- (1.) THE Income-tax Appellate Tribunal Bench 'b' (hereinafter called the Tribunal)has made this reference under Section 66 (1) of the Indian Income-tax Act, 1922 (hereinafter called the Act) on the ap-plications filed by the Commissioner of income-tax, Delhi and Rajasthan and the as-sessee Messrs. Mazdoor Kisan sahkari Samiti, village Bhadu, District Bhilwara.
(2.) THE statement of the case submitted to this Court by the Tribunal shows that the assessee was a co-operative society registered under the Co-operative societies Act in the year 1949. The assessee was doing business of mining mica in the State of Rajasthan from the year 1952. Up to and including the assessment year 1960-61 no assessments were made of the incomes of assessee because the tax was not payable by a co-operative society in respect of profits and gains of business carried on by it by virtue of Section 14 (3) of the Act. But there was an amendment of Section 14 (3) of the Act in the year 1960 and the exemption was confined to so much of the profits and gains of business carried on by it that did not exceed Rs. 15,000/ -. This amendment came into effect from the 1st of April 1960 by the Finance Act of 1960 which received the assent of the President on 20th of April, 1960. Section 1 (2) of that Act provided that the provisions of that Act were to come into force from 1st April, 1960. Because of this amendment, assessment proceedings were taken against the assessee for the year 1961-62, the accounting year being from 1st July, 1959 to 30th June, 1960. The assessee claimed certain deductions on account of dead rent paid by it to the State of Rajastban for that relevant year and also on account of development rebate which were disallowed. The assessee appealed to the Appellate Assistant Commissioner. There it raised one more point and that was that the business income of the assessee became taxable by the amendment of Section 14 (3) of the Act made by the Finance Act, 1960 and this amendment could not take away the vested right of the assessee exempting its business income from taxation till 1st April, 1960. The Appellate Assistant commissioner rejected all the three grounds raised by the assessee. The assessee thereafter appealed to the Tribunal raising the same three contentions. The point urged by the assessee that it could not be taxed in respect of profits which arose prior to 1st April, 1960 was rejected by the Tribunal on the ground that this controversy was set at rest by the Supreme Court in the case of Union of india v. Madan Gopal Kabra, (1954) 25 ITR 58 = (AIR 1954 SC 158 ). The assessee's claim for rebate on account of dead rent to the extent of Rs. 5,343 was also rejected on the ground that the case of this nature was considered by the rajasthan High Court in the case of Commr. of Income-tax v. Gotan Lime syndicate, ILR (1964) 14 Raj 65 and that decision was binding on the Tribunal. The third point relating to disallowance of development rebate on Rs. 13,239 was decided in favour of the assessee on the ground that the defect of not creating necessary reserve was removed as a specific reserve of Rupees 11,000/-had been created and that as it was the first assessment of the co-operative society a lenient view may be taken and the development rebate should be allowed.
(3.) ON applications filed by the Commissioner of Income-tax, Delhi and Rajasthan and the assessee, the Tribunal has referred the following questions to this Court for opinion:-- (1) Whether, on the facts and in the circumstances of the case, the assessee was liable to tax on its income earned prior to 1st April, 1960 ? (2) Whether, on the facts and in the circumstances of the case, the amount of Rs. 5,343/- being dead rent paid by the assessee was allowable as a deduction in determining its profits for the assessment year 1961-62 ? (3) Whether, on the facts and in the circumstances of the case, the assessee was entitled to a deduction on account of development rebate of Rs. 13,239/- for the assessment year 1961-62 ?;