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Issues Involved:
1. Validity of the Taxation Laws (Part B States) (Removal of Difficulties) Order, 1950. 2. Validity of the Central Government's exercise of powers under Section 12 of the Finance Act, 1950, after the repeal of the Indian Income-tax Act, 1922. 3. Correct computation of the written down value of assets for the assessment year 1950-51. Detailed Analysis: Issue 1: Validity of the Taxation Laws (Part B States) (Removal of Difficulties) Order, 1950 The assessee contended that the Taxation Laws (Part B States) (Removal of Difficulties) Order, 1950, was ultra vires the powers of the Central Government. They argued that when the notification was issued on May 8, 1956, and later amended on August 20, 1962, there was no existing difficulty that warranted such an order. The revenue countered, asserting that the High Court, in its advisory jurisdiction, lacks the authority to address the constitutionality or validity of statutory provisions, orders, or notifications, as these questions fall outside the scope of the taxing authorities' jurisdiction. The Supreme Court decisions in K. S. Venkataraman & Co. (P.) Ltd. v. State of Madras, Commissioner of Income-tax v. Straw Products Ltd., and C. T. Senthilnathan Chettiar v. State of Madras were cited to support this position. Consequently, the High Court concluded that it had no jurisdiction to answer questions related to the validity of the Taxation Laws (Part B States) (Removal of Difficulties) Order, 1950. Issue 2: Validity of the Central Government's Exercise of Powers under Section 12 of the Finance Act, 1950 The assessee questioned whether the Central Government could validly exercise its powers under Section 12 of the Finance Act, 1950, after the repeal of the Indian Income-tax Act, 1922. The revenue argued that the High Court, in its advisory capacity, could not address the validity of the Central Government's exercise of powers. The court agreed, reiterating that it had no jurisdiction to consider the vires of statutory provisions in a reference under Section 66 of the Act. The court refrained from expressing any opinion on this matter, in line with the Supreme Court's precedent. Issue 3: Correct Computation of the Written Down Value of Assets for the Assessment Year 1950-51 The assessee contended that the written down value of its assets should not be reduced by depreciation that would have been allowed under the Indian Income-tax Act, 1922, as stipulated by Section 13(5)(b) of the Saurashtra Income-tax Ordinance, 1949. The court examined Section 10(2)(vi) and Section 10(5)(b) of the Indian Income-tax Act, 1922, along with Section 13(5)(b) of the Saurashtra Income-tax Ordinance, 1949, and the relevant provisions of the Taxation Laws (Part B States) (Removal of Difficulties) Order, 1950. It concluded that the written down value for the assessment year 1950-51 must be calculated by deducting the aggregate depreciation that would have been allowed under the Indian Income-tax Act, 1922, and the depreciation allowed for the assessment year 1949-50. This approach was consistent with the previous decision in Income-tax Reference No. 69 of 1956, which held that the expression "would have been allowed" equates to "allowable under the Indian Income-tax Act." The court affirmed that the Tribunal had correctly computed the written down value. Conclusion: - Questions 2 and 3: The High Court expressed no opinion due to lack of jurisdiction. - Question 4: The written down value of the assets for the assessment year 1950-51 was correctly computed by the Tribunal. The assessee was ordered to pay the costs of the revenue.
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