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Determining the rate at which a converted company should pay super-tax for the tax year commencing on April 1, 1925. Analysis: The judgment deals with the conversion of an unregistered association, the Western India Turf Club, into a company limited by guarantee under the Indian Companies Act. The primary issue is to ascertain the rate at which the company should pay super-tax for the tax year starting from April 1, 1925. The relevant provision in question is Section 55 of the Indian Income Tax Act of 1922, which mandates the payment of super-tax in addition to income tax. The section specifies that the super-tax is to be charged based on the total income of the previous year of the taxpayer, whether an individual, unregistered firm, Hindu undivided family, or company. The judgment clarifies that even though the company did not exist in the previous year, the assessment for super-tax should be based on the total income of the predecessor in title of the company. This approach is supported by Section 26 of the Income Tax Act, which allows for assessment based on the entity's predecessor in cases of changes in the firm's constitution or business succession. Consequently, the income for super-tax purposes is determined based on the predecessor's income. Regarding the rate at which the super-tax should be paid, Section 55 directs taxpayers to refer to the rates laid down by the Indian Legislature for the relevant assessment year. In this case, Act XIII of 1925 specified the rates of super-tax for the year beginning on April 1, 1925. The rates were detailed in part II of the third schedule, with a specific rate applicable to companies for the excess income over 50,000 rupees, set at one anna in the rupee. The judgment dismisses the argument that liability to tax was attached to the income in the previous year, emphasizing that the tax liability arose only upon the passing of the Act of 1925. The decision also briefly mentions a cited case, indicating that further consideration would be required if the same issue were to arise again. Ultimately, the Privy Council advises that the appeal be dismissed with costs, affirming that the company should pay super-tax at the specified rate based on the predecessor's income.
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