TMI Blog1965 (12) TMI 35X X X X Extracts X X X X X X X X Extracts X X X X ..... : P. B. GAJENDRAGADKAR., V. RAMASWAMY., K. N. WANCHOO., M. HIDAYATULLAH., P. SATYANARAYANA RAJU. JUDGMENT The judgment of the court was delivered by SATYANARAYANA RAJU J.---This appeal, by special leave, against the judgment and order of the Kerala High Court dated July 25, 1963, in Income-tax Referred Case No. 10 of 1962 (Agricultural) raises the question as to the true scope and operation of section 2 of the Kerala Surcharge on Taxes Act, 1957 (XI of 1957), hereinafter called "the Surcharge Act." The facts which have given rise to this appeal may be briefly stated. For the assessment year 1957-58, the appellant-company was assessed to agricultural income-tax under the Kerala Agricultural Income-tax Act, 1950. In the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e appellant then applied to this court and obtained special leave to appeal against the judgment and order of the High Court. It is contended for the appellant by Mr. Setalvad learned counsel, that the Surcharge Act having come into force on September 1, 1957, and the said Act not being retrospective in operation, it could not be regarded as law in force at the commencement of the year of assessment, viz., 1957-58. It is also contended that, in the absence of express enactment or necessary intendment, the provisions of a statute which affect a right in existence at the time of the passing of that enactment are not to be applied retrospectively and that the interpretation placed by the High Court on the scope of sub-section (3) of section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x a Division Bench of the Bombay High Court, consisting of Chagla C.J. and Tendolkar J., considered the question as to the effect of an amendment which came into force after the commencement of the financial year. The facts in that case were these. The assessee's ship was lost as a result of enemy action. The Government paid the assessee in 1944 a certain amount as compensation which exceeded the original cost of the ship. The Income-tax Officer included the difference between the original cost and the written down value of the ship in the total income of the assessee for the assessment year 1946-47. The Tribunal upheld that decision and referred the question, whether the sum representing the difference between the original cost and the wri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it is not retrospective, and we cannot import into its construction matters which are ad extra legis, and thereby alter its true effect." In Commissioner of Sales Tax, Uttar Pradesh v. Modi Sugar Mills Ltd. this court held by a majority at page 199 as follows : " A legal fiction must be limited to the purposes for which it has been created and cannot be extended beyond its legitimate field. The turnover of the previous year is fictionally made the turnover of the year of assessment : it is not the actual or the real turnover of the year of assessment. By the imposition of a different tariff in the course of the year, the incidence of tax liability may competently be altered by the legislature, but for effectuating that alteration, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion is authority for the proposition that though the subject of the charge is the income of the previous year, the law to be applied is that in force in the assessment year, unless otherwise stated or implied. The facts of the said decision are different and distinguishable and the High Court was clearly in error in applying that decision to the facts of the present case. The Surcharge Act having come into force on September 1, 1957, and the said Act not being retrospective in operation, it could not be regarded as law in force at the commencement of the year of assessment 1957-58. Since the Surcharge Act was not the law in force on April 1, 1957, no surcharge could be levied under the said Act against the appellant in the assessment ye ..... X X X X Extracts X X X X X X X X Extracts X X X X
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