1966 (4) TMI 6 - HC - Income Tax

Petitioner, a public company incorporated in the former State of Bhopal, prays that the Taxation Laws (Merged States) (Removal of Difficulties) (Amendment) Order, 1962, be declared ultra vires, inoperative, seeks a writ of certiorari for quashing assessments of income-tax made on it and, as also the assessments made

Summary

Issues Involved:
1. Validity of the Taxation Laws (Merged States) (Removal of Difficulties) (Amendment) Order, 1962.
2. Whether the 1962 Order substantially amends the Indian Income-tax Act, 1922.
3. Whether the 1962 Order results in unauthorized delegation of legislative power.
4. Whether the 1962 Order violates Article 14 of the Constitution by discriminating between similarly situated assessees.

Detailed Analysis:

1. Validity of the 1962 Order:
The petitioner contended that the 1962 Order was unconstitutional and ultra vires, arguing that the power under section 6 of the 1949 Act could only be exercised if a difficulty arose in giving effect to the provisions of any Act, Rule, or Order extended by section 3. The petitioner argued that no such difficulty existed, and thus, the power under section 6 could not be invoked. The court, however, held that the existence of a difficulty was a subjective condition determined by the Central Government. The court's power was limited to seeing whether the difficulty was relevant to the scope of section 6, and it could not challenge the reasonableness of the Government's decision. The court found that the difficulty arose in giving effect to the depreciation provisions of the Indian Income-tax Act, 1922, particularly for those who were exempted from tax under any laws or rules in force in a Merged State. This justified the making of the 1962 Order.

2. Substantial Amendment of the Indian Income-tax Act, 1922:
The petitioner argued that the 1962 Order substantially amended the Indian Income-tax Act, 1922, which was beyond the scope of section 6 of the 1949 Act. The court disagreed, stating that the 1962 Order did not substantially amend the Act but modified its application to the Merged States in a way that did not affect its essential features or policy. The modification was related to the working of the depreciation allowance provisions and was necessary to give effect to the Act's provisions. The court referenced the Supreme Court decision in Commissioner of Income-tax v. Dewan Bahadur Ramgopal Mills, which supported the view that such modifications were within the scope of the Government's power under section 6.

3. Unauthorized Delegation of Legislative Power:
The petitioner contended that if section 6 of the 1949 Act conferred power on the Government to pass the 1962 Order, it amounted to unauthorized delegation of legislative power. The court held that it was not unconstitutional for the legislature to leave the determination of details relating to the working of taxation laws to the executive. The 1962 Order only determined details relating to the working of the depreciation allowance provisions and did not effect any essential change in the Indian Income-tax Act, 1922. Therefore, it was validly made under section 6 of the 1949 Act.

4. Violation of Article 14 of the Constitution:
The petitioner argued that the 1962 Order violated Article 14 of the Constitution by discriminating between similarly situated assessees. The court found that the Order applied to all persons within its ambit from the date it became operative and did not affect assessments that had become final. The classification of assessees into those with pending assessments and those with final assessments was reasonable and did not contravene Article 14. The court referenced the Supreme Court decision in Ramjilal v. Income-tax Officer, which held that such classification was permissible under Article 14.

Conclusion:
The petition was dismissed with costs, and the court upheld the validity of the 1962 Order, stating that it was necessary to remove the difficulty in giving effect to the provisions of the Indian Income-tax Act, 1922. The court found no violation of Article 14 and held that the Order did not result in unauthorized delegation of legislative power.