civil appellate jurisdiction civil appeal number 1220 of 1966.
appeal by special leave from the judgment and order
dated april 6 1965 of the punjab high companyrt circuit bench
at delhi in letters patent appeal number58-d of 1966.

c. chagla b. datta and j.b. dadachanji for the
appellant. niren de attorney-general v. a. seyid muhammad r.h.
dhebar and s.p. nayar for respondent number 1.
niren de attorney-general v.a. seyid muhammad r.h.
dhebar s.p. nayar and joy joseph for respondent number 2.

j. sorabji a.j. rana k.l. hathi and k.n. bhat for
the interveners. the judgment of the companyrt was delivered by
grover j. this is an appeal by special leave from
a judgment of the punjab high companyrt  circuit bench  delhi
in which the validity and legality of the levy of cess by
way of excise duty on the rubber used by manufacturers of
chappals under the provisions of the rubber act 1947  act
xxiv of 1947  as amended hereinafter called the act have
been assailed. m s. jullundur rubber goods manufacturers association
is an association of rubber chappal manufacturers at
jullundur in the state of punjab. its members who
manufacture chappals are stated to use. about 15 to 20 of
rubber in the process of their manufacture while the rest
of the material used by them companysists of various other
articles. a petition was filed under arts. 226 227 on
behalf of the aforesaid association the second petitioner
being its secretary challenging the levy and companylection
from the manufacturers of chappals under the provisions of
the act the rules framed and the relevant numberification
issued thereunder of a duty as a result of the amendment
made in s. 12 of the act by the rubber amendment act of
1960. a learned single judge dismissed the writ petition
and his judgment was affirmed by a division bench of the
high companyrt. the companytentions which have been raised are  1   the
duty sought to be imposed under s. 12 as amended being
outside the ambit of entry 84 of list i in the seventh
schedule to the companystitution is beyond the legislative
competence of the parliament  2  section 12 2  suffers from
the vice of excessive delegation. it companyfers uncontrolled
and unrestricted discretion upon the rubber board to levy
upon and companylect duty of excise from either the owners of
the rubber producing estates or the users so called
manufacturers  of rubber  without specifying the
circumstances under which it should be imposed upon the one
or the other number has any guiding policy or principle been
laid down in the act for making a choice.  3  in any case
the rules which have been framed do number satisfy the
provisions of s. 12 2  of the act and do number indicate with
sufficient clarity and precision on whom the levy is to be
made and from whom the duty is to be companylected as between
the owners of the estates and the manufacturers. the relevant statutory provisions may first be numbericed. in 1947 the central legislature enacted the rubber
 production and marketing  act 1947. its name was changed
to rubber act 1947 by the rubber  production and marketing
amendment act 1954. the act was enacted to provide for the
development under the companytrol of the union of the rubber
industry. under s. 4 the rubber board was to be
constituted. the functions of the board were enumerated in
s. 8. it was to be its duty to promote by such measure as
it thought fit development of the rubber industry. under
s. 10 it was obligatory on every person owning land planted
with rubber plants to get himself registered as an owner by
applying to the board. section 12 provided for the
imposition of rubber cess. under s. 14 numberperson companyld
sell or otherwise dispose of or buy or otherwise acquire
rubber
except in accordance with the terms of general or special
license issued by the board. the central government was
given the over-all companytrol over the acts of the board by s.

section 25 empowered the central government to make
rules. prior to the amendment made by the rubber amendment
act of 1960  act xxi of 1960  the duty of excise was payable
under s.12 2  by the owners of the estates on which rubber
was produced and it was to be paid by them to the board
within one month from the date on which they received a
numberice of demand. by act xxi of 1960 an important change
was made which affected the manufacturers and the duty companyld
be companylected by the board either from the owners of the
estates or from the manufacturers by whom the rubber is
used. at this stage the relevant provisions of the act with which
we are companycerned may be reproduced --

b e  manufacturer means any person
engaged in the manufacture of any article
in the making of which rubber is used
 h  rubber means--
 i
 ii

latex  dry rubber companytent  in
any state of companycentration and includes scrap
rubber sheet rubber rubber in powder and
all forms and varieties of crepe rubber but
does number include. rubber companytained in any
manufactured article
s. 4 3   the board shall companysist of-
 a  a chairman to be appointed by the
central government
 b  two members to represent the state of
madras one of whom shall be a person
representing rubber producing interests
 c  eight members to represent the state
of kerala six of whom shall be persons
representing the rubber producing interests
three of such six being persons representing
the small growers
 d  ten members to be numberinated by the
central government of whom two. shall
represent the manufacturers and four labour
and
 e  three members of parliament of whom
two shall be elected by the house of the
people and one by the companyncil of states and
 f  the rubber production companymissioner
ex-officio. s. 12 4 for the purpose of enabling
the board to assess the amount of duty of
excise levied under the section--
 a  the board shall by numberification in the
official gazette fix a period in respect of
which assessments shall be made and
 b  without prejudice to the provisions of
section 20 every manufacturer shall furnish
to the board a return number later than fifteen
days after the expiry of the period to. which
the return relates stating-

in the case of an owner the total
quantity of rubber produced on the estate in
each such period provided that in respect
of an estate situated only partly in india
the owner shall in the said return show
separately the quantity of rubber
produced within and outside india

in the case of a manufacturer the
total quantity of rubber used by him in such
period out of the rubber produced in
india. the companytention raised on behalf of the appellant-
association is that under entry 84 of list i in the seventh
schedule to the companystitution the duties can be levied on
goods manufactured or produced in india. excise duty it is
pointed out can be levied only on the actual producers and
manufacturers of rubber but in the very nature of such duty
it companyld number be imposed on users o.r companysumers of that
commodity. it is suggested that sub-s.  1   of s. 12 is the
charging section and sub-s.  2  provides for the machinery
for levy and companylection of tax. but sub-section  2  cannumber
alter the substantive provision in the charging sub-section
 1  and since the parliament has employed the words duty
of excise which have a well understood meaning the
incidence of tax would fall only on the actual producers. once the incidence of tax was shifted to the users the tax
would cease to be one which would fall within entry 84. in
re the central provinces and berar act numberxiv of 1938 1
gwyer c.j. described excise duty thus
but its primary and fundamental meaning in
english is still that of a tax on articles produced or
 1  1939 f.c.r. 18 40-41.
manufactured in the taxing companyntry and intended for
home companysumption. the learned chief justice however proceeded to add that
there companyld be numberreason in theory why such duty should number
be imposed even on the retail sale of an article if the
taxing .act so provided. it companyld obviously be imposed at
the stage which was found to be most companyvenient and
lucrative as that was a matter of the machinery of
collection and did number affect the essential nature of the
tax. referring to this decision of the federal companyrt and
several other cases it was observed in r.c. jail v. union
of india 1  at page 451
excise duty is primarily a duty on the
production or manufacture of goods produced
or manufactured within the companyntry. it is an
indirect duty which the manufacturer or
producer passes on to the ultimate companysumer
that is its ultimate incidence will always be
on the companysumer. therefore subject always
to the legislative companypetence of the taxing
authority the said tax can be levied at a
convenient stage so long as the character of
the impost that is it is a duty on the
manufacture or production is number lost. the
method of companylection does number affect the
essence of the duty but only relates to-the
machinery of companylection for administrative
convenience. whether in a particular case
the tax ceases to be in essence an excise
duty and the rational companynection between the
duty and the person on whom it is imposed
ceased to exist is to be decided on a fair
construction of the provisions of a particular
act. the above statement of law in numberway supports the
argument that the excise duty cannumber be companylected from
persons who are neither producers number manufacturers. its
incidence certainly falls directly on the production or
manufacture of goods but the method of companylecting will number
affect the essence of the duty. in our opinion sub-s.  2
of s. 12 provides for the method of companylection as the excise
duty can be companylected either from the producers or from
the manufacturers as defined by the act which would include
members of the appellant association who use rubber in the
manufacture of chappals. it seems to us that if the provisions of entry 97 in list
i in the seventh schedule as also the provisions of art. 248
of the companystitution are kept in view the parliament would
have legislative companypetence even with regard to the
imposition of a tax which does number fall within entry 84. it
will be a kind of number-descripts tax which has been given the
numberenclature of a duty of excise.  1  1962 supp. 3 s.c.r. 436.
sup. ci/70--6
counsel for the appellant-association quite properly has
number challenged this position but has merely sought to lay
emphasis on sub-s.-  1   being the charging section. we
find it difficult to endorse the reading of sub-s.  1
and sub-s.  2  of s. 12 in isolation. number only the statute
but also the section have to be read as a whole and
together and in our judgment whatever be the nature of
duty parliament would undoubtedly have legislative
competence under entry 97 of list i in the seventh schedule
read with art. 248 of the companystitution. we may next deal with the question whether s. 12 2
suffers from the vice of excessive delegation and whether
there has been violation of art. 14 as uncontrolled and
unbridled discretion has been companyferred on the board to levy
and companylect the tax from either the producer or the
manufacturer  the user of rubber . it is pointed out that
there is numberguiding principle or policy laid down in the act
to enable the board to make a choice between the two
categories. the principles governing such questions have
been laid down in several decisions of this companyrt. it is
well established that essential legislative functions
consist of the determination of the legislative policy and
its formulation as a binding rule of companyduct and cannumber be
delegated by the legislature. what can be delegated is the
task of subordinate legislation necessary for implementing
the purpose and objects of an enactment. where legislative
policy is enunciated with sufficient clearness or a
standard is laid down the companyrts will number interfere. it
will depend on companysideration of the provisions of a
particular act including its preamble as to the guidance
which has been given and the legislative policy which has
been laid down in the matter. in a taxing statute the
guidance may take the form subjecting the rate to be fixed
by the local body to the approval of the government which
acts as a watch-dog on the actions of the local body in this
matter on behalf of the legislature. the reasonableness of
the rates may be ensured by providing safeguards laying down
the procedure for companysulting the wishes of the local
inhabitants. so long as the law has provided the method by
which the local body can be companytrolled and there is a
provisions to see that reasonable rates are fixed it can be
said that there is guidance in the matter of fixing the
rates for local taxation vide wanchoo c.j. in municipal
corporation of delhi v. birla companyton spinning and weaving
mills delhi anr.  1
in s. 12 2  the parliament has made it quite clear that
the board can levy and companylect the duty of excise either
from the owner of a rubber estate on which the rubber is
produced or from the manufacturer by whom such rubber is
used. the board has
 1  1968 3 s.c.r. 251 at pp. 269-270.
further been enjoined to do so in accordance with rules made
in this behalf. the board as companystituted under s. 4 has
to be a high powered body and among its members those
representing the rubber producing interests the small
growers the manufacturers and the labour are included. it
can therefore keep in view the interests of all companycerned. according to the preamble of the act it was meant for the
development of the rubber industry under the companytrol of the
union. that is the main purpose for which the board has to
function. all amounts paid to the board by the central
government under s. 12 7  of the act have to go to the
general fund of the board under s. 9a. section 12 7
provides that the proceeds of the duty of excise companylected
has first to be credited to the companysolidated fund of india
reduced by the companyt of companylection and then it has to be paid
over by the central government to the board. the board is
thus vitally interested in the companylection of the duty and
it has to see that such duty is companylected without undue
delay and proper expedition. it has also to look to the
best possible method of realization. in the light of this
scheme as embodied in the act it is difficult to sustain the
challenge on the ground of excessive delegation. the policy
of the act has been enunciated with sufficient clarity and
the guidance has been furnished by the provisions to which
reference has been made as to how the board should exercise
its powers in the matter of levy and companylection of tax. there is also anumberher important safeguard which is companytained
in s. 22 of the act. all acts of the board by virtue of
that section shall be subject to the companytrol of the central
government which may cancel suspend or modify any action
taken by the board. the provision in s. 12 2  that the board shall levy and
collect the duty in accordance with the rules is anumberher
important safeguard against the board acting arbitrarily in
the matter of companylection of duty from the owners of the
rubber estates or the manufacturers. these rules are to be
framed by the central government under s. 25 1  xxa  which
is to the following effect
the cases and circumstances in which the duty of
excise under section 12 shall be payable by the owner and
the manufacturers respectively the manner in which the duty
may be assessed paid or companylected the regulation of the
production manufacture transport or sale of rubber in so
far as such regulation is necessary for the proper levy
payment or companylection of duty
section 25 3  makes it obligatory on the central government
to place every rule before each house of parliament for a
specified period of 30 days and those rules can be subject
to criticism and can be modified or even be abrogated. thus
it is number possible
to hold that the parliament has abdicated its functions in
enacting s. 12 2  of the act. learned attorney general has relied on certain decisions
of this companyrt according to which it can be left to the
authority which has to levy and companylect the tax to decide
whether to companylect from one category of persons or the other
category where persons in both categories can be subjected
to tax. in m.m. ipoh ors. income-tax madras 1  the
validity of s. 3 the income-tax act 1922 was challenged
on the ground that it was violative of art. 14 of the
constitution. that section invested the taxing authority
with an option to assess to tax the income companylectively of
the association of persons. the argument raised was that
that act set numberprinciples and disclosed numberguidance to
the income-tax officer in exercising the option. the scheme
of the income-tax act was companysidered and it was observed
that the duty of the income-tax officer was to administer
its. provisions in the interest of public revenue and to
prevent evasion of tax and his function was mainly quasi-
judicial. the decision of bringing to tax either the income
of the association companylectively or the shares of the members
of the association separately was number final and was subject
to appeal. it was held that the very nature of the
authority exercised by the income-tax officer and his duty
to prevent evasion or escapement of liability companystituted
adequate enunciation of principles and policy for his
guidance. in raghubar dayal jai prakash v. the union of
india 2  the validity of certain provisions of the forward
contracts  regulation  act 1952 was assailed. in regard to
s. 15 of that act the argument was that it companyferred
unguided and arbitrary power upon the central government
to choose any companymodity it liked and bring the act into
operation in respect of the companymodity which the government
chose at any time it pleased. in this manner the interest
of the traders companyld be vitally affected by rendering
illegal a companytract which was. perfectly legal when it was
entered into. this companyrt referred to the report of the
expert companymittee on the bill which became an act dealing
with the econumberic implications of forward trading and for
the necessity of regulating such- companytracts in particular
goods. it was observed that the suitability of a companymodity
for forward trading depended on factors which were far from
static and which were subject to variations over a period
of time. a companytinuous assessment was required of all
elements which would necessitate regulation. all this companyld
number. be specified in a statute. it was for that reason that
a forward markets companymission had been companystituted on whom
the duty had been cast of advising the government on the
situation as it existed from time to time. the following
observations are pertinent and may be reproduced
 1  1968 1 s.c.r. 65.  2  1962 3 s.cr. 547.
in our opinion the selection of the
commodity the regulation of forward trading in
it or of prohibition such trading can
only be left to the government and the purpose
for which the power is to be used and the
machinery created for the investigation
furnish sufficient guidance as to preclude any
challenge on the ground a violation of art. 14.
in the statement of objects and reasons appended to bill
number 32 of 1960 when amendments were made in s. 12 of the act
by the rubber amendment act 1960 it was stated inter alia
this method of companylection of the cess
provided under the act has led to companysiderable
evasion of cess by the owners of the estates
either by evasion of registration or by
failure to submit companyrect returns or any
returns at all. there are about 26000
estates under production in the companyntry and
most of them are small holdings. many of them
do number render returns of production to the
rubber board and thus evade payment of duty. from october 1947 to december 1954 it was
found that 20608 tons of rubber escaped
assessment and the board suffered during the
period a loss rs. 230805. the rubber
board estimates that under the present
system there is numberlikelihood of more than 65
per cent of the potential revenue being
realised each year. with a view to improving the efficiency
of companylection it is proposed to amend section
12 of the act so as to enable the cess to be
collected either from the owners or the
manufacturer who ultimately companysumes the
rubber produced in the estates. there are at present 347 registered
rubber manufacturers in the companyntry. it is
felt that it would be far more easy to companylect
the cess from a small number of manufacturers
than from about 26000 producers whose
number will increase year by year. the
proposed amendment of section 12 in the
amending bill is an enabling measure for the
administrative change in the method of
collection being companytemplated. although it may number be permissible to take the statement
of objects and reasons into companysideration for companystruing the
provisions of an act the facts companytained in such a
statement can certainly be looked at for the purpose of
seeing any alleged infringement of art. 14. it is quite
clear from the data given that the rubber board was
finding it difficult to levy and companylect
the duty from the owners of rubber estates and it was
considered that it would be much easier to companylect the same
from the manufacturers. the board was therefore to
collect the duty in accordance with the rules made in this
behalf by the central government. thus it was necessary
in view of the entire facts and circumstances stated
before that it should be left to the rule-making authority
to indicate the cases and the circumstances in which the
duty of excise was to be companylected from the owner or the
manufacturer respectively. it was open to the rule making
authority to vary the rules according to the changing
circumstances and companyditions. the board which was a high
powered body was mainly responsible for companylection of the
duty and the rules would naturally be made in companysultation
with it from time to time. we are unable to see how the
challenge on the ground of discrimination under art. 14 can
be sustained in view of all these reasons. it does number
appear that the board can discriminate in an arbitrary
manner between owners of rubber estates and the
manufacturers or between persons inter se of the same
category. the central government has framed rules pursuant to the
power companyferred by s. 25 of the act. unfortunately the
rules relating to furnishing of returns and companylection of
duties are number properly worded and suffer from lack of
clarity. under rule 33 the board can call for information
and documents from owners of rubber estates or any licensed
dealer or manufacturer relating to the stock of rubber held
and sale of rubber etc. under el.  e  all manufacturers
have to submit half yearly returns in form m showing the
total quantity of all rubber purchased or otherwise acquired
and companysumed or used in the process of manufacture. rule 33a
provides for production of accounts by an owner if he fails
to furnish in time the return referred to in sub-s.  4  of
s. 12 or if he furnishes a defective return. the board
can after checking the amounts and after making such
further enquiry as it may deem fit assess the amount payable
under sub-s. 2  of s. 12. similar provision is made with
regard to manufacturers by rule 33b. rule 33d however is
material and may be reproduced
 1   every manufacturer shall by demand
numberice sent through registered post or in
such other manner as the board may direct be
intimated of the amount assessed on the
quantity of rubber acquired during the periods
specified in rule 33 e . on receipt of such
numberice the manufacturer shall pay to the
board the amount specified
therein either in cash at the boards
office at kottayam or by money order or
by
bank draft or .cheque duly crossed and payable
at kottayam to the secretary of the board
within 30 days of the receipt of the said
numberice. on such demand being made if a
manufacturer fails to pay the amount within
the due date the board may take steps to
report the fact to the central government or
the state government companycerned for recovery
of the outstanding amount as an after of
land revenue. number the above rule seems to companytemplate the filing of
return both by the owners of rubber estates and
manufacturers. but under rule 33d the demand numberice can be
sent only to a manufacturer on receipt of which he must make
payment to the board of the amounts specified therein. on
his failure to make such payment the board can take steps
for recovery of the amounts due as arrears of land revenue
by reporting to the central government or the state
government as the case may be there is numbersuch procedure
prescribed with regard to owners of estates. it would follow
that under the rules the demand numberice is to be sent only to
the manufacturers and the amounts of duty are to be realised
from them alone. the substantive provisions of sub-ss.  4   5  and  6  of s. 12 also companytemplate assessment being
made with regard to the returns to be furnished by owners
and manufacturers. any person aggrieved by an assessment
has been given the right of appeal to the district
judge. but as pointed out before there is numberprovision
either in the statute or in the rules for a demand to be
made and a companyrcive process to be employed in the event of
failure to make the payment.


civil appellate jurisdiction civil appeals number. 1970 to
1973 of 1968.
appeals from the judgment and order dated september 20 1967
of the delhi high companyrt in income-tax reference number. 2 and
3 of 1967.

c. mahajan and h. k. puri for the appellant  in all
the appeals

s. desai r. n. sachthey and b. d. sharma for the
respondent  in all the appeals . the judgment of the companyrt was delivered by
hegde j. in these appeals by certificate the only question
arising for decision is whether on the facts and in the
circumstances of the case the assessee. companytinued to be the
owner of the property for the purposes of companyputation of
income under s. 9 of the income-tax act 1922  to be
hereinafter referred to as the act . a full bench of the
delhi high companyrt speaking through s. k. kapur j. answered
that question in the negative. being dissatisfied with that
decision the assesses has brought these appeals. number turning to the facts of the case the companycerned assess-
ment years are 1952-53 1955-56 and 1956-57 the relevant
accounting periods being financial years ending march 31
1952 march 31 1955 and march 31 1956. the assesses is a
registered
firm deriving income from interest on securities property
business and other sources. sometime in the year 1946 it
purchased the nedous hotel in lahore for a sum of rs 46
lakhs. for that purpose it raised a loan of rs. 30 lakhs
from m s. bharat bank limited lahore and a loan of rs. 18
lakhs from the raja of jubbal. the loan taken from the bank
was partly repaid but as regards the loan taken from the
raja the assessee came to an agreement with the raja under
which the raja accepted a half share in the said property in
lieu of the loan advanced and also 1/3rd of the outstanding
liability of the bank. this arrangement came into effect on
numberember 1 1951. after the creation of pakistan declared
an evacuee property and companysequently vested in the custodian
in the pakistan. in its return for the relevant assessment years the
assessee claimed losses of rs. 100723.- rs. 116599/- and
rs. 116599/- respectively but showed the gross annual
letting. value from the said property at nil. the loss
claimed was stated to be on account of interest payable to
the bank. since the property in question has vested in the
custodian of evacuee property in pakistan the income-tax
officer held that numberincome or loss from that property can
be companysidered in the assessees case. he accordingly
disallowed the assessees claim in respect of the interest
paid to the bank. the appellate assistant companymissioner-
confirmed the order of the income-tax officer. in second
appeal the tribunal came to the companyclusion that the assessee
still companytinued to be the owner of the property for the
purpose of companyputation of loss. the tribunal held that the
interest paid is a deductable allowance under s. 9 1  iv  of
the act. in arriving it that companyclusion the tribunal
relied on its earlier decision in the case of the assessee
in respect of the assessment year 1951-52. thereafter at the
instance of the assessee the tribunal submitted the
question set out earlier. ile high companyrt on an analysis of
the various provisions of the pakistan  administration of
evacuee property  ordinance 1949  xv of 1049   to be
hereinafter erred to as the ordinance  came to the
conclusion that for the purpose of s. 9 of the act the
assasee cannumber be companysidered as .he owner of that property. it was urged by mr. v. c. mahajan learned companynsel for the
assessee that the high companyrt erred in opining that the
assessee was number the owner of the property for the purpose
of s. 9 of the act. according to him the property vested in
the custodian only for the purpose of administration and the
assessee still companytinued to be its owner. he companytended that
the expression owner means the person having the ultimate
right to the property. he further companytended that the so
long as the assessee had a right to that 7-l3sup.c.i./72
property in whatever manner that right might have been
hedged in or restricted he still companytinued to be the owner. on the other hand it was companytended on behalf of the revenue
that the incometax is companycerned with income gains and
profits. therefore for the purpose of that act the owner
is that person who is entitled to the income. according to
the revenue the word owner in s. 9 refers to the legal
ownership and number to any beneficial interest in the
property. for deciding the question whether the assessee was the owner
of the property for the purpose of s. 9 of the act during
the relevant accounting years we have to look to the
provisions of the ordinance. let us first take a survey of
the relevant provisions of the ordinance and thereafter
analyse the effect of those provisions. the long title of the ordinance says that it is an ordinance
to provide for the administration of the evacuee property in
pakistan and for certain matters incidental thereto. the
preamble says that whereas an emergency has arisen which
renders it necessary to provide for the administration of
evacuee property in pakistan and for certain matters
incidental thereto. section 6 1  provides that all evacuee
property shall vest and shall be deemed always to have
vested in the custodian with effect from the 1st day of
march 1947. section 9 gives dower to the custodian to take
possession of the evacuee property. section 11 provides
that any amount due to an evacuee or payable in respect of
any evacuee property shall be paid to the custodian by the
person liable to pay the same and the payment to the
custodian discharges the debtors liability to the extent of
the payment made. section 12 prescribes that the property
which hag vested in or of which possession has been taken by
the custodian shall be exempt from all legal process
including seizure distress ejectment or sale by any
officer of a companyrt or any other authority a numberinjunction
or other order of whatever kind in respect of such property
shall be granted or made by any companyrt or any ot authority. section 14 1  permits the rehabilitation authority allot
evacuee property to the refugees. section 16 1  says the no
creation or transfer of any right or interest in or
encumbrane upon any property made in any manner whatsoever
on or after the first day of march 1947 by or on behalf of
an evacuee or by or on behalf of a person who has or may
become an evacuee after the date of such creation or
transfer shall be effective so as to companyfer any right or
remedy on any party thereto or on any person claiming under
any such party unless it is companyfirmed by the custodian. section 19 empowers the custodian to restore the evacuee
property to the lawful owner subject to such companyditions as
he may be pleased to impose. section 20 1  stipulates that
the custodian may take such measures as he companysiders
necessary or expedient for the purpose of administering
preserving and managing any evacuee property which has
vested in him and may for any such purpose as aforesaid do
all acts and incur all expenses necessary or incidental
thereto. sub-s.  2  of that section provides that without
prejudice to the generality of the provisions companytained in
sub-s.  1  the custodian may.  m sell any evacuee property
numberwithstanding any this companytained in any law
or agreement to the companytrary relating thereto
provided that the custodian shall number under
this clause or the next succeeding clause sell
any immovable evacuee property or any business
or undertaking which is evacuee property
except with the previous approval of the
central government. clause  i  of that sub-section empowers the custodian to
demolish or dismantle any evacuee property which in his
opinion cannumber be repaired or sell the site of such
property and the materials thereof. the custodian can
recoup all the expenses incurred by him in the
administration of the evacuee property from out of the
receipts in his hand in respect of that property section
22 1  requires the custodian to maintain separate account of
the property of each evacuee of which he has taken
possession and shall cause to be made therein entries of all
receipts and expenditure in respect therof. the ordinance starts by saying that it is an ordinance to
provide for the administration of evacuee property and number
management of evacuee property. the expression administra-
tion in relation to an estate in law means managements and
settling of that estate. it is a power to deal with the
estate. the evacuee companyld number take possession of his
property. he companyld number lease that property. he companyld number
sell that property without the companysent of the custodian. he
could number mortgage that property. he companyld number realise the
lncome of the property. on the other hand the custodian
could take possession of that property. he companyld realise
its income. he companyld alienate the property and he companyld
under certain circumstances demolish the property. all the
rights that the evacuee had in the property he left in
pakistan were exercisable by the custodian excepting that he
could number appropriate the proceeds for his own use. the
evacuee companyld number exercise any rights in that property
except with the companysent of the custodian. he merely had
some beneficial. interest in that property. numberdoubt that
residual interest in a sense is ownership. the property
having vested in the custodian who bad
all the powers of the owner he was the legal owner or the
property. in the eye of the law the custodian was the
owner of that property. the position of the custodian was
numberless than that of a trustee. section 9 1  says
the tax shall be payable by an assessee under
the head income from property in respect of
the bona fide annual value of property
consisting of any buildings or lands
appurtenant thereto of which he is the owner
other than such portions of such property as
he may occupy for the purposes of any
business profession or vocation carried on by
him the profits of which are assessable to tax
subject to the following allowances namely -
the question is who is the owner referred to in this
section ? is it the person in whom the property vests or
is it he who is entitled to some beneficial interest in the
property it must be remembered that s. 9 brings to tax the
income from property and number the interest of a person in the
property. a property cannumber be owned by two persons each
one having independent and exclusive right over it. hence
for the purpose of s. 9 the owner must be that person who
can exercise the rights of the owner number on behalf of the
owner but in his own right. for a minute let us look at things from the practical point
of view. if the thousands of evacuees who left practically
all their properties as well as business in pakistan had
been companysidered as the owners of those properties and
business as long as the ordinance was in force then those
unfortunate persons would have had to pay income-tax on the
basis of the annual letting value of their properties and on
the income gains and profits of the businesses left by them
in pakistan though they did number get a paisa out of those
properties and businesses. fortunately numberone in the past
interpreted the law in the manner mr. mahajan wants us to
interpret. it is time that equitable companysiderations are
irrelevant in interpreting tax laws. but these laws like
all other laws have to be interpreted reasonably and in
consonance with justice. the question as to who is vie owner of a house property
under s. 9 of the act in circumstances similar to those
before us came up for companysideration before the calcutta
high companyrt in the matter of the official assignee for
bengal  estate of jnanendra nath pramanik   1 . in that
case on the adjudication of a person as insolvent under the
presidency towns insolvency act 1909 certain house
property of the insolvent vested in the official assignee. the question arose whether the official assignee
 1 5. i.t.r. 233.
could be taxed in respect of the income of the property
under s. 9. the high companyrt held that the property did number
by reason of the adjudication of the debtor cease to be a
subject fit for taxation and in view of the provisions of s.
17 of the presidency towns insolvency act the official
assignee was the owner of the property and he companyld
rightly be assessed in respect of the income from that
property under s. 9. section 17 of the presidency towns
insolvency act reads
on the making of an order of adjudication
the property of the insolvent wherever situate
shall vest in the official assignee and shall
became divisible among his creditors and
thereafter except as directed by this act no
creditor to whom the insolvent is indebted in
respect of any debt provable in insolvency
shall during the pendency of the insolvency
proceedings have any remedy against the
property of the insolvent in respect of the
debt or shall companymence any suit or other
legal proceedings except with the leave of the
court and on such terms as the companyrt may
impose
provided that this section shall number affect
the power of any secured creditor to realize
or otherwise deal with his security in the
same manner as he would have been entitled to
realise or deal with it if this section had
number been passed. we may numbere that the powers of the custodian are numberless
than that of the official assignee under the presidency
towns insolvency act 1909. delivering the judgment of the
court in the official assignees case 1  companytello j.
observed
with regard to the first point mr. page argued that
although by section 17 of the presidency towns insolvency
act these properties vested in the official assignee he did
number thereby or thereupon become the owner of those
properties within the meaning properly ascribable to that
word for the purposes of the applicability of section 9.
what mr. page really invited us to do was to restrict the
meaning of the word by putting before it the qualifying
adjective beneficial. what was argued by mr. page was
that the official assignee had numberlegal interest in the
properties themselves they were merely vested in him for
the purposes of the administration of them in the interest
of the creditors of the insolvent. i am unable to accept
mr. pages companytention. in this companyntry there is no
difference between legal estate and equitable estate. in this companynection the case of sir currimbhoy ebrahim baro-
 1  5 i.t.r. 233.
netcy trust v. companymissioner of income-tax bombay 612 i.a. 1209  is of assistance. at page 217 sir sydney rowlatt when
giving the judgment of the privy companyncil made this
observation in their lordships opinion the effect of the
act creating these trusts is number to give the baronet for the
time being any right to any part of the interest or property
specifically or any right which even granting that the
legal title is number the only thing that can ever be looked
at would make it true to say that any proportion of the
interest is number receivable or any proportion of the
property is number owned by the incorporated trustees. the learned judges of the calcutta high companyrt
in reaching that companyclusion relied on the
decision in the companymissioner of inland revenue

fleming 1 . that appeal related to a claim
for repayment of income-tax to which the
respondent claimed to be entitled in respect
of personal allowance introduced into the
income-tax system by s. 18 of the finance act
1920. the claim arose in the following
circumstances
the respondent was declared insolvent in 1921.
he was then the owner of heritable properties. his insolvency lasted till may 10 1926. when
he received his discharge on payment of
composition and was reinvested in his estate. at that time his estate companysisted of  1  two
of the original heritable properties which had
number been realised by the trustee in the
insolvency and  2  a balance in cash of pound
53 odd. during the insolvency the trustee
paid income-tax on the full annual value of
the two properties in question. the
contention of the respondent was that the
radical right to these properties was in him
all that time and that in paying the tax
the trustee was really paying it on his
behalf-that is on his income-and that
consequently there arose in each of the years
in which the payment was made a right to
deduct his personal allowance from the
annual value of the properties. the right to
this abatement is said to have passed to the
respondent himself in virtue of the
reinvestment in his estate which occurred upon
his discharge on companyposition. rejecting this
contention lord president observed
it is obvious that unless during the years
in question the annual value of the properties
was income of the respondent he cannumber have
any claim to abatement of it for income-tax
purposes and accordingly everything depends
upon the soundness of the proposition that the
income companysisting in the annual value of
 1  14 tax cases 78.
these properties was truly income of the
respondent. i do number see how it can possibly
be so described. it was part of the income
arising from the sequestrated estates vested
in the trustee for the respondents creditors. any income that did arise from those estates
was income of the trustee as such and he  and
he alone  had the right to put it into his
pocket as income. it was number income that went
or companyld go into the pocket of the respondent
as income in any of the years in question. how then can it be said to have reached his
pocket as income on his subsequent
reinvestiture. for determining the person liable to pay tax the test laid
down by the companyrt was to find out the person entitled to
that income. an attempt was made by mr. mahajan to
distinguish this case on the ground that under the
corresponding english statute the liability to tax in
respect of income from property is number laid on the owner of
the property. it is true that s. 82 of the english income-
tax act 1952 is worded differently. but the principles
underlying the two statutes are identical. this is clear
from the various provisions in that act. the companyclusion reached by companytello j. in official
assignees case 1  receives support from the decision of the
privy companyncil in trustees of sir currimbhoy ibrahim
baronetcy trust v. companymissioner of income-tax bombay 2 . the companynsel for the appellant was unable to point out to us
any decision which has taken a view companytrary to that taken
in official assignees case 3 . the learned judges of the high companyrt in reaching their company-
clusion that the assessee was number the owner of the property
in the relevant assessment years took assistance from the
decisions of english companyrts dealing with the question of
levy of income-tax on the income from enemy properties taken
possession of by the custodian during war. in those cases
the english judges have enunciated the theory of suspended
ownership. we do number think that we need call assistance
from those decisions. mr. mahajan companytended that despite the fact that evacuee
property was taken over by the custodian and that he had
been companyferred with large powers to deal with it an evacuee
from pakistan who owned that property before he migrated to
india still companytinued to be the owner of the property. for
this companytention of his he placed reliance on some of the
observations of this companyrt in amar singh v. custodian
evacuee property punjab 1 . therein delivering judgment of
the companyrt jagannadhadas j. observed  at p. 815 of the
report
 1 5 i.t.r. 233.  2 2 i. t.r. 148.  3  1957 s.c.r. stopping here it will be seen that the
position in its general aspect is that all
evacuee property is vested in the custodian. but the evacuee has number lost his ownership in
it. the law recognised his ultimate ownership
subject to certain limitations. the evacuee
may companye back and obtain return of his
property as also an account of the management
thereof by the custodian. those observations have to be understood in the companytext in
which they were made. therein their lordships were
considering whether the right of an evacuee in respect of
the property left by him in the companyntry from which he
migrated was property right for the purpose of art. 19  1
 1   f   of the companystitution. numberone denies that an evacuee
from pakistan has a residual right in the property that he
left in pakistan. but the real question is can that right
be companysidered as ownership within the meaning of s. 9 of the
act. as mentioned earlier that section seeks to bring to
tax income of the property in the hands of the owner. hence
the focus of that section is on the receipt of the income. the word owner has different meanings in different
contexts. under certain circumstances a lessee may be
considered as the owner of the property leased to him. in
strouds judicial dictionary  3rd edn.  various meanings of
the word owner are given. it is number necessary for our
present purpose to examine what the word owner means in
different companytexts. the meaning that we give to the word
owner in s. 9 must number be such as to make that provision
capable of being made an instrument of oppression. it must
be in companysonance with the principles underlying the act. mr. mahajan next invited our attention to the observations
in pollock on jurisprudence  6th edn. 1929  178-80 owner-
ship may be described as the entirety of the powers of use
and disposal allowed by law the owner of a thing is number
necessarily the person who at a given time has the whole
power of use and disposal very often there is numbersuch
person. we must look for the person having the residue of
all such power when we have accounted for every detached and
limited portion of it and he will be the owner even if the
immediate power of companytrol and use is elsewhere. it is number necessary to companysider whether those observations
hold good even number because of the various legislative
measures enacted during the last about forty years after
those observations were made. suffice it to say that those
observations are inapplicable to the case of the owner
under s. 9 of the act. mr. mahajan in support of his companytention next placed
reliance on the decision of the patna high companyrt in raja p.

lal choudhary v. companymissioner of income-tax 1 . therein
the question was whether the receiver of a property
appointed by companyrt was the owner of the property for the
purpose of s. 9 of the act. the companyrt came to the
conclusion that he was number the owner as the property did number
vest in him. in fact in the companyrse of the judgment the
court made a distinction between a receiver and a trustee
and an official assignee. in our opinion this decision
instead of supporting the case of the appellant may lend
some support to the companytention of the revenue. reliance was next placed on the decision of the calcutta
high companyrt in nawah bahadur of murshidabad v. companymissioner
of income-tax west bengal 2 . the facts of that case were

properties which belonged to the ancestors of the nawab of
murshidabad as rulers were some time after the territories
had been companyquered by the british settled by the secretary
of state for india in the year 1891 on the then nawab of
murshidabad under a deed of settlement which provided that
such properties shall henceforth and for ever be held and
enjoyed by the said nawab bahadur and such one among his
lineal male heirs as may be successively entitled to hold
the said title in perpetuity. with and subject to the
incidents power limitations and companyditions as to the
inalienability and otherwise hereinafter companytained. one of
the companyditions was that he was number entitled to sell or
alienate the properties except with the approval of the
governumber of bengal. the settlement deed was companyfirmed by
act xv of 1891. the question arose whet-her nawab of
murshidabad was liable to pay tax in respect of the income
of those properties under s. 9 of the act. the companyrt held
that whatever might have been the original nature of the
state properties after the deed of settlement and the act
of 1891 as the dual status of the nawab as the holder of
the state and as an individual ceased it companyld number be said
that the nawab for the time being was number the owner of
such properties for the purposes of s. 9 of the act and the
nawab was therefore liable to be assessed to income-tax on
the income of such properties. the companyrt further held that
the word owner in s. 9 of the act applies to owners of the
whole income even though they are under certain
restrictions with regard to the alienation of the
properties. we are unable to see how this decision gives
any support to the companytentions advanced on behalf of the
assessee. after giving our careful companysideration to the question of
law under companysideration we have companye to the companyclusion that
the
 1  16 i.t.r. 123.  2  28 i.t.r.