Judgement Appeal (No. 63 of 1945) from a judgment and order of the Federal Court of India (in its civil appellate jurisdiction (March 27, 1944) which reversed a judgment and decree of a Special Bench of the High Court at Calcutta (in its ordinary original civil jurisdiction) (April 9, 1943). The following facts are taken from the judgment of the Judicial Committee The appellant was a joint stock company incorporated in the Isle of Man, having its registered office in that island, and its main office in England. At all material times it held the bulk of the shares in eleven companies, carrying on business in British India. Two of those companies were incorporated in British India, having their registered offices and headquarters in Calcutta. The nine remaining companies (called the sterling companies) were, as to some of them, incorporated in the Isle of Man and, as to the rest, incorporated in England. The business of the sterling companies in India was managed by local boards, but the ultimate control lay with the London boards. The meetings of the sterling companies were held in England. All the dividends that were received by the appellant from the sterling companies were declared, paid and received in England. No part of them was ever remitted to British India. On January 6, 1939, the proper income tax officer by notice required the appellant to make a return of its total income (and total world income) for the assessment year 1939-40. A return was made on May 18, 1939. In the correspondence which followed, the appellant raised the point that Explanation 3 tos. 4, sub-s. 1, of the Income-tax Act, 1922, as amended, if it applied to dividends declared and paid outside British India to persons not resident in British India was ultra vires the Indian Legislature. By an assessment order dated December 23, 1940, the income tax officer assessed the appellant as a non-resident on a total income of Rs. 75, 45,197. The total income so ascertained included the dividends received from the sterling companies. By an assessment form and notice of demand dated December 23, 1940, the appellant was assessed in respect of income tax and super-tax in the sum of Rs. 4, 45,202.13.0. The tax attracted by the inclusion of the dividends from the sterling companies amounted to Rs. 4, 35,290.5.0. By an assessment form and notice of demand dated December 23, 1940, the appellant was assessed in respect of income tax and super-tax in the sum of Rs. 4, 45,202.13.0. The tax attracted by the inclusion of the dividends from the sterling companies amounted to Rs. 4, 35,290.5.0. The demand notice required payment on or by February 23, 1941, and stated that in default of payment the appellants would be liable to penalties, and that a warrant of distress might be issued. The appellant then intimated its intention of appealing against the assessment as far as it related to the taxation of dividends received from the sterling companies, and requested the income tax officer to stay his hand pending the appeal. That request was refused, and the appellant accordingly, on March 12, 1941, paid the tax demanded under protest. On June 4, 1941, the appellant gave notice of appeal to the appellate assistant commissioner of income tax. On January 16, 1942, the appellant informed the appellate assistant commissioner that it did not propose to proceed with the appeal. By his order, dated January 24, 1942, the appellate assistant commissioner confirmed the assessment, expressing the opinion that the constitutional questions raised by the appellant could not be entertained in an appeal under the Income-tax Act, by the provisions of which the income-tax authorities were bound. On April 17, 1942, the appellant instituted the present suit in the High Court of Calcutta in its ordinary original civil jurisdiction, claiming— (1) A declaration that in so far as Explanation 3 and the other provisions of s. 4 of the Indian Income-tax Act purported to authorize the assessment and charging to tax of a nonresident in respect of dividends declared or paid outside British India, but not brought into British India, those provisions were ultra vires the legislative powers of the Federal legislature, and that therefore the appellant was not liable to be assessed or charged to tax in respect of the dividends from the sterling companies and that the assessment was illegal and wrongful. (2) An injunction restraining the Department from making assessments in future years in respect of dividends from the sterling companies. (3) Repayment of Rs. 4, 35,290.5.0 together with interest. Section 4, sub-s.1 (c), and Explanation 3 to s.4, sub-s.1, of the Indian Income-tax Act provided as follows— "4. (2) An injunction restraining the Department from making assessments in future years in respect of dividends from the sterling companies. (3) Repayment of Rs. 4, 35,290.5.0 together with interest. Section 4, sub-s.1 (c), and Explanation 3 to s.4, sub-s.1, of the Indian Income-tax Act provided as follows— "4. (1) Subject to the provisions of this Act, the total income of any previous year of any person includes all income, profits and gains from whatever source derived which— "(c) if such person is not resident in British India during such year, accrue or arise or are deemed to accrue or arise to him in British India during such year." "Explanation 3 A dividend paid without British India shall be deemed to be income accruing and arising in British India to the extent to which it has been paid out of profits subjected to income-tax in British India." By s.226, sub-s.1, of the Government of India Act, 1935 "Until otherwise provided by Act of the appropriate legislature, no High Court shall have any original jurisdiction in any matter concerning the revenue . . . ." The High Court at Calcutta (Derbyshire C.J., Mitter and Lodge JJ.) held that the provision was ultra vires, and that jurisdiction to entertain the suit was not denied by either s. 226 of the Constitution Act of 1935 or s. 67 of the Inome-tax Act, which provided that " no suit shall be brought in any " civil court to set aside or modify any assessment made " under this Act . . . ." An order for repayment of the sum in question was therefore made. The Federal Court (Spens C.J., Varadachariar and Zafrulla Khan JJ.) held that s. 226 of the Act of 1935 barred the maintenance of the suit before the High Court in its ordinary civil jurisdiction, and they expressed their view that the impugned provision was not ultra vires the Indian legislature. The Federal Court accordingly ordered the dismissal of the suit. 1946. Nov. 21, 22, 25, 26, 27, 28. Sir Cyril Radcliffe K.C. and Sidney Isaacs for the appellant. The constitutional issue in this case turns on s. 99 of the Government of India Act, 1935, which gives definite affirmative power of extra-territorial legislation in respect of five matters. The Federal Court accordingly ordered the dismissal of the suit. 1946. Nov. 21, 22, 25, 26, 27, 28. Sir Cyril Radcliffe K.C. and Sidney Isaacs for the appellant. The constitutional issue in this case turns on s. 99 of the Government of India Act, 1935, which gives definite affirmative power of extra-territorial legislation in respect of five matters. It recognizes, however, and it is not sought to argue to the contrary, that outside the range of those five affirmative provisions there may be cases in which, under the general words used in sub-s. i, some extraterritorial operation may properly result. The question is, within what ranges, according to established rules, should it be found that extra-territorial power does reside in this legislature. The section of the Income-tax Act which in effect directs the appellant in England to pay tax in India is clearly extra-territorial, and the question is whether it is permitted extra-territoriality according to established rules. The judgment of the Federal Court is open to these two major criticisms (a) They have failed to understand that this Act as applied to the dividends in question, and to the appellant as a taxpayer, is of necessity extra-territorial, because it purports to be a law that the appellant, which is neither resident in, nor subject to, British India, should make contributions to the Indian exchequer, (b) They have failed to appreciate that a legislature such as that set up in India by the Constitution Act is subject to a valid and existing general rule which limits its powers of extra-territorial legislation, and that such legislation by such a body must be positively justified either by express words or proper implication from the Constitution Act. With regard to the authorities in this connexion, the judgment in London and South American Investment Trust v. British Tobacco Co. (Australia) (i) clearly distinguishes between the two points on which the plaintiff there was capable of succeeding, (i.) the legislative powers of the Australian Parliament and (ii.) the rule of private international law that the contract between the shareholder and the company being English, the incidence could not be altered by a foreign legislature. The explanation which the Federal Court gave of that case ([ 1927] 1 Ch. 107.) is not really justified. The explanation which the Federal Court gave of that case ([ 1927] 1 Ch. 107.) is not really justified. The observations in MacLeod v. Attorney-General for New South Wales ([ 1891] A. C. 455.) as to extra-territoriality are not obiter; they are the ground of the judgment. Commercial Cable Company v. Attorney-General for Newfoundland ([ 1912] A. C. S20, 824, 826.) contains a reference to limitations on the power of Newfoundland of a territorial order with regard to taxation. One of the grounds why the relevant Act was held not to be competent in Nadan v. The King ([ 1926] A. C. 482.) was because to abolish the right of appeal to the Privy Council from decisions of Canadian courts in criminal cases needed extra-territorial jurisdiction, which the Canadian legislature did not then possess. After the Statute of Westminster the power did exist British Coal Corporation v. The King ([ 1935] A. C. 500, 516.). The existence of an effective rule about extra-territorial limitations has thus been recognized in recent years, and the Federal Court in this case do not seem to have appreciated how substantive this rule is. Inland Revenue Commissioners v. National Mortgage and Agency Co. of New Zealand ([ 1938] A. C. 524, 544.) shows how wide the matter can be put. Trinidad Lake Asphalt Operating Co., Ltd. v. Commissioners of Income Tax for Trinidad and Tobago ([ 1945] A. C. l, 6, 9.) is a very important case from the appellants point of view; it accepted Tomlin J.s decision in 1927 in the London and South American Investment Trust case ([ 1927] 1 Ch. 107.), and accepted his principle regarding taxing a nonresident in respect of property not situated in the jurisdiction. If that principle still applies to a Colony like Trinidad it applies because the Colony is not within the larger area of the Statute of Westminster; nor is India. If Lord Tomlin was right, that the test is the situation of the property, the appellant must succeed on this point. " Sources " is a very vague word; when one is dealing with the conception of property there is a clear legal distinction. [Reference was made to Cull v. Inland Revenue Commissioners ([ 1940] A. C. 51.), Barnes v. Rely Hutchinson ([ 1940] A. C. 81.) and Canadian Eagle Oil Co., Ld. " Sources " is a very vague word; when one is dealing with the conception of property there is a clear legal distinction. [Reference was made to Cull v. Inland Revenue Commissioners ([ 1940] A. C. 51.), Barnes v. Rely Hutchinson ([ 1940] A. C. 81.) and Canadian Eagle Oil Co., Ld. v. The King ([ 1946] A. C. 119.).] If the Judicial Committee had really meant in Croft v. Dunphy ([ 1933] A. C. 156.) that the extra-territorial limitations are now out, so to speak, then there was no room for such cases as the Trinidad Lake Asphalt case (3) and the British Coal Corporation case (1). [Reference was also made to Reg. v. Burah (( 1878) 3 App. Cas. 889, 903.) and Hodge y. Law Rep. 74 Ind. App. 50 ( 1946- 1947) Raleigh Investment Co. Ltd. v. Governor-General in Council 34 The Queen (( 1883) 9 App. Cas. 117, 131.).] A subordinate legislature is under a restriction that it cannot make laws with extra-territorial operation unless by the Constitution Act which sets it up it is given that power either expressly or by proper implication. There are several decisions in Australia which obviously had a very strong influence on the decision of the Federal Court in this case. Two of those decisions—that the legislature had power to tax a non-resident shareholder in circumstances similar to those here—are directly in point. It is submitted, however, that they do not result from a valid line of reasoning based on the Privy Council authorities; if they do, then they cannot be satisfactorily transferred from the Australian constitution to that set up by the Government of India Act. There is good practical sense where it was said in Commissioner of Stamps (Queensland) v. Wienholt (( 1915) 20 C. L. R. 531, 539-40) that "any extraterritorial taxation must depend upon some special authority from the Imperial Parliament. The opposite view would result in endless confusion and collision." The two cases described by the Federal Court as directly on the same point are Nathan v. Federal Commissioner of Taxation (( 1918) 25 C. L. R. 183)—it is not more than a decision on the Australian Act—and Murray v. Federal Commissioner of Taxation (( 1921) 29 C. L. R. 134)—a case which decided the question of taxable jurisdiction. The following cases contain passages in Australian High Court judgments which explain the conception of the limits of Australian legislation in respect of this extra-territorial rule Trustees Executors & Agency Co., Ld. v. Federal Commissioner of Taxation (( 1933) 49 C. L. R. 220, 230.), National Trustees, Executors and Agency Co. of Australasia, Ld. v. Federal Commissioner of Taxation (( 1916) 22 C. L. R. 367, 379.), Colonial Gas Associa tion, Ld. v. Federal Commissioner of Taxation (( 1934) 51 C. L. R. 172, 186, 189.), and Broken Hill South, Ld. v. Commissioner of Taxation (N.S.W.) (( 1937) 56 C L. R. 337, 355, et seq.). Up to that point those judgments have accepted as the principle that the Dominion or, for that matter, the State, legislature approaches all questions of taxation as questions of legislation for the peace, order and good government of the territory. Viewed from that point of view, Croft v. Dunphy ([ 1933] A. C. 156.) has established that extra-territorial elements in what laws they make are of no special significance. The Australian cases say that while it is true that a law which can have no conceivable relation with the territory is ultra vires, so long as there is any connexion, however extra-territorial its operation, it is legislation for peace, welfare and good government. The connexion must be a real or a relevant one. "Sources" have now ceased to have any practical importance. Turning now to a few cases which have been brought in in one aspect or another as being part of the argument on the constitutional issue, the relevance of Colquhoun v. Brooks (( 1889) 14 App. Cas. 493, 502-4.) is that it contains an important passage as to the territorial limitation accepted by the legislature of this country with regard to income tax, and indicates the extent of power which one would suppose had been conferred by this country on the Government of India with regard to a similar subject. In Whitney v. Inland Revenue Commissioners ([ 1926] A. C. 37, 54-5.) a non-resident alien was in this country liable to tax on income derived from property in the United Kingdom. In Whitney v. Inland Revenue Commissioners ([ 1926] A. C. 37, 54-5.) a non-resident alien was in this country liable to tax on income derived from property in the United Kingdom. Applying that to the present case of a non-resident shareholder receiving dividend from the company which is not an Indian company and which has already paid tax in England on its profits in respect of its dealings in India, the Imperial Parliament cannot be presumed to have given the Government of India the power which they now claim to exercise. Bradbury v. English Sewing Cotton Co. ([ 1923] A. C. 744, 753.) was simply a decision about the meaning of foreign possessions in the English Income Tax Act in a very special case. Gramophone and Typewriter, Ld. v. Stanley ([ 1908] 2 K. B. 89.) is perhaps the extreme case for the purposes of taxation law of the differentiation between the shareholder and the company in respect of profits. The profits of the nine companies in the present case, even if made in India, are not the appellants profits. Summing up (a) There is a subsisting rule that subordinate legislatures created by the British Parliament are subject to extra-territorial limitations. This rule is not accurately expressed by saying that they merely have to ensure that their Acts are for the peace, order and good government of their territory, (b) The effect of Explanation 3 in this Act is inevitably to have extra-territorial operation, since it claims to subject to the injunctions of the law persons who are neither resident nor domiciled in India nor even British subjects, (c) When one looks at the Indian Constitution Act of 1935, one finds no such express power of extra-territorial operation, nor any proper implication of such a power in respect of taxation of income having regard, inter alia, to the legislative practice of the British Parliament in the same field, (d) The implications that the Federal Court has made in supporting this legislation are not capable of being derived from anything in Bradbury v. English Sewing Cotton Co. ([ 1923] A. C. 744.), or from the Australian decisions, assuming them to be rightly decided. The Australian decisions can be distinguished, even if their principle is accurate, by the fact that they are related to a different constitution and different words—peace, welfare and good government. ([ 1923] A. C. 744.), or from the Australian decisions, assuming them to be rightly decided. The Australian decisions can be distinguished, even if their principle is accurate, by the fact that they are related to a different constitution and different words—peace, welfare and good government. The Federal Courts decision is contrary to the judgment of Lord Tomlin in the London and South American Investment Trust case ([ 1927] 1 Ch. 107.) and the principle recognized by the Privy Council in the Trinidad Lake Asphalt case ([ 1945] A. C. 1.). On the question of s. 226 of the Constitution Act, the Federal Court were against the appellant, the basis of their decision being mainly Spooner v. Juddow (( 1850) 4 Moo. I. A. 353, 375.). It is not sought to distinguish that case, but it is not any reason for saying that an action which is founded to obtain a declaratory order is within the bar of s. 226 [Reference was also made to Alcock, Ashdown & Co. v. Chief Revenue Authority, Bombay (( 1923) L. R. 50 I. A. 227, 232.), Dayaldas Kushiram v. Commissioner of Income-Tax, Central (I. L. R. [ 1940] B. 650, 659.) and Sir Byramjee Jeejeebhoy v. Province of Bombay (I. L. R. [ 1940] B. 58, 62 et seq.).] There is a great deal of authority in the various Provinces on the application and interpretation of Provincial Acts not worded in the same way as s. 226 of the Constitution Act, where access to civil courts is either barred or restricted Bhagchand Dagadusa v. Secretary of State for India (( 1923) I. L. R. 48 B. 87, 132, 154.). All the cases on the earlier Provincial Acts of course depend on the actual words used. The submission on s. 226 is that any such words as " concerning the revenue " involve certain assumptions, one, at least, is that there exists a validly created revenue. If the purport of the suit is to obtain a ruling from the court that the very legislation itself which purports to create the branch of revenue in question is no law, is null and void, then it is not a suit concerning revenue within the meaning of those words. It is not necessary for the appellant to say of this case that it is absolutely barred from proceeding under the income tax procedure. It is not necessary for the appellant to say of this case that it is absolutely barred from proceeding under the income tax procedure. It decided not to avail itself of it because in the view it took, rightly or wrongly, this suit was the more appropriate procedure for raising the question. If the Board is going to consider s. 67 of the Indian Income-tax Act, reference should be made to Raja of Ramnad v. Secretary of State for India (( 1928) I. L. R. 52 M. 12, 17.), because the courts in India have given a definite meaning to s. 67. Secretary of State for India v. Meyyappa Chettiar (I. L. R. [ 1937] M. 211) contains a full review of the Indian authorities bearing on the interpretation of the section, and C.T.A.C.T. Nachiappa Chettiar v. Secretary of State for India (( 1933) I. L. R. 11 R. 380, 393) also deals with the question of s. 67 and its relation to ultra vires. The submission therefore is that there would appear to be a general current of authoritative practice in India which does not treat s. 67 as a bar to a declaratory suit if the issue raised by the declaratory suit goes to jurisdiction; that may be the reason why this point was not raised before the Federal Court. Sidney Isaacs followed. On the proper construction of s. 226 it is clear that it is intended to refer only to legal revenue constituted or created under a valid statute. Spooner v. Juddow (4 Moo. I. A. 353.) is not applicable to this case. With regard to the question of jurisdiction arising under s. 67 of the Income-tax Act, there are certain features in Municipal Committee, Montgomery v. Sant Singh (( 1940) I. L. R. 21 Lah. 707, 717-19.) which bear a resemblance to this case. Tucker K.C. and B. MacKenna for the respondent. Both points in this case—the jurisdiction point as well as the question whether the material provision of the Act is ultra vires—are of considerable importance to the Government of India, who would like a decision on both, even at the risk of losing on the ultra vires point. Admittedly, so far as appears from the Record, the question under s. 67 of the Income-tax Act was not taken expressly before the Federal Court. Admittedly, so far as appears from the Record, the question under s. 67 of the Income-tax Act was not taken expressly before the Federal Court. It was certainly taken in the High Court, and does go directly to jurisdiction, and the respondent is entitled to take it here Norwich Corporation v. Norwich Electric Tramways Co., Ld. ([ 1906] 2 K. B. 119.), which was cited with approval in Westminster Bank, Ld. v. Edwards([ 1942] A. C. 529.). It is a curiosity that s. 226 of the Government of India Act only bars the High Court in its original jurisdiction, but the Income-tax Act introduces uniformity so far as income tax is concerned; in s. 67 it says " no suit shall be brought in any civil court "...." What is said is that the respondent has wrongly included as income something which the Act does not validly tax, and therefore the assessment is excessive. Otherwise there is no question that this is an action to modify an assessment made, and properly made, under the Income-tax Act. The clearest way the matter is put is by Varadachariar J. in Secretary of State for India v. Meyyappa Chettiar (I. L. R. [ 1937] M. 211), where he said that s. 67 protects assessments made under the Act.” “This point is bound up with s. 226 of the Constitution Act. The words are "any matter concerning the revenue.” The question is, did this suit concern the revenue? When the matter gets to the stage where there is an assessment, and the appellant declines to accept it, then you are concerning the revenue. [At the conclusion of the argument on the jurisdiction point the Board adjourned for consideration, and on resumption counsel was stopped.] Sir Cyril Radcliffe K.C. replied on the jurisdiction point. Section 67 is inherently bound up in its privative provisions with the scheme and machinery which makes up the Act itself. The words "liability to be assessed under the Act" necessarily compel one to assume that all the relevant statutory income tax provisions that are going to be invoked are effective provisions that the court must recognize. Section 67 is inherently bound up in its privative provisions with the scheme and machinery which makes up the Act itself. The words "liability to be assessed under the Act" necessarily compel one to assume that all the relevant statutory income tax provisions that are going to be invoked are effective provisions that the court must recognize. It all turns simply on the meaning of the words "assessment made under this Act.” In s. 67 one is brought back in the privative provisions to the same point, and there is no bar to one saying that before the question of what he is liable to pay can be considered there must be ascertained whether there is in this respect any valid Act at all. The appellant is not asking in this suit for any court to deal with the assessment at all. The matter has passed beyond assessment into a payment of money, and the appellant asks for a return of money on the ground that the statutory jurisdiction under which it was claimed was a nullity. Secondly, while it is accepted, of course, that jurisdiction is a question which the court considers at any stage, s. 67 is a perfectly well-known section—part of the income tax code—and the question of jurisdiction must therefore have presented itself to the minds of no less than three judges in the High Court, none of whom thought the section provided a bar; it must have presented itself with force to the Government of India, who raised no suggestion in their grounds of appeal to the Federal Court, or in their pleadings, that the section must be understood as a juris- dictional bar; and it presented no ground to any of the three members of the Federal Court, equally familiar with the income tax law, to the effect that it was a jurisdictional bar. No case has been cited which suggests that s. 67 in a case of this kind is so treated as a bar. Secretary of State for India v. Meyyappa Chettiar (I. L. R. [ 1937] M. 211, 228, 236.) and the cases therein referred to show that if the Board were to take this point about s. 67 as Law Rep. 74 Ind. App. 50 ( 1946- 1947) Raleigh Investment Co. Secretary of State for India v. Meyyappa Chettiar (I. L. R. [ 1937] M. 211, 228, 236.) and the cases therein referred to show that if the Board were to take this point about s. 67 as Law Rep. 74 Ind. App. 50 ( 1946- 1947) Raleigh Investment Co. Ltd. v. Governor-General in Council 37 a bar to jurisdiction now, it will be doing something which apparently did not present itself to the minds of the Indian courts. 1947. Feb. 19. The judgment of their Lordships was delivered by LORD UTHWATT. This is an appeal by the Raleigh Investment Co., Ld., from a judgment of the Federal Court of India in its civil appellate jurisdiction reversing a decree passed by a Special Bench of the High Court of Calcutta in its ordinary original civil jurisdiction. The suit in which that decree was passed was brought by the appellant against the respondent, the Governor-General in Council, claiming repay ment of Rs. 4, 35,295.5.0, part of a larger sum paid by the appellant under an assessment to income tax made upon it. The basis of this claim was that in the computation of assessable income effect has been given to a provision of the Income-tax Act which in the submission of the appellant was ultra vires the Indian legislature, and that the assessment was therefore wrong. The respondent contended first, that the impugned provision was not ultra vires the Indian legislature, and, second, that, whether the impugned provision was or was not ultra vires, the High Court in its ordinary civil jurisdiction was precluded from entertaining the suit by reason of s. 226 of the Government of India Act, 1935, and also by reason of s. 67 of the Indian Income-tax Act, 1922. In the proceedings before the Federal Court the point as to jurisdiction arising under s. 67 of the Act of 1922 was not taken. But jurisdiction cannot be given by consent. It is pars judicis to take jurisdiction into consideration and the section has to be considered. Their Lordships, having come to the conclusion that this section bars the maintenance of the suit, do not think it proper to express any opinion on the effect of s. 226 of the Act of 1935 or on the validity of the impugned provision. It is pars judicis to take jurisdiction into consideration and the section has to be considered. Their Lordships, having come to the conclusion that this section bars the maintenance of the suit, do not think it proper to express any opinion on the effect of s. 226 of the Act of 1935 or on the validity of the impugned provision. The views of the High Court and the Federal Court on the latter topic stand only as dicta receiving neither assent nor dissent from their Lordships. [His Lordship then set out the facts as stated above and continued] In form the relief claimed does not profess to modify or set aside the assessment. In substance it does, for repayment of part of the sum due by virtue of the notice of demand could not be ordered so long as the assessment stood. Further, the claim for the declaration cannot be rationally regarded as having any relevance except as leading up to the claim for repayment, and the claim for an injunction is merely verbiage. The cloud of words fails to obscure the point of the suit. An assessment made under the machinery provided by the Act, if based on a provision subsequently held to be ultra vires, is not a nullity like an order of a court lacking jurisdiction. Reliance on such a provision is not an excess of jurisdiction but a mistake of law made in the course of its exercise. Their Lordships therefore regard the suit as in truth directed exclusively to a modification of the assessment. It is not necessary to set out the impugned provision of the Income-tax Act pursuant to which the dividends received from the sterling companies were brought into computation. It is sufficient to say that there is a substantial question whether or not that provision is ultra vires the Indian legislature. Their Lordships now propose to consider and determine whether the bringing of the suit is barred by s. 67 of the Indian Income-tax Act, 1922. It is sufficient to say that there is a substantial question whether or not that provision is ultra vires the Indian legislature. Their Lordships now propose to consider and determine whether the bringing of the suit is barred by s. 67 of the Indian Income-tax Act, 1922. That section runs as follows " No " suit shall be brought in any Civil Court to set aside or modify "any assessment made under this Act, and no prosecution, suit or other proceeding shall lie against any officer of the " Crown for anything in good faith done or intended to be " done under this Act.” The argument for the appellant was that an assessment was not an assessment "made under the Act" if the assessment gave effect to a provision which was ultra vires the Indian legislature. In law such a provision, being a nullity, was non-existent. An assessment justifiable in whole or in part by reference to, or by, such a provision was more aptly described as an assessment not made under the Act than as an assessment made under the Act. The section in question had therefore, it was urged, no application if the impugned provision in the Income-tax Act, 1922, was ultra vires. This construction finds some support in cases decided in India. In construing the section it is pertinent, in their Lordships opinion, to ascertain whether the Act Law Rep. 74 Ind. App. 50 ( 1946- 1947) Raleigh Investment Co. Ltd. v. Governor-General in Council 38 contains machinery which enables an assessee effectively to raise in the courts the question whether a particular provision of the Income-tax Act bearing on the assessment made is or is not ultra vires. The presence of such machinery, though by no means conclusive, marches with a construction of the section which denies an alternative jurisdiction to inquire into the same subject-matter. The absence of such machinery would greatly assist the appellant on the question of construction and, indeed, it may be added that, if there were no such machinery, and if the section affected to preclude the High Court in its ordinary civil jurisdiction from considering a point of ultra vires, there would be a serious question whether the opening part of the section, so far as it debarred the question of ultra vires being debated, fell within the competence of the legislature. In their Lordships view it is clear that the Income-tax Act, 1922, as it stood at the relevant date, did give the assessee the right effectively to raise in relation to an assessment made on him the question whether or not a provision in the Act was ultra vires. Under s. 30, an assessee whose only ground of complaint was that effect had been given in the assessment to a provision which he contended was ultra vires might appeal against the assessment. If he were dissatisfied with the decision on appeal—the details relating to the procedure are immaterial—the assessee could ask for a case to be stated on any question of law for the opinion of the High Court and, if his request were refused, he, might apply to the High Court for an order requiring a case to be stated and to be referred to the High Court (see s. 30 and Secretary of State for India v. Meyyappa Chettiar (I. L. R. [ 1937] M. 211.). It cannot be doubted that included in the questions of law which might be raised by a case stated is any question as to the validity of any taxing provision in the Income-tax Act to which effect has been given in the assessment under review. Any decision of the High Court on that question of law can be reviewed on appeal. Effective and appropriate machinery is therefore provided by the Act itself for the review on grounds of law of any assessment. It is in that setting that s. 67 has to be construed. In their Lordships view the construction of the section is clear. Under the Act the income tax officer is charged with the duty of assessing the total income of the assessee. The obvious meaning, and in their Lordships opinion, the correct meaning, of the phrase "assessment made under this Act” is an assessment finding its origin in an activity of the assessing officer acting as such. The circumstance that the assessing officer has taken into account an ultra vires provision of the Act is in this view immaterial in determining whether the assessment is "made under this Act." The phrase describes the provenance of the assessment it does not relate to its accuracy in point of law. The use of the machinery provided by the Act, not the result of that use, is the test. The use of the machinery provided by the Act, not the result of that use, is the test. The results which would follow from the acceptance of the appellants argument are somewhat curious. First, no distinction can for the purpose in hand be drawn between an assessment giving effect to an ultra vires provision and an assessment giving effect to a wrong construction of a provision to which no objection based on vires can be taken. There may, indeed, be practical difficulties in making out in a civil court that a wrong construction has been placed on a provision, but, assuming those difficulties are surmounted, the assessment is established as one which on the appellants construction is not "made under this Act." All questions of law affecting the accuracy of an assessment might therefore be raised in proceedings in any civil court, where reliance was sought to be placed on the assessment. The section on the appellants construction is robbed of all practical content. Second, on the appellants construction, in order to ascertain whether a civil court is barred by the section from reviewing an assessment brought before it, the legal merits of the assessment have first to be considered and decided. For if the assessment is determined to be right in law the jurisdiction of the civil court to entertain the suit is excluded. The assessment is, on the appellants construction, made under the Act. If, on the other hand, the assessment is determined to be wrong, the jurisdiction of. the civil court to entertain the suit arises. The Law Rep. 74 Ind. App. 50 ( 1946- 1947) Raleigh Investment Co. Ltd. v. Governor-General in Council 39 result of an inquiry into the merits of the assessment is on the appellants construction, to determine whether jurisdiction existed to embark on the inquiry at all. Jurisdiction is made to depend not on subject-matter, but on the correctness of the suitors contention as respects subject-matter. The language of the section is inapt to justify any such capricious method of determining jurisdiction. In conclusion, their Lordships would observe that the scheme of the Act is to set up a particular machinery by the use of which alone total income assessable for income tax is to be ascertained. The income tax exigible is determined by reference to the total income so ascertained, and only by reference to such total income. In conclusion, their Lordships would observe that the scheme of the Act is to set up a particular machinery by the use of which alone total income assessable for income tax is to be ascertained. The income tax exigible is determined by reference to the total income so ascertained, and only by reference to such total income. Under the Act (s.45) there arises a duty to pay the amount of tax demanded on the basis of that assessment of total income. Jurisdiction to question the assessment otherwise than by use of the machinery expressly provided by the Act would appear to be inconsistent with the statutory obligation to pay arising by virtue of the assessment. The only doubt, indeed, in their Lordships mind, is whether an express provision was necessary in order to exclude jurisdiction in a civil court to set aside or modify an assessment. Their Lordships will therefore humbly advise His Majesty that the appeal be dismissed. The appellant will pay the costs of the appeal.