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Issues Involved:
1. Entitlement to set-off of excess advance tax payments made in Lahore for assessment years 1946-47 and 1947-48 against tax liabilities in India for subsequent years. 2. Applicability of Indian Independence (Rights, Property, and Liabilities) Order, 1947, to refund claims. 3. Limitation period for claiming refunds under the Income-tax Act. 4. Adequacy of alternative remedies (appeal) before filing a writ petition. Issue-wise Detailed Analysis: 1. Entitlement to Set-off of Excess Advance Tax Payments: The petitioner, a partner of a firm, made advance tax payments under section 18A of the Income-tax Act in Lahore for the assessment years 1946-47 and 1947-48. Post-partition, the petitioner sought to adjust these excess payments against tax liabilities assessed in Lucknow for the years 1948-49 and 1949-50. The Income-tax Officer, Lucknow, initially referred the matter to higher authorities but later refused the adjustment, stating jurisdictional limitations due to the records being in Pakistan. The court held that the petitioner was entitled to a refund under section 48 of the Income-tax Act, as the payments were made under the Act when it was applicable in Lahore. Section 49E allows the Income-tax Officer to set off the excess payments against future tax liabilities. The court emphasized that if a statute confers a beneficial power on a public officer, it should be construed as a duty to exercise that power. Thus, the Income-tax Officer had a duty to allow the set-off requested by the petitioner. 2. Applicability of Indian Independence (Rights, Property, and Liabilities) Order, 1947: The petitioner argued that under article 9 of the Indian Independence (Rights, Property, and Liabilities) Order, 1947, the liability for refund of excess tax payments devolved on the Dominion of India and subsequently on the Union of India under article 294 of the Constitution. The court agreed, interpreting the term "financial obligations" to include such tax payments, thereby making the Union Government liable for the refund. The court rejected the respondent's reliance on the Indian Independence (Income-tax Proceedings) Order, 1947, and the Expert Committee's report, as there was no evidence that the corresponding deposits were transferred to Pakistan or that an agreement binding on the two Dominions was reached. 3. Limitation Period for Claiming Refunds: The respondent contended that the claim for a refund was barred by time under section 50 of the Income-tax Act, which imposes a four-year limitation period. The court found that the petitioner's claim was made within the allowable period, as evidenced by the Income-tax Officer's letter dated 5th February 1952, indicating that the claim was pending consideration by higher authorities. 4. Adequacy of Alternative Remedies: The respondent raised a preliminary objection regarding the maintainability of the petition, arguing that the petitioner should have filed an appeal against the Income-tax Officer's order. The court noted that section 30 of the Income-tax Act does not provide for an appeal against an order under section 49E. Moreover, the court observed that the Income-tax Officer's refusal was based on instructions from higher authorities, making an appeal futile. Thus, the writ petition was deemed appropriate and maintainable. Conclusion: The court allowed the petition, issuing a writ of mandamus commanding the respondent to determine the excess payments made under section 18A of the Income-tax Act for the years 1946-47 and 1947-48 and to allow a set-off of those amounts against the tax liabilities for the years 1948-49 and 1949-50. The petitioner was awarded costs.
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