TMI Blog1962 (1) TMI 6X X X X Extracts X X X X X X X X Extracts X X X X ..... visions of the earlier law would apply, and those previous years to which the provisions of the Indian Income-tax Act would apply. The rights were neither enlarged nor curtailed. Since, in this case, the carry-forward of the loss was for only two years, and those years were before the previous year from which the Indian Income-tax Act began to apply, there is no question of the application of the Indian Income-tax Act. The appeal thus succeeds, and is allowed. - - - - - Dated:- 16-1-1962 - Judge(s) : B. P. SINHA., J. L. KAPUR., M. HIDAYATULLAH., J. C. SHAH., J. R. MUDHOLKAR JUDGMENT The judgment of the court was delivered by HIDAYATULLAH J.--The Commissioner of Income-tax, Kerala and Coimbatore, has filed this appeal a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e-tax Act, there was in force in Travancore State, the Travancore Income-tax Act, 1121 M.E. (Act XXIII of 1121 M.E.), which came into force on the first day of Chingom 1122 M.E. (August 17, 1946). The assessment year under the Travancore Act ended on the last day of Karkadakom which corresponds to August 16, 1947. Thus, for the account year, January 1, 1946, to December 31, 1946, of the firm, the assessment year was 1123 M.E. (August 17, 1947, to August 16, 1948). The assessee company declared losses in the account years, 1946, 1947 and 1948. These losses together with the dates of the account years and the assessment years are tabulated below. ------------------------------------------------------------------------------------------- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l. The Tribunal was moved for a case, but declined to state one; but the High Court called for a statement of the case under section 66(2) and the above-mentioned question was decided in favour of the assessee company. The only question argued in this appeal is whether the High Court was right in the answer it gave. The assessee company was not represented at the hearing before this court. The Indian Income-tax Act was extended to Travancore-Cochin by section 3 of the Indian Finance Act, 1950. By section 13(1) of the same Act, it was provided : "If immediately before the 1st day of April, 1950, there is in force in any Part B State...... any law relating to income-tax......... that law shall cease to have effect except for the purpose ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the loss for the year, which does not correspond to the years named in the latter part of the section abovequoted, that part of the section does not apply to the assessee company's case. What was thus claimed was the benefit of the earlier part, where the loss was allowed to be carried forward for six years. This position taken by the assessee company can hardly be considered in view of the provisions of section 32 of the Travancore Act, read with the Removal of Difficulties Order passed in 1950. Section 32 of the Travancore Act was a reproduction of the Indian section 24(2) except for a change of the dates mentioned therein, due obviously to the fact that the Travancore Act came into force on the first day of Chingom, 1122 M.E. (August ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eable to tax in the said year of assessment or in any year subsequent thereto, such loss would be so set off in the same manner, to the same extent, and up to the same year of assessment, as it would have been set off had the State law continued to be in force." The critical words are those contained in the latter part, namely, "in the same manner, to the same extent, and up to the same year of assessment, as it would have been set off had the State law continued to be in force." They show that the law to apply to the loss of " any previous year prior to the previous year for the assessment for the year ending on the 31st day of March, 1950, " was the law in force in a Part B State--here, the Travancore Act. Now, taking the case of the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... beyond two years, whether one takes the account year or the assessment year as the basis of the calculation of two years. The High Court, with all due respect, was not right in thinking that the Removal of Difficulties Order, 1950, was meant to enlarge the rights of the new assessees brought within the reach of the Indian Income-tax law. The intention of the law was to make a dividing line between those previous years to which the provisions of the earlier law would apply, and those previous years to which the provisions of the Indian Income-tax Act would apply. The rights were neither enlarged nor curtailed. As pointed out by Chagla C. J. in Indore Malwa United Mills Ltd. v. Commissioner of Income-tax : "...the only right integratio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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