DHRANGADHRA TRADING COMPANY PRIVATE LIMITED Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) This is a reference under sec.66(1) of the Indian Income Tax Act 1922 at the instance of the assessee. The assessee is a private limited company. The assessment years with which we are concerned are the years 1950-51 1951 1952 and 1953-54 the accounting years being the years ending 31st March 1950 31 March 1951 31 March 1952 and 31st March 1953 respectively. At all material times the assessee company had its registered office at Dhrangadhra in Saurashtra and was carrying on business at Dhrangadhra. The first assessment on the assessee company under the Indian Income Tax Act 1922 was made for the assessment year 1950-51. The Indian Income Tax Act 1922 was extended to Part B States from 1st April 1950. The question involved relates to the construction of the provisions contended in section 14(2)(c) of the Indian Income Tax Act. Section 14(2)(c) as it stood on 1st April 1950 before the amendment made therein by the Indian Income-tax (Amendment) Act 1953 read as follows :

(2.) By the Income Tax (Amendment) Act 1953 in the above clause for the words a part B State the words the State of Jammu & Kashmir have been substituted with effect from 1st April 1950. Under the circumstances the following question of law has been referred to us :

(3.) A reference was made by Mr. S. P. Mehta the learned advocate for the assessee to the provisions of the Finance Act of 1950. He urged that by sec. 2(1) of that Act it was provided that income-tax should be charged at the rates specified in Part I of the First Schedule and the rates of super-tax shall for the purposes of sec. 55 of the Indian Income Tax Act 1922 be those specified in Part II of the First Schedule. By sub-clause 7 of sec. 2 it is provided that for the purposes of the said section and of the rates of tax imposed thereby the expression total income meant total income as determined for the purposes of incometax or super-tax as the case may be in accordance with the provisions of the Income-tax Act. It was urged on behalf of the assessee that as no amendment had been made in the Finance Act of 1950 the amendment made in the Income Tax Act by the Income Tax (Amendment) Act 1953 could not effectively operate In his submission if the legislature wanted to prevent the operation of the exempting provisions contained in sec. 14(2)(c) as from 1st April 1950 in respect of any class of income then it could only effectively do so by amending both the provisions contained in sec. 14(2)(c) and the provisions of the Finance Act of 1950.