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TMI Blog1966 (4) TMI 18X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs. 11,09,332 received from the Binod Mills was chargeable under the War Profits Tax Ordinance ?" When the reference was first heard by the High Court, three contentions were raised by Messrs. Binodram Balchand of Ujjain, respondents before us, hereinafter referred to as the assessees. They were: " (1) The assessees did not deal in shares and their holdings in the Binod Mills Limited were purely in the nature of investments, having no connections with their business as defined in section 2(5) read with rule 1 of Schedule 1 of the Gwalior War Profits Tax Ordinance. The business of the secretaries, treasurers and agents of the Binod Mills Limited, which was carried on by them did not require any holding of the shares of the company and w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iness of manufacturing and selling textile goods in 1944. The Ruler of the Gwalior State promulgated the Gwalior War Profits Tax Ordinance, Samvat 2001, for the purpose of imposing tax on excess profits arising out of certain businesses. The Ordinance came into force on July 1, 1944, and applied originally to the accounting period falling within the period commencing on July 1, 1944, and ending on June 30, 1945. By virtue of a notification the period was extended to June 30, 1946. The assessees carried on the managing agency business during the aforesaid period in Gwalior State and being liable to be assessed to war profits tax submitted a return for the period commencing from July 1, 1944, to October 16, 1944. It appears that Rs. 11,09,3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eceived from investments held for the purposes of that part of the business shall be deemed to be profits of that part of the business." By section 2 of the Gwalior War Profits Tax (Amendment) Ordinance, Samvat 2002---hereinafter referred to as Ordinance 2002---rule 3 of the First Schedule to the Ordinance was amended as follows: " In rule 3(2) of the First Schedule to the Ordinance, the following shall be added, namely:---- ' Explanation.---The income from investments to be included in the profits of the business under the provisions of this rule shall be computed exclusive of all income received by way of dividends or distribution of profits from a company carrying on a business to the whole of which the section of the Ordinance imp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Mills Limited and the mills were subject to the burden of the war profits tax under the Ordinance. That being so, the explanation in terms applies to the case, and the assessee is entitled to claim that the dividend income of Rs. 11,09,332 received from Binod Mills could not be included in the computation of its profits for the purposes of war profits tax and was, consequently, not chargeable under the War Profits Tax Ordinance. Learned Advocate-General appearing for the State did not dispute this position." Mr. Shroff, the learned counsel for the Commissioner, contends, first, that the Explanation was not in existence at the relevant time, and, therefore, cannot be taken into consideration; secondly, that the Explanation is an Explanatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ordinance 2004, it would have been very arguable that the Explanation inserted by Ordinance 2002 was retrospective because it dealt with the computation of profits and would apply to all computation of profits made by the taxing authorities after February 28, 1946. But we need not go into this question because Ordinance 2004 expressly assumes that the Explanation was in existence from the date when the Ordinance came into force and no other meaning can be given to section 2 of Ordinance 2004 because, by deeming that the comma shall be deemed to be there from the date from which the Ordinance came into force, it expressly assumes that the Explanation was also in force from that date. Accordingly we are not inclined to accept the first conte ..... X X X X Extracts X X X X X X X X Extracts X X X X
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