1954 (8) TMI 38 - HC - Income Tax

Summary

Issues:
Assessment of income from house properties in the hands of the holder of an impartible estate under Section 9(4) of the Income-tax Act. Interpretation of the retrospective effect of the Income-tax Amendment Act of 1948 on assessments for the years 1941-42 and 1942-43.

Analysis:
The case involved Raja Bahadur Kamakshya Narain Singh of Ramgarh being assessed for the income from house properties for the years 1941-42 and 1942-43. Initially, the Income-tax Officer assessed the income on the Raja Bahadur as an individual, but the Appellate Assistant Commissioner ruled in favor of taxing the Hindu undivided family instead, following a Privy Council decision. The Income-tax Appellate Tribunal upheld this decision. However, the Income-tax Amendment Act of 1948 introduced Section 9(4), deeming the holder of an impartible estate as the individual owner of all properties in the estate.

The Appellate Tribunal, after the enactment of the Amendment Act, dismissed the appeals, stating that the income should be taxed on the holder of the impartible estate. The High Court was asked to determine if the income from the house property should be assessed in the hands of the holder of the impartible estate under Section 9(4). Two main arguments were presented: the Tribunal's application of the Amendment Act in the appeals and the retrospective effect of the Act on assessments for 1941-42 and 1942-43.

The High Court found that the Tribunal correctly considered the legal change brought by the Amendment Act in disposing of the appeals. The Court noted that the powers of the Tribunal were extensive, allowing for a broad consideration of legal changes. Regarding the retrospective effect of the Amendment Act, the Court analyzed the language of Section 4 and Section 1 of the Act. It concluded that Section 4 did not have inherent retrospective force, as it used the term "deemed" without specifying a perpetual effect. However, Section 1(2) of the Act conferred limited retrospective effect, applying to assessments from the year 1947-48 onwards.

Ultimately, the High Court held that the Amendment Act did not retroactively affect assessments for the years 1941-42 and 1942-43. The Court determined that the income from the house property for those years should not be taxed on the holder of the impartible estate. Therefore, the question was answered in favor of the assessee against the Income-tax Department.