TMI Blog1952 (10) TMI 49X X X X Extracts X X X X X X X X Extracts X X X X ..... this private limited company he held 800 shares and his wife held the remaining 200 shares. On the 19th of September, 1941, the assessee resigned his office of selling agent of the two mills situated in the Baroda State, and this resignation was to take effect from the 1st of October, 1941, and on that very day these two mills appointed M.M. Shah Ltd. to be the selling agents of the mills. The Excess Profits Tax Officer while making the excess profits assessment for the chargeable accounting periods, calendar years 1942, 1943, 1944, 1945 and 1st of January, 1946, to the 31st of March, 1946, added to the assessee's profits the profits derived from the selling agency business of the Baroda State mills. The finding of the department and o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act applies. What is contended by Sir Nusserwanji on behalf of the Commissioner is that Section 10A overrides the third proviso to Section 5, and it is urged that if an assessee transfers his business in the taxable territories to a Part B State with the object and the intention of avoiding or reducing his liability to excess profits tax, then it is open to the Excess Profits Tax Officer to ignore that transaction and to consider the profits made by the business in a Part B State as if they were the profits made -in the taxable territories. Now, turning to Section 10A, it provides that where the Excess Profits Tax Officer is of opinion that the main purpose for which any transaction or transactions was or were effected was the avoidance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fits Tax Officer under Section 10A of the Act. It is not a business in the taxable territories that the Excess Profits Tax Officer is taxing under his powers under Section 10A. He is really in substance taxing a business the profits of which accrue or arise in a Part B State. Therefore, by the exercise of his powers under Section 10A he is bringing within his purview and subjecting to taxation the very profits which the Legislature exempted from taxation. Now, the language of Section 10A also does not lend itself to the interpretation for which Sir Nusserwanji is contending. The power given to the officer is to make such adjustments as respects liability to excess profits tax as he considers appropriate. To make the Act applicable to a busi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax or would not be chargeable to the same extent but for his powers to make adjustments. Therefore this can only apply to a person who is liable to pay tax in respect of a business to which the Act applies. It cannot possibly refer to a business which does not come within the scope and ambit of the Act at all. Now turning to our decision on which reliance was placed by the Tribunal, Sir Nusserwanji has attempted to distinguish that case from the facts we have to consider in the present reference. Sir Nusserwanji is perhaps right that there were one or two distinguishing features in that case. There there was a firm carrying on business in Ahmedabad in piece goods and that firm had two partners. Then a new firm was started at Jorawarnag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n State liable to excess profits tax, although the Legislature has thought fit to exempt those profits from tax . This is exactly what the Excess Profits Tax Officer has done in this case. It may be that if Section 10A applied to the facts, this was a much stronger case than the case which we were considering in Pujabhai's case 2. But if Section 10A cannot override the third proviso to Section 5, we are not concerned with the particular facts which led the Excess Profits Tax Officer to put Section 10A into operation. Therefore, as far as the principle of the judgment is concerned, it is clear that that principle applies to the facts of this case, and in view of that decision we must come to the same conclusion as we did in that case ..... X X X X Extracts X X X X X X X X Extracts X X X X
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