9911796707
TMI Blog1965 (12) TMI 27X X X X Extracts X X X X X X X X Extracts X X X X ..... e these. The respondent, M/s. Straw Products Ltd., Bhopal, hereinafter called "the assessee", is a public limited company. It was incorporated in the erstwhile State of Bhopal in 1939 and was given the certificate of commencement of business on May 30, 1939. On September 20, 1938, the assessee entered into an agreement with the Government of Bhopal. Under the agreement the assessee obtained certain concessions and facilities. The assessee not only got exclusive licence to manufacture card-board articles of all kinds but also got land on lease on favourable terms. It was also exempted from payment of customs and other duties payable to the municipality. Clause 8 of the Agreement is relevant for the purpose of these appeals and is in the following terms : " 8. Subject to and so far as the State shall not become or become obliged by any Instrument of Accession or Supplementary Instrument under the Government of India Act, 1935, in respect of any Federal Taxation, it is hereby agreed as follows :--- (a) During the period of 10 years from the date on which the said company takes over the land for its business purposes the said company shall not be liable to pay any sum by way of tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and for the assessment year 1953-54 the original depreciation allowance of Rs. 2,87,285 was reduced to Rs. 1,72,673. The Appellate Assistant Commissioner, disagreeing with the Income-tax Officer, held on appeal that the assessee had not been allowed excess depreciation allowance as per the original assessment and there was no basis for initiating proceedings under section 34. He was of the view that the expression "actually allowed" could not imply depreciation allowed by a mental phenomenon. The Appellate Tribunal upheld the order of the Appellate Assistant Commissioner and directed the computation of the allowance on that basis. On a reference the High Court by its judgment dated August 22, 1961, answered the question as follows : "In the circumstances of this case the correct basis for computing written down value of depreciable assets of the company is the one adopted by the Appellate Assistant Commissioner." On August 20, 1962, in exercise of the powers conferred by section 6 of the Taxation Laws (Extension to Merged States and Amendment) Act, 1949 (LXVII of 1949), the Central Government made the following order to amend the Taxation Laws (Merged States) (Removal of Diff ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, as appear to it to be necessary for removal of the difficulty." The Taxation Laws (Amendment) (Second) Ordinance, 1949 (XXXIII of 1949), inter alia, made various amendments in the Indian Income-tax Act, 1922. These Ordinances were replaced by the Taxation Laws (Extension to Merged States and Amendment) Act, 1949 (LXVII of 1949). Section 3 of this Act is similar to section 3 of the First Ordinance. Section 6, which took the place of section 8 of the First Ordinance, reads as follows : "If any difficulty arises in giving effect to the provisions of any Act, rule or order extended by section 3 to the merged States, the Central Government may, by order, make such provisions or give such directions as appear to it to be necessary for removal of the difficulty." Section 34 repealed Ordinance XXI of 1949 and Ordinance XXXIII of 1949, but by sub-section (2), inter alia, provides as follows : "........ anything done or any action taken in the exercise of any power conferred by any of the Ordinances referred to in this section shall for all purposes be deemed to have been done or taken in the exercise of the powers conferred by this Act as if this Act were in force on the day on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Order into consideration. It is unnecessary to refer to the cases because the point is concluded by a judgment of this court in Commissioner of Sales Tax v. Bijli Colton Mills. Shah J., speaking for the court, observed as follows : " Undoubtedly the Tribunal called upon to decide a taxing dispute must apply the relevant law applicable to a particular transaction to which the problem relates, and that law normally is the law applicable as on the date on which the transaction in dispute has taken place. If the law which the Tribunal seeks to apply to the dispute is amended, so as to make the law applicable to the transaction in dispute, it would be bound to decide the question in the light of the law so amended. Similarly, when the question has been referred to the High Court and in the meanwhile the law has been amended with retrospective operation, it would be the duty of the High Court to apply the law so amended if it applies. By taking notice of the law which has been substituted for the original provision, the High Court is giving effect to legislative intent and does no more than what must be deemed to be necessarily implicit in the question referred by the Tribunal, pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rule has been directed to be applied and the Income-tax Officer is bound to follow this statutory direction. We are unable to see how the judgment in Venkataraman's case does not apply. Mr. Desai then contends that the 1962 Order did not apply to this case because the income of the assessee had not been exempted under the agreement with the Ruler. He says that the words "exempted from tax" in the 1962 Order means that the assessee must have been liable to pay tax and then exemption granted. He points to the definition of the word "assessee" in the Bhopal Income-tax Act, 1936 (VIII of 1936), which has been defined as "a person by whom income-tax is payable." Then he refers to the charging section, the relevant part of which reads as follows : " 3. Where by a notification in the jarida the Government declares that income-tax shall be charged for any year at any rate or rates applicable to the total income of an assessee, tax... " He says that the respondent was not an assessee because under the agreement no income-tax was payable by it and for this reason no notice or assessment had been made under the Bhopal Income-tax Act. We are unable to sustain this contention. The defini ..... X X X X Extracts X X X X X X X X Extracts X X X X
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