application by the Revenue under Sec.
66(1) of the Act the following question was referred to the High Court : "Whether on the facts and circumstances of the case, the assessee was not liable to tax under the Indian; Income tax Act, 1922, in respect of his personal income accruing or arising to him in British India in the two assessment years 1946 47 and 1947 48." The High Court relying upon the decision of this, court in Commissioner of Income tax, Andhra Pradesh vs H. E. H. Mir Osman Ali Bahadur(1), which reversed the decision of the Andhra Pradesh High Court referred to and relied upon by the President of the Tribunal held against the assessee.
It is contended before us that the facts and circumstances in the Nizam 's case are totally different and the decision of this Court is clearly distinguishable.
The learned Advocate contends that in that case the assessments related to the assessment years 1950 51 and 1951 52, the corresponding accounting year for which was the, period between 1st April 1949 and 31st March 1950, and 1st April 1950 and 31st March 1951 respectively, which years being after the inauguration of the Constitution on 26th January 1950, clearly make the Act which was made applicable from 1st April 1950 to all the Part B States, applicable to the assessee.
But it is submitted that in the case before us there could be no ques tion of Act being made applicable to Faridkot State as the assessment years and the accounting years are prior to the inauguration of the Constitution and the application of the Act.
The learned Advocate cited a large number of decisions in support of his contention that the Native States in India had International.
(1) 20 personality and their Rulers had 'immunity similar to those that were accorded to any other Head of a State under International Law.
It was also argued that though these princely States in India may have been 'protected States; it was not necessary for the recognition of the privileges and immunities of the Rulers of such States to possess all the attributes of sovereignty and complete independence in support of which the decisions of Mighall ,vs Sultan of Jahore(1), Duff Development Co. Ltd. vs Govt.
of Kelantan & Anr.(2), Stathem vs Stathem & H. H. the Gaekwad of Baroda(3), were referred to.
It was therefore contended that in this country also the position was the same as that recognised by the Common Law of England for which proposition, decisions were referred to from Punjab Recorder onwards.
A reference was also made to several cases pertaining more specifically to the immunity enjoyed by the Rulers from payment of Income tax on the basis of their status under International Law.
These are : The Patiala State Bank vs Commissioner of Income tax, Bombay(4), Rani Amrit Kunwar vs Commissioner of Income tax, C.P. & U.P.(5), The Accountant General, Baroda State vs Commissioner of Income tax, Bombay City(6), A. H. Wadia, as Agent of the Gwalior Durbar vs Commissioner of Income Tax, Bombay (7), and Maharaja Bikram Kishore of Tripura vs Province of Assam (8).
On behalf of the Revenue reliance is placed on Commissioner of Income tax Andhra Pradesh vs H. E. H. Mir Osman Ali Bahadur(9), to sustain the Judgment under appeal and it is conceded that if this decision was not applicable to the facts and circumstances of this case, the position as contended by the assessee would be that the Indian Rulers prior to the Constitution were granted immunity from taxation, and in any case this was so in respect of the income from the property of the State as, distinct from the private or personal property of the Ruler though there were observations in some of the cases that it was difficult 'to distinguish public or private property owned by a ruler.
At this stage we think it necessary to advert to one argument .adduced on behalf of the assessee namely that the Income tax authorities particularly the Income tax Officer, had accepted the International status of the assessee and the immunity from .taxation of income from public property, but only rejected the claim for such immunity in respect of income from private or Personal property.
It is therefore contended that the status of (1) [1894] I. Q. B. 149.
(3) (1912) Probate 92.
(5) XIV ITR 561.
(7) XVII ITR 63.
(9) 59 I.T.R. (2) (4) XI ITR 617.
(6) XVI ITR 78.
(8) XVII ITR 220.
(9) 59 I.T.R.666 21 the assessee as an international personality is not in issue before.us s, what is in issue is whether his income from private property is exempt from taxation.
We do not think this contention has, validity, because the High Court has specifically While rejecting, the second contention addressed on behalf of the assessee ruled;, that the status of the assessee as a ruler of the Indian State could. ' not be equated with that of a sovereign in international law.
Even the reference to the High Court does not limit or circumscribe the matter for consideration as contended for but on the, other hand enables us to deal with the question whether as an, erstwhile ruling prince the assessee can at all be entitled to the. immunity from taxation.
In considering the question referred to by the Tribunal it,, may be useful to examine briefly the basis and extent of the privilege and immunity enjoyed by Head of State in International Law, particularly having regard to the lengthy arguments.
addressed before us.
In International Law the Head of a State,.
represent* the State as such and not as an individual representing his own rights.
In that capacity he enjoys certain extra, territorial privileges in other States which are friendly and in peace, known as the receiving States, with the State he represents.
These are, ceremonial honours for himself, the Members of his, family and his retinue; special protection to his person, and ' exemption from Criminal jurisdiction; the grant of extra terri toriality, on the basis that one sovereign does not have any powerover the other, such as immunity from filing of suits against him except where he is himself a plaintiff and from.
other civil processes; exemption from taxation rating and other fiscal enactments and the invilobility of immovable property in which he of, the representatives of the State accorded diplomatic immunity.
reside etc.
Some of these privileges and immunities are political and are generally the subject of executive and administrative instructions such as ceremonial honours, Police protection.
exemption from customs in accessability of their residences to officers of Justice, Police or Revenue officials unless consented to by them.
There are yet others in relation to the applicability of the Municipal Laws, the immunity from which are either recognised by the Common Law and which Courts will not enforce as.
in England or are dealt with by those laws themselves by affording the necessary exemption.
There are yet others which may be regulated by Treaties or international covenants.
Whatever may be the various aspects of the immunity and privileges enjoyed by the Heads of the State under the Laws of the Country where questions relating to them arise, what we are concerned with at the very thresh hold of this argument dealing with the immunity is whether the rulers of the erstwhile native States as.
22 they were called enjoyed the same or similar privileges as those ,of the Heads of States recognised as Members of the family of nations ln International Law.
It is clear from the very nature of the native States in 'India that they were subject to the sovereignty and protection of British Crown.
While their relations with the Crown were governed by treaties, though initially on terms of equality, as time went by and the British Crown in India ,became paramount, the relationship between it and the Rulers ,became unequal with the result that these treaties became subject to the reservation that they could be disregarded where the interests of the British Empire or those of the subjects of the native States were involved.
When the Nizam claimed equality with the British Crown, the then Viceroy Lord Reading informed him on 27th March 1926 that "The sovereignty of the British Crown is supreme in India and therefore no Ruler of an Indian State can justifiably claim to negotiate with the British Government on an equal.
footing".
After giving a few illustrations to negative the claim of the Nizam, the Viceroy proceeded to observe "other illustrations could be added no less inconsistent than the foregoing with the suggestion that the Government of your Exhalted Highness and the British Government stand on a plane of equality . (1).
This paramountcy was described by Shah, J, as he then was, as "brazen faced autocracy" in H. H. Maharajadhiraj Madhav Rao Jivaji Rao Bahadur of Gwalior etc.
vs Union of India (2).
What then becomes of the claim of these States or their rulers to recognition.
as International personality.
The answer to this specific question is furnished even towards the end of the 19th Century.
The status of these native States as International personalities was negatived.
in the Notification of the Government published in Gazette of India Part 1, dated 21st August, 1891 at page 485, which was a resolution containing a proclamation regarding the trial of accused persons in Manipur and the regrant ,of the Manipur State.
In this regard the following passage at page 488 is of interest : "The principles of the International law have no bearing upon the relations between the Government of India as representing the Queen Empress on the one hand, and the Native States under the suzerainty of Her Majesty on the other.
The paramount supremacy of the former presupposes and implies the subordination of the latter.
In the exercise of their high prerogative, the Government of India have, in Manipur as in other protected States, the unquestioned right to remove by (1) Vide Appendix I of the White Paper on Indian States.
(2) ; 161. 23 .lm15 administrative order any person whose presence in the State, may seem objectionable.
They also have the right to summon a Darbar through their political representative for the purpose of declaring their decision upon matters connected with the expulsion of the ex Maharaja. through their Officers." After stating that any one resisting the decision and not complying with orders will be liable to arrest, the declaration went on to say "In the opinion of the Governor General in Council any armed and violent resistance to such arrest was an act of rebellion, and can no more be justified by a plea of self defence than could resistance to a police officer armed with a Magistrate 's warrant in British India.
" In the recent case of this Court in H. H. Maharajadhiraja Madhav Rao Jivaji Rao Scindia Bahadur of Gwalior(1), referred to above the majority expressed the view that "the States had no International personality".
Nonetheless the status of these rulers in England was recognised as being on par with other Rulers in the matter of personal immunity from being sued in their Courts.
In so far as British India was concerned these were governed partly by Acts of the Legislatures particularly the provisions contained in Civil Procedure Codes and by Notifications of the executive under taxation laws as well as by executive or administrative instructions relating to their privileges.
It is therefore apparent that in so far as this country is concerned the immunity from legal proceedings which is recognised in the common law has been the subject matter of legislation under which the ruling princes of India, notwithstanding that they were not recognised as International personalities, were however accorded this immunity.
433 of the Code of Civil Procedure of 1882 and subsequently Sections 84 to 87 of the Civil Procedure Code of 1908 deal with these matters.
Gajendragadkar, C.J., in Mirza Ali Akbar Kashani vs United Arab Republic & Anr.(2), cited with approval the observations of Strachey, J, in Chandulal Khushalji vs Awed Bim Umar Sultan Nawaz Jung Bahadur(3), as correctly representing the result of the provisions of Sec.
433 as much as of those contained in Sec.
86(1).
It may be mentioned that Strachey, J, after pointing out that in India before the enactment of Sec.
433 of the Code, the privilege of independent sovereign princes stood on exactly the same footing as in England, observed (1) ; 161.
(2) ; (3) at 371 372. 24 .lm15 "No doubt the question of privilege now depends on the construction of Sec. 433, and I am alive to the danger of pressing too far an analogy between a rule of international law and a specific enactment of the Legislature.
" It is apparent from a perusal of Sec. 86 of the Civil Procedure Code that there is no absolute prohibition against a Ruler of a foreign State being sued in India.
A Ruler can be sued with the consent of the Central Government certified in writing by a Secretary to that Government.
It is also provided that such consent should not be given unless it appears to the Central Government that the Ruler has instituted a suit in the Court against the person desiring to sue him or by himself or another, trades within the local limits of the jurisdiction of the Court, or, is in posses sion of immovable property situate within those limits and is to be sued with reference, to such property or for money charged thereon, or has expressly or impliedly waived the privilege accorded to him by this Section.
In view of these provisions the several cases cited by the learned Advocate for the assessee which deal with immunity from suits against ruling princes under the English law have no application.
In so far as the question whether there exists a rule of international law exempting a State, or the property which it owns, from taxation by a foreign State, is concerned, there seems to be no uniform practice followed by the various States.
It is however suggested that immunity from taxation "appears as a logical accompaniment of the principle of immunity of foreign State owned property from judicial process" and on this basis it is sought to be contended that even personal, private property of the Head of a State is exempt.
It is unnecessary for us to examine this position because even if there was such an immunity the Rulers of an Indian State could only avail of it, if they are recognised as international personalities which, as we have seen, they are not.
Any exemptions which they may be given, must, in our view be under the relevant taxing Acts.
The learned Advocate for the Assessee however points out that if the Rulers of Indian State were not exempted from tax apart from the statute, there was no need to make a provision in Sec. 3 of the Bengal Agricultural Income tax Act IV of 1944, specifically making every Ruler of an Indian State liable to Agricultural Income tax.
On the other hand it would appear to us that this provision would itself militate against the assumption of immunity from taxation of the property of the Rulers and at any rate the legislature may have been acting ex abundanti cautale.
It may however be noticed that in so far as the Income tax Act is 25 concerned exemption of the Income of the Ruters derived from Central Government securities was specifically given under Sec.
60 of the Act which implies that the Rulers were not exempt from other provisions of law.
This position also finds support from a case cited by the learned Author on the "Immunity from taxation on foreign owned Property" in the Americal Journal of International Law XLI at page 239, where the Suppreme Court of Ceylon in the Suprintendent of the Government Soap Factory, Bangalore vs Commissioner of Income tax, held that the profits ade in Ceylon by the Mysore Government Soap Factory could be taxed by Ceylon without violation of international law.
The Ceylon Court held that the State of Mysore had no position in international law and could not,invoke any immunity arising by virtue of international law ' In any case so far as, immunity from taxation of the income from personal property of the Rulers of the Native States is concerned this is now concluded by a decision of this Court in the Commissioner of Income Tax, Andhra Pradesh ',v.
H.E.H. Mir Osman Ali Bahadur(1).
In that case the question directly arose as to whether the Ruler of the Hyderabad State prior to 26th January '50 could claim immunity from taxation under international law, namely whether the assessee enjoyed immunity from taxation under the Act in respect of income which accrued or arose to him, and which was received by him upto 26th January 1950.
The learned Advocate for, the revenue had contended that under the International law, a foreign sovereing was not immune from taxation in respect of his private properties situated in the Taxing State; even if there was such an immunity under the international law, the assessee being under the suzerainty or ,he paramountcy of the British Crown, had never enjoyed the status of a sovereign as understood in the international law and, therefore, was not governed by that law; and that in any event, as on January 26, 1950, the date when he became liable to tax, he was no longer a sovereign and therefore he could not claim exemption under the international law.
Respondent 's Advocate claimed that the assessee was not liable to Income tax on the ground that under the Act, income tax was charged on the assessee 's income received during the accounting year and that as during the accounting year the assessee was a ruling chief, he was exempt from taxation under the international law.
He argued that under the international law, as understood by English Courts, a foreign sovereign was exempt from taxation, that the said interpretation of the law had become the common law of England and that the said common law was the law of India before the Constitution and it continued to have force thereafter reason of Article 372.
(1) 256SupCI/72 26 We have noticed these contentions to show that there is no validity in the submission of the learned Advocate for the assessee, that that question did not directly arise in that case because the Nizam was being assessed in respect of assessment year 1950 1951 and 1951 52, when he was not a ruling prince.
This Court specifically dealt with this matter as can be seen from the observations of Subba Rao J, as he then was at page 670 "International ' law vis a vis the liability of a sovereign to taxation in respect of his private property is in a process of evolution '.
It has not yet become cry stallized." After referring to Halsbury 's Laws of England, 3rd Edition, Volume 20, page, 589 and Oppenheim 's International Law, 8th Edition, Volume 1, page 759 and the Article on immunity from taxation of foreign State owned property in the American Journal of International Law, to which we have already adverted,.
observed "that the question is not free from difficulty and that it requires serious consideration when it directly arises for decision.
Assuming for the purposes of these, appeals that a foreign sovereign who has acquired an international personality has such an immunity from taxation, he proceeded to examine the question whether His Exalted Highness the Nizam had ever acquired international personality.
After examining the position he concluded at page 675 : ".
that Hyderabad State did not acquire international personality under the international law and So its Ruler could not rely upon international.
law for claiming immunity front taxation of his personal properties".
We are not here concerned with the alternative argument in that case, that the Act having applied to the State of Hyderabad , after the inauguration of the Constitution on `6h January '50, the charge as well as the manner of computation of income did not depend on the pre existing law but only upon the provisions of the Act because in these appeals that question does not arise.
in view of this legal position we do not propose to burden this Judgment with any detailed examination.
of the several decisions of the High Courts which were prior to the decision of this Court cited by the learned Advocate in support of the proposition that the ruling chief of an Indian State has the same immunity from taxation as enjoyed by other foreign sovereigns.
Two of 'those cases arose under the where different considerations were applicable (The Patiala State Bank vs C.I.T., Bombay(1), A. H. Wadia, as Agent of the Gwalior Durbar vs C.I.T., Bombay (2).
At any rate in one other case i.e. in Maharaja Bikram Kishore of Tripura vs Province of Assam(3), a distinction was sought to be drawn (1) XI I.T.R. 617.
(2) XVII I.T.R.63.
(3) XVIT I.T.R. 220.
27 between the property of the State and the private property of the ruler.
In that case the question whether the income derived from Chakla Roshanabad Estate was liable to tax under Assam Agricultural Income tax Act, by assessment upon the State of Tripura or by assessment on the ruler of Tripura.
It was held that the Chakla Roshanabad was the State property and not personal property of the then ruling Raja who held it in his capacity as a Ruler.
No doubt in the other two cases refunds were not given for tax deducted at source on the assumption that, the Rulers were not assessees.
In the view we have taken the answer of the High Court to the reference was clearly right and the appeals are accordingly dismissed with costs one set.
S.N. Appeals dismissed.

summary/full:
The appellant who was the ruler of an erstwhile princely state, challenged the assessments made against him for the assessment years 1946 47 and 1947 48 in respect of his personal income earned in British India, on the ground that he being a Ruler was immune from taxation on every source of income.
On the question whether the appellant could claim immunity from tax under the Indian Income tax Act, 1922 in respect of the income earned in British India, HELD: The appellant was not entitled to any immunity and, therefore was liable to tax.
(a) In International law the head of a State representing the State as such enjoys certain extra territorial privileges in other States.
Some of these privileges and immunities are political and are generally the subject of executive and administrative instructions.
There are others in relation to the applicability of the municipal laws, the immunity from which are either recognised by the common law and which courts will not enforce, as in England, or are dealt with by those laws themselves by affording the necessary exemption; yet others are regulated by treaties and international conventions.
Whatever might be the various aspects of the privileges and immunities enjoyed by the Heads of State, the rulers of the erstwhile princely states did not enjoy the same or similar privileges as those of the Heads of States recognised as members of the family of Nations in international law.
From the very nature of these princely states it was clear that they were subject to the sovereignty and protection of the British Crown.
While their relations with the Crown were governed by treaties, though initially on terms of equality, when the British Crown in India became paramount, the re lationship between it and the rulers became unequal with the result that these treaties became subject to the reservation that they could be disregarded where the interests of the British Empire or those of the subjects of the princely states were involved.
The status of these States as inter national personalities was negatived by the British Government even towards the end of the 19th century and it had been maintained that the principles of International law had no bearing upon the relations between the Government of India as representing the Queen Empress on the one hand and the native states under the suzerainty of Her Majesty on the other.
Again, though the status of these rulers in England was recognised as being on par with other rulers in the matter of personal immunity from legal proceedings in so far as British India was concerned, these were the subject matter of legislation under which the ruling princes in India, notwithstanding that they were not recognised as international personalities, were accorded this immunity.
Therefore, any exemption the Rulers could claim had to be under the relevant taxing acts.
There is no such exemption under the Income tax Act.
Besides, the fact that the income of the 17 rulers derived from Central Government securities was specifically exempted by section 60 implied that the rulers were not exempted from other provisions of law.
The provisions in certain statutes specifically making every Ruler of an Indian State liable to tax only militate against the assumption of immunity from taxation of the property of the Rulers at any rates provisions might have been ex abundant ceutela.
[21D 22B, 24G].
H. H. Maharajadhiraja 'Madhav Rao Jivaji Rao Rahadur of Gwalior etc.
vs Union of India; , , referred to.
(b) Further it is now concluded by a decision of this Court in Commissioner of Income tax, Andhra Pradesh vs H. E. H. Mir Osman Ali Bahadur; , that the ruler of a princely state did not acquire international personality and so could not rely upon International law for claiming immunity from taxation of his personal properties.


judgement:
Appeal No. 1312 of 1967.
Appeal by special leave from the judgment and decree dated ' October 22, 1962 of the Kerala High Court in Appeal Suit No.804 of 1969.
B. R. Naik and K. Rajendra Chowdhary, for the appellant.
The respondent did not appear.
The Judgment of the Court was delivered by Khanna, J.
This is an appeal by special leave against the judgment of Kerala High Court affirming an appeal, the order of the Lower Court whereby the appellant Bank 's application for execution of an award made under the Bombay Co operative Societies Act, 1925 (hereinafter referred to as the Bombay Act) was dismissed.
The appellant is a Co operative Society registered in Bombay under the Bombay Act.
The Head Office of the appellant is in Bombay and it has a branch in Mangalore.
As the objects of the appellant were not confined to one State, it was governed by Multi Unit Co operative Societies Act of 1942 (herinafter referred to as the Central Act).
The appellant made a claim under section 54 of the Bombay Act in respect of a transaction which took place in Mangalore against the respondent who is a resident of Kasaragod, and was a member of the appellant society.
Both Mangalore and Kasaragod were at the relevant time in Madras Presidency.
The Deputy Registrar of Co operative Societies, Bombay gave an award regarding that claim.
The award was sought to be executed as a decree in the Court of Subordinate Judge, Kasaragod.
An objection to the execution of the decree was raised by the respondent on the ground that the Deputy Registrar of Co operative Societies, Bombay had no jurisdiction to pass the award and the same could not be executed as a decree in the Courts in Kerala.
This objection was upheld by the Subordinate Judge and he dismissed the execution application.
On appeal, the decision of the learned Subordinate Judge was affirmed by the High Court.
It was not disputed before the High Court that the appellant was governed by the provisions of the Central Act. 164 The contention raised on behalf of the appellant was that the passing of an award came within the expression 'control ' occurring in .sub section (1) of section 2 of the Central Act.
This contention ,did not find favour with the High Court and in the result, the appeal was dismissed.
We have heard Mr. Naik on behalf of the appellant.
No one has appeared on behalf of the respondent.
Before dealing with the argument advanced on behalf of the appellant, it would be apposite to reproduce section 2 of the Central Act.
The same reads as under : "2.
(1) A co operative society to which this Act applies which has been registered in any State under the law relating to co operative societies in force in that State shall be deemed in any other State to which its objects extend to be duly registered in that other State under the law there in force relating to co operative societies, but shall, save as provided in sub sections (2) and (3), be subject for all the purposes of registration, control and dissolution to the law relating to co operative societies in force for the time being in the, State in which it is ac tually registered.
(2) Where any such co operative society has established before the commencement of this Act or establishes after the commencement of this Act a branch or place of business in a State other than in which it is actually registered, it shall, within six months from the commencement of this Act or the date of establishment of the branch or place of business, as the case may be, furnish to the Registrar of Co operative Societies of the State in which such branch or place of business is situated a copy of its registered by laws, and shall at any time it is required to do so by the said Registrar submit any returns and supply any in formation which the said Registrar might require to be submitted or supplied to him by a co operative society actually registered in that State.
(3) The Registrar of Co operative Societies of the State in which a branch or place of business such as is referred to in sub section (2) is situated may exercise in respect of that branch or place of business any powers of audit and of inspection which he might exercise in respect of a co operative society actually registered in the State".
According to sub section (3) of section 1, the Central Act "applies to all co operative societies with objects not confined to one State incorporated before the commencement of this Act under 165 the , or under any Act relating to co operative societies in force in any State, and to all co operative societies with objects not confined to one State to be incorporated after the commencement of this Act.
" As the objects of the appellant society were not confined to one State, it was not disputed before the High Court that it is governed by the previsions of the Central Act.
Plain perusal of sub section (1) of section 2 reproduced above makes it manifest that if the objects of a co operative society registered in State 'A ' extend to State 'B ', the Society shall be deemed to be registered in State 'B ' under the law in force in State 'B ' relating to co operative societies.
Despite this deemed registration in State 'B ' for, three purposes, namely, registration, control and dissolution,, the society shall be subject to the law relating to co operative, societies in force in State 'A '.
Sub section (2) makes it obligatory on a co operative society which establishes a branch or place of business in a State other than that in which it is actually registered to furnish within the prescribed time to the Registrar of the cooperative societies of the State in which such branch or place of business is situated, a copy of its by laws and to submit such return and supply such information as the Registrar might require in respect of a co operative society actually registered in that State.
Sub section (3) gives a limited control to the Registrar of Co operative Societies of the State in which a branch or place of business of a co operative society is established by authorising him to exercise in respect of that branch or place of business any powers of audit and of inspection which he might exercise in respect of a co operative society actually registered in that State.
The contention which has been advanced on behalf of the, appllant society by its learned counsel, Mr. Naik, is that as the appellant was registered in Bombay, it is the Bombay Act which govern the appellant society for purposes of registration, control and dissolution.
It is not disputed that the adjudication of a claim by the appellant against its members does not fall, under the head 'registration ' or "dissolution".
What is, however, urged is that the word 'control ' comprehends within itself the adjudication of a claim made by the society against its members.
Such a, claim having been made by the appellant against the respondent, the same could, according to the learned counsel, have been adjudicated upon under section 54 of the Bombay Act.
The award made by the Deputy Registrar of Co operative Societies, Bombay in the circumstances, the counsel submits, did not suffer from any legal infirmity.
166 There is, in our opinion, no force in the above contention because we do not agree with the underlying assumption of the above argument that the word 'control ' comprehends within itself .the adjudication of a claim made by a co operative society against its members.
The appellant society, as would appear from the resume of facts given above, established a branch in Mangalore ,and had dealings there with the respondent who was a resident of Kasaragod.
As the objects of the appellant society were extended to the Presidency of Madras, it should, in view of subsection (1) of section 2 of the Central Act, be deemed to have .been registered under the law in force in the Presidency of Madras relating to co operative societies.
The law which was then in force, according to Mr. Naik, was the Madras Co operative Societies Act, 1932 (hereinafter referred to as the Madras Act).
Clause, (f) of section 2 of that Act defines a registered society to mean a society registered or deemed to be registered under that Act.
Section 51 of the Madras Act provides inter alia that if .,any dispute touching the business of a registered society between a member and the society arises, such dispute shall be referred to the Registrar for decision.
Registrar has been defined in clause (g) of section 2 of the Madras Act to mean "a person appointed to perform the duties of a Registrar of Co operative Societies under this Act and includes a person on whom all or any of the powers of a Registrar under the Act have been conferred".
It would, therefore, follow that a dispute between the appellant and the respondent in respect of its dealings relating to its Mangalore branch would normally have to be adjudicated upon by the Registrar appointed under the Madras Act.
The fact that for the purpose of control, the appellant society was .governed by the Bombay Act would not, in our opinion, justify a departure from the above normal rule.
The word 'control ' is ,synonymous with superintendence, management or authority to direct, restrict or regulate (See p. 442 of Words and Phrases (Vol 9) Permanent Edition).
Control is exercised by a superior authority in exercise of its supervisory power.
Adjudication of disputes is a judicial or quasi judicial function and it would, in our opinion, by unduly straining the meaning of the word 'control ' to hold that it also covers the adjudication of disputes between a co operative society and its members.
There is a clear distinction between jurisdiction to decide a dispute which is a judicial power and the exercise of control which is an administrative power and it would be wrong to treat the two as identical or equate one with the other.
Reference has been made on behalf of the appellant to the case of Panchshila Industrial Co operative Societies (Mult Unit) 167 vs The Gurgaon Central Co operative Bank Ltd., Gurgaon(1).
In that case, Deputy Registrar of Co operative Societies, Rohtak had given an award in favour of the respondent bank which was a co operative society governed by the provisions of Punjab Cooperative Societies Act.
The appellant filed an appeal against that award before the Central Registrar.
The Central Registrar dismissed the appeal on the ground that he was not the appropriate appellate authority in respect of the said award.
On appeal to this Court, the decision of the Central Registrar was affirmed.
It was held that the dispute between the parties fell within section 55 of the Punjab and those provisions were not affected by the Central Act.
It would appear from the above that the question involved in that case was entirely different and the appellant can derive no assistance from it.
Argument has also been advanced that there was no inherent lack of jurisdiction in the Deputy Registrar appointed under the Bombay Act for adjudicating upon the dispute between the parties and that it was at the best a case of lack of territorial jurisdiction.
We find ourselves unable to accede to this contention because we are of the opinion that there was inherent lack of jurisdiction in the Registrar appointed under the Bombay Act for dealing with the dispute arising out of the dealings of the Mangalore branch of the appellant society with the respondent.
The dispute between the parties as would appear from what has been discussed above, could only be adjudicated upon in accordance with the provisions of the Madras Act.
The appeal consequently fails and is dismissed.
As no one has appeared on behalf of the respondent, we make no order as to costs.
G.C. Appeal dismissed.
(1) [1971] (2) 2.S.C.C. 500.

summary/full:
The appellant was a co operative society registered in Bombay under the Bombay Co operative Societies Act, 1925.
The head office of the appellant was in Bombay and it had a branch in Mangalore.
As the objects of the appellant were not confined to one State it was governed by MultiUnit Cooperative Societies Act, 1942 a Central Act.
The appellant made a claim under section 54 of the Bombay Act in respect of a transaction which took place in Mangalore against the respondent who was a resident of Kesaragod and was a member of the appellant society.
Both Mangalore and Kesaragod were at the relevant time in Madras Presidency.
The Deputy Registrar of Co operative Societies Bombay gave an award regarding that claim.
The award was sought to be executed as a decree in the Court of Subordinate Judge, Kesaragod.
The respondent took an objection to the execution on the ground that the Deputy Registrar of Bombay bad no jurisdiction to pass the award and the same could not be executed as a decree in the courts in Kerala.
Upholding the objection the Subordinate Judge dismissed the execution application.
The High Court affirmed the decision.
In appeal by special leave before this Court the appellant contended that since it was registered in Bombay State it was the Bombay Act which would govern the appellant society for purposes of registration, control and dissolution as laid down in section 2(1) of the Central Act.
The word 'control it was urged comprehends within itself the adjudication of a claim made by the society against its members, and in the circumstances the award under, section 54 of the Bombay Act made by the Deputy Registrar Co operative Societies Bombay did not suffer from any legal infirmity.
HELD, : As the objects of the appellant society were extended to the Presidency of Madras it should in view of sub section (1) of section 2 of the Central Act be deemed to have been registered under the law in force in the Presidency of Madras relating to co operative societies.
The law which was then in force was the Madras Co operative Societies Act, 1932.
Under section 51 of that Act a dispute between the appellant and the respondent in respect of its dealings relating to its Mangalore branch would normally have to be adjudicated upon by the Registrar appointed under the Madras Act.
The fact that for the purpose of control the appellant society was governed by the Bombay Act would not justify a departure from the above normal rule.
[166 B E] The word 'control ' is synonymous with superintendence, management, or authority, to direct restrict or regulate.
Control is exercised by a superior authority in exercise of its supervisory power.
Adjudication of disputes in a judicial or quasi judicial function and it would be unduly straining the meaning of the word 'control ' to hold that it also covers the adjudication of disputes between a co operative society and its members.
There is a clear distinction between jurisdiction to decide a dispute which is a judicial power, and the exercise of control which is an administrative power, and it would be wrong to treat the two as identical or equate one with the other.
[166 F G] 163 Panchshila Industrial Co operative Societies (Multi unit) vs Gurgaon Central Co operative Bank Ltd., Gurgaon, , distinguished.
Since, as held above, the dispute between the parties could only be adjudicated upon in accordance with the provisions of the Madras Act the Registrar under the Bombay Act lacked inherent jurisdiction to decide the dispute and it was not a case of lack of territorial jurisdiction only [167 D E]