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TMI Blog1964 (4) TMI 23X X X X Extracts X X X X X X X X Extracts X X X X ..... vying or collecting income-tax and/or any other tax from them for the financial years 1956-57, 1957-58, and, thereafter, up to June, 1958, with respect to income from the business of their Biscuit and Confectionery Factory at Gwalior and for certain other consequential reliefs. The case of respondents was that they intended to install a factory for the manufacture of biscuits and confectionary at Bombay, but the Government of Madhya Bharat was anxious that the factory should be started at Gwalior and, therefore, passed an order on May 20, 1949, granting certain concessions to the respondents if their factory was set up in Gwalior. These concessions were : 1. No customs duty would be levied on the import of building and other material requ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce. The respondents, therefore, wanted to know if exemption from income-tax would be available to them for the whole period of seven years. In reply to this the respondents were told by the Government of Madhya Bharat that their concession would continue for the whole period. On the faith of this undertaking, the respondents said that they built their factory at Gwalior and that the factory started working in June, 1951. On January 26, 1950, the Constitution of India came into force and the former State of Madhya Bharat became the Part B State of Madhya Bharat thereunder. The Indian Income-tax Act was extended to the territory of the Part B State of Madhya Bharat from April 1, 1950, by the Finance Act (XXV of 1950). Further in view of secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Orders. This petition was heard by the High Court along with another petition Gwalior Rayon Silk Manufacturing (Weaving) Co. Ltd. v. Union of India, and in view of the decision of the High Court in that case, on the scope and effect of article 295(1)(b), it held that the concession granted to the respondents by the Madhya Bharat Government which became an obligation of the Government of India entitled them to exemption from income-tax for seven years and was binding on the Government of India in spite of the legislative provisions made in connection with income-tax from April 1, 1950. The High Court, therefore, granted a writ restraining the Income-tax Officer from taking any action against the respondents in pursuance of the Income-tax A ..... X X X X Extracts X X X X X X X X Extracts X X X X
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