JAGDISH SAHAI J. - (1.) THE Income-tax Tribunal (hereinafter referred to as the Tribunal) has in pursuance of the directions given by this court dated 11th of December, 1957, allowing an application under section 66(2) of the Indian Income-tax Act (hereinafter referred to as the Act) submitted a statement of case and referred some questions of law to this court for answer. When the hearing of the case started before us a preliminary objection was taken by Mr. Gulati on behalf of the income-tax department (hereinafter referred to as the department) that this court has no jurisdiction to answer the questions of law referred to it and that it is the Rajasthan High Court alone which has jurisdiction in the matter. In order to appreciate this argument it is necessary to give certain dates. THE Tribunal rejected the application of the assessee under section 66(1) of the Act on the 7th of July, 1950, whereupon the assessee made an application to this court under section 66(2) of the Act some time in 1951. That application was allowed on the 11th of December, 1957, and the Tribunal was directed to submit a statement of case and refer some questions of law.
(2.) MR. Gulati has invited our attention to clause (8) of section 66 of the Act as amended by the Adaptation of Laws (No. 3) Order, 1956. That provision reads as unde : 66. (8) For the purposes of this section, the High Court means - (a) in relation to any State, the High Court for that State; (b) in relation to the Union territories of Delhi and Himachal Pradesh, the High Court of Punjab; (c) in relation to the Union territories of Manipur and Tripura, the High Court of Assam; (d) in relation to the Union territory of the Andaman and Nicobar Islands, the High Court at Calcutta, and (e) in relation to the Union territory of the Laccadive, Minicoy and Amindivi Islands, the High Court of Kerala. It is contended that in 1956, Ajmer, from which place the present case comes, has been included within the territorial limits of the State of Rajasthan and consequently for the purposes of clause (a) of sub-section (8) the High Court which will have jurisdiction is the High Court of Rajasthan and not this court. In 1956 the States Reorganisation Act (XXXVII of 1956) was passed. It was enforced on the 31st of August, 1956. The relevant portion of section 10 of that Act reads as follow : 10. Formation of new Rajasthan State - (1) As from the appointed day, there shall be formed a new Part A State to be known as the State of Rajasthan comprising the following territories, namel :.... (2) The territories comprised in the existing State of Ajmer shall form a separate district to be known as Ajmer district, and the territories referred to in clauses (c) and (d) of sub-section (1) shall be included in, and become part of, Sirohi and Jhalawar Districts respectively, in the new State of Rajasthan. Even though this Act included the areas comprising the original Ajmer district in the newly created State of Rajasthan, and made it one of the districts of that State, èit is silent with regard to the pending proceedings in connection with income-tax matters. There are, however, a few sections which require notice. Section 52 of this Act reads as follow : 52. Jurisdiction of High Courts for new States. - The High Court for a new State shall have, in respect of any part of the territories included in that new State, all such original, appellate and other jurisdiction as, under the law in force immediately before the appointed day, is exercisable in respect of that part of the said territories by any High Court or Judicial Commissioners Court for an existing State. The effect of this provision is that the Rajasthan High Court would be the High Court for the district of Ajmer also and that court would have all such original, appellate and other jurisdictions as were exercisable in respect of the district of Ajmer by any High Court or Judicial Commissioners Court. The position before the passing of the States Reorganisation Act was that in respect of the income-tax matters, this court had jurisdiction over the district of Ajmer and in other matters the Judicial Commissioner of Ajmer had the jurisdiction. The result is that even in tax matters, arising out of areas constituting the Ajmer district, the Rajasthan High Court alone has jurisdiction. But the question that still requires consideration is as to whether that is so even with regard to references called for by this court and pending before it. In our opinion, such an inference is not deducible from the language of section 52. That is a general provision conferring jurisdiction on the Rajasthan High Court in respect of all cases arising out of the areas constituting the State of Rajasthan but does not deal with the specific matter relating to the decision of pending cases. For pending proceeding, the States Reorganisation Act (hereinafter referred to as Act No. XXXVII) has made separate provisions. It may be noticed that whereas section 64 of Act XXXVII clearly provides for the transfer of certain pending proceedings relating to the areas which were included in the State of Bombay and were by Act XXXVII to merge in the State of Rajasthan to the High Court of Rajasthan, there is no such provision with regard to the income-tax proceedings pending in this court. It would contribute to a clear understanding of the point if we reproduce section 64 of Act XXXVII of 1956 in extens : 64. Transfer of proceedings to Rajasthan High Court - (1) As from the appointed day, the High Court of Bombay shall have no jurisdiction in respect of the territory transferred from the existing State of Bombay, to the new State of Rajasthan. (2) Such proceedings in the High Court at Bombay or the High Court of Madhya Bharat immediately before the appointed day as are certified by the Chief Justice of that High Court, having regard to the place of accrual of the cause of action and other circumstances, to be proceedings which ought to be heard and decided by the High Court for the new State of Rajasthan (referred to in this Act as the High Court of Rajasthan) shall, as soon as may be after such certification, be transferred to the High Court of Rajasthan. (3) All proceedings pending in the High Court of the èexisting State of Rajasthan immediately before the appointed day other than those certified under sub-section (1) of section 61 and all proceedings pending in the Court of the Judicial Commissioner for Ajmer immediately before the appointed day shall stand tranferred to the High Court of Rajasthan. (4) Any order made before the appointed day by any court referred to in sub-section (2) or sub-section (3) in any proceedings transferred to the High Court of Rajasthan by virtue of sub-section (2) or sub-section (3) shall, for all purposes, have effect not only as an order of that court, but also as an order of the High Court of Rajasthan.
(3.) IT is noteworthy that whereas there is a direct provision for the transfer of all proceedings pending before the Judicial Commissioner of Ajmer and before the High Courts of Bombay and Madhya Bharat to the High Court of Rajasthan, there is no provision for the transfer of the income-tax references pending in this court to the High Court of Rajasthan. IT is well settled that the question relating to the jurisdiction of a court or Tribunal has got to be determined on the basis of the conditions existing on the date when the suit or the proceedings were started. Thus, if on the date of the filing of the suit or the start of the proceedings a court had validly entertained the suit or the proceedings it would continue to be seized of it even though later on the area from which the suit or proceeding arises has gone out of the territorial limits of the jurisdiction of that court. This general rule has an exception the same being that if there is anything contained in any statutory provision to the contrary the question relating to jurisdiction of the court shall be governed by that provision. The view that we are taking finds support from the decision of the Federal Court in Venugopala Reddiar v. Krishnaswami Reddiar, AIR 1943 FC 24. In that case a suit was filed in an Indian court in respect of certain properties some of which were situated in Rangoon. The litigation was still pending when Burma Independence Act came into force and the question arose whether an Indian court should decide even in respect of properties situate in Burma. IT was contended before the Federal Court that under the municipal law a court of one State cannot decide in respect of the properties situated in another independent State. But their Lordships held that in view of the fact that the Burma Independence Act did not contain any provision which extinguished the jurisdiction of the Indian courts in respect of suits already filed relating to properties in Burma, the Indian courts had jurisdiction in the matter. We have already said above that there is nothing in Act XXXVII which requires either the transfer of the present case or dismissal of the present proceedings on the ground that we have no jurisdiction to proceed further and we do not see any reason why the rule laid down in Venugopala Reddiar v. Krishnaswami Reddiar, AIR 1943 FC 24 should not be followed in this case. In this connection we would also like to notice two other provisions in Act XXXVII. Section 123 reads as follow : 123. Legal proceedings - Where immediately before the èappointed day, the Union or an existing State is a party to any legal proceedings with respect to any property, rights or liabilities subject to apportionment under this Act, the successor State which succeeds to, or acquires a share in, that property or those rights or liabilities by virtue of any provision of this Act shall be deemed to be substituted for the Union or the existing State as a party to those proceedings, or added as a party thereto, as the case may be, and the proceedings may continue accordingly. Section 125 reads thu : 125. Provisions as to certain pending proceedings - (1) Every proceeding pending immediately before the appointed day before a court (other than a High Court), Tribunal, authority or officer in any area which on that day falls within a State shall, if it is a proceeding relating exclusively to any part of the territories which as from that day are the territories of another State, stand transferred to the corresponding court, Tribunal, authority or officer in the other State. (2) If any question arises as to whether any proceeding should stand transferred under sub-section (1), it shall be referred to the High Court having jurisdiction in respect of the area in which the court, Tribunal, authority or officer before which or whom such proceeding is pending on the appointed day, is functioning and the decision of that High Court shall be final. (3) In this section - (a) proceeding includes any suit, case or appeal; and (b) corresponding court, Tribunal, authority or officer in a State means - (i) the court, Tribunal authority or officer in that State in which, or before whom, the proceeding would have lain if the proceeding had been instituted after the appointed day, or (ii) in case of doubt, such court, Tribunal, authority or officer in that State as may be determined after the appointed day by the Government of that State, or before the appointed day by the Government of the corresponding State, to be the corresponding court, Tribunal, authority or officer. Two things emerge from the perusal of these two statutory provisions. Firstly, that in connection with all legal proceedings pending on the appointed day, in cases in which the State is a party, substitutiion shall take place in order to replace the State which has lost jurisdiction by the State which has acquired jurisdiction in respect of the territories to which that proceeding relates, and, secondly that all proceedings in a court other than a High Court shall stand transferred from the Tribunal or authority where they were pending to the corresponding Tribunal or authority of the State to which the areas are being transferred. It is noteworthy that though a suit or an appeal has been expressly included in the expression proceeding, nothing has been said about a reference under the Act. Neither of these two sections, therefore, apply to proceedings like the one before us. ;