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Issues:
1. Validity of the amendment to Taxation Laws (Part B States) (Removal of Difficulties) Order, 1950 under section 60A of the Indian Income-tax Act. 2. Power of the Central Government to pass an order with retrospective effect. Analysis: Issue 1: The case involved a reference by the Income-tax Appellate Tribunal regarding the validity of an amendment to paragraph 2 of the Taxation Laws (Part B States) (Removal of Difficulties) Order, 1950 under section 60A of the Indian Income-tax Act. The assessee claimed depreciation allowance for the assessment year 1950-51 based on the actual cost of assets acquired 40 years earlier. The contention was whether the assets should be valued under the Hyderabad Income-tax Act or the Indian Income-tax Act for depreciation purposes. The Central Government's notification added an explanation to the Order, seeking to support the assessee's claim under section 10(2)(vi) of the Indian Income-tax Act. The court referred to a previous judgment where it was held that the Central Government's power under section 60A is to avoid hardship or anomaly and make modifications favoring the assessee. The Income-tax Department argued that modifications could also favor the Department, but the court disagreed. It emphasized that modifications must be in favor of the assessee to avoid increasing the tax burden beyond what the Act allows. The court upheld its previous decision and rejected the Department's argument regarding the interpretation of section 60A. The court also addressed the Department's submission that if the amendment was not valid under section 60A, it should be considered under section 12 of the Finance Act. However, the court held that the powers under these sections are distinct, and the order made under section 60A cannot be deemed to be made under section 12 of the Finance Act. The court reiterated that the explanation added to the Order was void, leading to a negative answer to the first question raised. Issue 2: The second question, regarding the power of the Central Government to pass an order with retrospective effect, was dependent on the first question's answer. Since the first question was answered negatively, the court did not delve into the second question. The court referred to a previous case where this issue had been addressed, indicating that the answer to the second question had already been dealt with in that case. In conclusion, the court held that the amendment to the Taxation Laws (Part B States) (Removal of Difficulties) Order, 1950 was not valid under section 60A of the Indian Income-tax Act, and the explanation added to the Order was declared void. The second question regarding retrospective effect did not arise due to the negative answer to the first question.
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