TMI Blog1961 (7) TMI 6X X X X Extracts X X X X X X X X Extracts X X X X ..... ut was delivered by HIDAYATULLAH J.---These there consolidated appeals by special leave are against a common judgment and order of the High court of Madhya Pradesh, dated September 8, 1958, in three second appeals filed under rule 13 of the Indore Industrial Tax Rules, 1927, of the former Holkar State, which were in force before the State became part of Madhya Bharat State. They concern three assessments relating to the assessment years 1941, 1942 and 1943, respectively. These second appeals were originally filed in the Madhya Bharat High Court as early as 1952 ; but the records of the appeals were destroyed by fire and had to be reconstructed. By the time the appeals were ready, Madhya Bharat had merged in the new State of Madhya Pradesh, and the appeals were accordingly heard by a Divisional Bench of that High Court. The appellant is a textile mill and a public joint stock company called the Nandlal Bhandari Mills Ltd. The appellant had appointed a firm, Messrs. Nandlal Bhandari and Sons, as agents, secretaries and treasurers of the mills, and under clause (6) of the agreement of agency, it agreed to pay to the agents an office allowance, commission on the company's net pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es were made applicable retrospectively from May 1, 1926. These Rules were framed for the levy of the tax and for ascertainment and determination of the income of cotton mills. The tax called the " industrial tax " was leviable under rule 3, which imposed the charge. It says that the industrial tax shall be payable by an assessee in respect of the profits or gains of any cotton mills industry carried on by him in the Holkar State. Sub-rule (2) of rule 3 provides that such profits or gains are to be computed after making allowances, inter alia, for any expenditure incurred solely for the purpose of earning such profits or gains. Rule 6, which is a part of the rule imposing a charge, lays down the rates which are : (a) on all incomes up to Rs. 50,000, at 1 1/2 annas per rupee, and (b) above, at 2 1/2 annas per rupee. The short question thus was whether in computing the profits and gains of the appellant, the remuneration paid to the agents was deductible under rule 3(2)(ix). It is necessary at this stage to see the legislative machinery existing in the Holkar State in 1927 and onwards. On February 27, 1926, His Highness Maharaja Tukoji Rao III abdicated, and his son, H. H. Maharaj ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It is to be noticed that this notification refers to the earlier Notification No. 4733 of December 6, 1927, under which were published the amended Industrial Tax Rules, 1927, and to the notification of August, 1931. The latter has not been produced before us. This notification led to representations by the persons affected by it. The Maharaja of Holkar thereupon referred the matter for the opinion of the Full Bench of the High Court of the State. It appears that the opinion of the High Court was in favour of disallowing such deductions. On July 14, 1933, another notification (No. 13) was issued, which read as follows : " In continuation of this office Notification No. 1 dated 3rd February, 1932, it is hereby published for the information of the mills and factories concerned that on submission of the Prime Minister's (Legal Department) report No. 25 dated 11th May, 1933, His Highness the Maharaja is pleased to order (vide Huzur Shri Shankar Order No. 173 dated 29th June, 1933) that the opinion of the Full Bench of the High Court being that the managing agent's commission on profits is not an item of expenditure incurred solely for the purpose of earning the said profit withi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or judicial interpretation of the rule. The rival claims in these appeals are thus confined to the legislative force of the notifications issued in 1931, 1932 and 1933 respectively. The appellant's contention is that the notifications were not an act of legislation but an interpretation by the sovereign. Mr. Desai concedes that if they be regarded as legislation, then the later decisions of the Privy Council and some of this court cannot be called in aid, because where the law itself speaks with clarity, judicial interpretation is out of place. He contends, however, that the two notifications were not framed as rules and were not expressly stated to be amendments of the rules then existing. He points out that after the first notification which was nothing more than an administrative direction to the assessing officers to include in the profits the remuneration of the agents, the opinion of the High Court was obtained, and the second notification merely pointed out that the earlier notification was to be given effect to, and did no more than add a second administrative direction. On the other side, it is contended that the Cabinet could make laws as often as it pleased and that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al. In our judgment, the two notifications cannot be described as " judicial interpretation ". If anything, they must be interpreted as legislative exposition of rule 3(2)(ix) and in the nature of an explanation. This court in Ameer-un-nissa Begum v. Mahboob Begum, in dealing with the Firmans of His Exalted Highness the Nizam of Hyderabad, observed as follows : " It cannot be disputed that prior to the integration of Hyderabad State with the Indian Union and the coming into force of the Indian Constitution, the Nizam of Hyderabad enjoyed uncontrolled sovereign powers. He was the supreme legislature, the supreme judiciary and the supreme head of the executive, and there were no constitutional limitations upon his authority to act in any of these capacities. The Firmans were expressions of the sovereign will of the Nizam and they were binding in the same way as any other law ; --- nay, they would override all other laws which were in conflict with them. So long as a particular Firman held the field, that alone would govern or regulate the rights of the parties concerned, though it could be annulled or modified by a later Firman at any time that the Nizam willed. " The same c ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
