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1978 (3) TMI 51 - HC - Income Tax

Issues Involved:

1. Applicability of Section 25(3) of the Indian Income-tax Act, 1922, post the enforcement of the Income-tax Act, 1961.
2. Interpretation of Section 6 of the General Clauses Act, 1897, in the context of the repeal of the Indian Income-tax Act, 1922.
3. Determination of whether the assessee's right to claim relief under Section 25(3) of the Indian Income-tax Act, 1922, was preserved after the enactment of the Income-tax Act, 1961.

Issue-wise Detailed Analysis:

1. Applicability of Section 25(3) of the Indian Income-tax Act, 1922, post the enforcement of the Income-tax Act, 1961:

The assessee discontinued its business in India on 28th February, 1962, and filed a claim under Section 25(3) of the Indian Income-tax Act, 1922, on 27th March, 1962. The Income-tax Officer (ITO) rejected the claim on the grounds that the discontinuance of business fell in the previous year for the assessment year 1963-64, which was governed by the provisions of the Income-tax Act, 1961. The ITO argued that Section 25(3) of the 1922 Act was not applicable under the new Act. The Appellate Assistant Commissioner (AAC) affirmed the ITO's decision, rejecting the assessee's claim for relief under Section 25(3) of the 1922 Act.

2. Interpretation of Section 6 of the General Clauses Act, 1897, in the context of the repeal of the Indian Income-tax Act, 1922:

The Tribunal, upon appeal, observed that the provisions of the new Act and Section 6 of the General Clauses Act should be considered. The Tribunal noted that the assessee had filed the claim before the new Act came into force, and the accounting period related to a period prior to the new Act's enforcement. The Tribunal held that the substantive right or privilege accrued to the assessee under the old Act could not be taken away unless clearly shown by the new Act's provisions. The Tribunal concluded that Section 6 of the General Clauses Act saved the assessee's claim, as there was no clear intention in the new Act to destroy the existing rights.

3. Determination of whether the assessee's right to claim relief under Section 25(3) of the Indian Income-tax Act, 1922, was preserved after the enactment of the Income-tax Act, 1961:

The Tribunal referred to the provisions of Section 25(3), (4), and (5) of the Indian Income-tax Act, 1922, which dealt with assessments in case of discontinued business. The Tribunal discussed various judicial precedents, including the cases of Meyyappa Chettiar v. CIT and CIT v. P. E. Polson, which explained the scope and purpose of these provisions. The Tribunal also considered the Supreme Court's observations in CIT v. K. Srinivasan & K. Gopalan, which clarified the interpretation of "end of the previous year" in the context of Section 25(3) and (4).

The Tribunal found that the assessee had filed the claim before the new Act came into force, and the discontinuance occurred before the new Act's enforcement. The Tribunal held that the right to claim relief under Section 25(3) of the 1922 Act was preserved by Section 6 of the General Clauses Act, as there was no manifest intention in the new Act to destroy such rights. The Tribunal directed the AAC to find out the facts and grant the necessary relief if the requisite conditions were fulfilled according to law.

Conclusion:

The High Court upheld the Tribunal's decision, holding that the relief claimed by the assessee under Section 25(3) of the Indian Income-tax Act, 1922, was legally justified. The Court emphasized that the repeal of an Act does not affect any right, privilege, obligation, or liability unless a contrary intention appears in the new legislation. The Court found no such intention in the Income-tax Act, 1961, to destroy the rights accrued under the 1922 Act. Therefore, the assessee was entitled to the relief claimed. The question referred to the Court was answered in the affirmative and in favor of the assessee, with parties bearing their own costs.

 

 

 

 

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