1968 (12) TMI 13 - HC - Income Tax

Jurisdiction of Commissioner u/s 33B to revise the orders of the ITO granting refunds in respect of assessments relating to the three years long before the coming into force of section 33B - held that Commissioner was well within his powers u/s 33B in revising the orders of the ITO

Summary

Issues:
1. Jurisdiction of the Commissioner under section 33B to revise orders of the Income-tax Officer.
2. Inclusion of the additional rate of 3% in section 20(7)(a) of the Ceylon Ordinance of 1932 in the 'Ceylon tax' for double income-tax relief.
3. Correctness of the Commissioner's order canceling the relief granted for the assessment year 1945-46.

Analysis:
1. Jurisdiction of the Commissioner under section 33B:
The High Court analyzed the jurisdiction of the Commissioner under section 33B of the Income-tax Act, 1922, to revise orders of the Income-tax Officer. The court held that the language of section 33B is broad, allowing the Commissioner to call for records of any proceeding under the Act and pass orders if deemed necessary. The court emphasized that the section covers any proceeding taken under the Act, regardless of the assessment year. The court rejected the argument that the law applicable to an assessment is the one in force on the 1st of April of the relevant assessment year. The court concluded that the Commissioner was within his powers to revise the orders of the Income-tax Officer, even for proceedings initiated after the enactment of section 33B.

2. Inclusion of additional rate in Ceylon tax for double income-tax relief:
The court examined the interpretation of section 20(7)(a) of the Ceylon Income-tax Ordinance and its relation to section 45(4)(b)(ii) concerning double income-tax relief. Section 20(7)(a) imposed tax at twice the unit rate increased by an additional rate of 3%. The court considered the argument that section 20(7) only visualizes one tax and does not include an additional tax. However, the court ruled that the additional rate in section 20(7)(a) should be considered as part of the Ceylon tax for double income-tax relief. The court interpreted that the additional rate is a component of the tax charged under section 20(7), aligning with the Act's treatment of rate and taxes as synonymous.

3. Correctness of the Commissioner's order for the assessment year 1945-46:
Regarding the Commissioner's order canceling the relief granted for the assessment year 1945-46, the court found that the Tribunal mistakenly assumed that section 45(4)(b)(ii) did not apply to the first two assessment years. The court clarified that although the provision came into force from April 1, 1945, its predecessor, with similar language, was applicable during the first two assessment years. Consequently, the court upheld the Commissioner's order for the assessment year 1945-46.

In conclusion, the High Court ruled in favor of the revenue on all issues, with costs awarded to the revenue.