9911796707
|
Home
Issues Involved:
1. Whether the sum of Rs. 9,26,532 was properly included in the assessee company's total income for the assessment year 1946-47. 2. Application of the fourth proviso to Section 10(2)(vii) of the Indian Income-tax Act. 3. Retrospective application of amendments to the Indian Income-tax Act. Issue-wise Detailed Analysis: 1. Inclusion of Rs. 9,26,532 in Total Income: The primary issue was whether the sum of Rs. 9,26,532 was correctly included in the assessee company's total income for the assessment year 1946-47. The assessee, Scindia Steam Navigation Co. Ltd., had a ship named "El Madina" which was lost due to enemy action on March 16, 1944. The government paid compensation for this loss in installments during 1944 and 1946. The original cost of the ship was Rs. 24,95,016, and its written-down value was Rs. 15,68,484. The difference, Rs. 9,26,532, was included by the Income-tax Officer in the assessee's total income for the assessment year 1946-47. The assessee contended that this amount should not be taxed. 2. Application of the Fourth Proviso to Section 10(2)(vii): The inclusion of the amount was justified by the provisions of the fourth proviso to Section 10(2)(vii) of the Indian Income-tax Act. The proviso, incorporated by Act VIII of 1946, came into force on May 4, 1946. The assessee argued that this proviso should not apply to their assessment for the year 1946-47, as it was not in effect on April 1, 1946, when the assessment year commenced. The Department contended that the amendment should apply to all assessments made after it came into force. 3. Retrospective Application of Amendments: The court considered whether the amendment introduced by Act VIII of 1946 could be applied retrospectively. It was argued that the liability to pay tax should be based on the provisions of the Indian Income-tax Act as they were on April 1, 1946. The court noted that the Indian Income-tax Act taxes the income of the previous year and that the liability arises from the Finance Act of the assessment year. The Finance Act of 1946, effective from April 1, 1946, did not include the fourth proviso to Section 10(2)(vii), which came into force on May 4, 1946. The court referred to the Privy Council's decision in Maharaja of Pithapuram v. Commissioner of Income-tax, Madras, which held that the computation of total income should be based on the provisions of the Indian Income-tax Act as they stood at the beginning of the assessment year. The court concluded that the Department's attempt to apply the amendment retrospectively was not justified. The amendment could not be deemed to be in force on April 1, 1946, and therefore, the assessee was not liable to pay tax on the sum of Rs. 9,26,532. The court emphasized that if the legislature intended to give retrospective effect to an amendment, it should be explicitly stated, as seen in other legislative provisions. Conclusion: The court answered the question in the negative, holding that the sum of Rs. 9,26,532 was not properly included in the assessee company's total income for the assessment year 1946-47. The court did not find it necessary to consider other contentions raised by the assessee, as the primary issue resolved the matter. No order as to costs was made.
|
