TMI Blog1933 (12) TMI 29X X X X Extracts X X X X X X X X Extracts X X X X ..... ndian Legislature and came into force on April 1, that year. Section 2 of the Act is in the following terms:- 2.-(1) Where a trade or business of any kind is carried on by or on behalf of the Government of any part of His Majesty's Dominions, exclusive of British India that Government shall, in respect of the trade or business and of all operations connected therewith, all property occupied in British India, and all goods owned in British India for the purposes thereof, and all income arising in connection therewith, be liable- (a) to taxation under the Indian Income Tax Act, 1922, in the same manner, and to the same extent as in the like case a company would be liable; (b) to all other taxation for the time being in forc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d from the Commissioner, upon a reference made by him under Section 66(2) of the Act, to the High Court. This reference was heard by MUKERJI AND NIAMATULLAH, JJ., on November 21, 1929 (vide Ram Prasad, In re (1930) A.L.J. 579--Ed.]. Four questions of law had been formulated by the Commissioner. Question (1) was upon the State's contention that the Act of 1926 was not applicable to it. Questions (3) and (4) were concerned with the nature of its dealings in British India. Question (2) upon the answer to which their Lordships think that the result of the present appeal depends, was as follows:- (2) Whether, since the Government Trading Taxation Act only came into force on April 1, 1926, there is any liability for assessment with ref ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the tax which has to be paid by the Tehri State for the year 1926-27 is to be paid on the amount of profits earned by it in the year 1925-26. If the State decided to stop its business, say in the year 1930-31, the tax paid by it in 1930-31, on the basis of the income of 1929-30, would be liable to be refunded, in so far as the income of the year 1930-31 fell short of the income earned in 1929-30. In the result the learned Judges were of opinion that none of the grounds taken by the State were tenable. By the time this judgment was delivered it had apparently been ascertained that the State had in fact no taxable income in the year 1926-27, though whether the business had been dis continued, as the High Court seems to think, or wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to a refund of the ₹ 25,000. The learned Judges recited the passage from their previous judgment, which has been quoted above, and proceeded to interpret the language they had used, and the principle upon which their decision was based:- We have carefully read our order of November 21, 1929, and entertain no doubt as to what we intended to hold and did hold. On a consideration of Section 2 of the Government Taxation Act (III of 1926), we were quite clear that the liability of the Tehri State to pay the income-tax arose for the first time after April, 1926, if it had assessable income in British India after that date. We proceeded to hold that the Tehri State was liable to pay income-tax on the income of 1926-27 which for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of the income of the year 1925- 26. Holding, as we did, that the Tehri State had been assessed to tax in respect of the income of 1926-27, calculated provisionally on the basis of the income which had accrued in 1925-26, we repelled the objection of the Tehri State. The provision of refund in our order in case of discontinuance of business in any future year in respect of which the tax might be assessed and collected is an integral part of our order and a necessary corollary to the rule on which we upheld the assessment then under reference. It was not an obiter dictum. No inconsistency has been pointed out between the passage here cited and that quoted from the first judgment, and their Lordships think that this must be taken to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r Section 66(5) of the Act of 1922, the judgment of the High Court is to contain the grounds upon which the decision is founded: that a copy of the judgment is to be sent to the Commissioner, and that the case is to be disposed of by the Income tax authorities conformably to such judgment . Under this provision their Lordships think that the judgment as a whole is binding between the parties in the particular case. If the judgment expounded a wrong construction of the Act, as the appellant now contends, an appeal against it was open, and there is no other procedure by which it could be corrected. On the assumption, which their Lordships are satisfied must be made for the purposes of the present appeal, that Section 3 of the Act was to b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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