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TMI Blog1954 (9) TMI 21X X X X Extracts X X X X X X X X Extracts X X X X ..... 11 of the Indian Income-tax (Amendment) Act of 1939 was further substituted by the present clause by Section 3 of the Indian Incometax (Amendment) Act, 1946 (VIII of 1946). The present clause reads as follows : (2) Such profits or gains shall be computed after making the following allowances, namely : (vii) in respect of any such building, machinery or plant which has been sold or discarded or demolished or destroyed, the amount by which the written down value thereof exceeds the amount for which the building, machinery or plant, as the case may be, is actually sold or its scrap value : Provided that such amount is actually written off in the books of the assessee : Provided further that where the amount for which any such building, machinery or plant is sold, whether during the continuance of the business or after the cessation thereof, exceeds the written down value, so much of the excess as does not exceed the difference between the original cost and the written down value shall be deemed to be profits of the previous year in which the sale took place : Provided further that where any insurance, salvage or compensation moneys are received in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... R. Pillar, Secretary to the Government of India, Department of Commerce :- You are aware that to ships of the Scindia, namely the S. S. ' Jalarajan ' and S. S. 'EL Madina' were lost at sea by enemy action. The S. S. Jalarajan was lost in January 1942, and the S. S. El Madina in March, 1944. Similarly two ships of the Bombay Steam, namely the S. S. 'Pravhavati' and the S. S. 'Parvati;, which were commandeered for the purpose of local naval defence, were lost by enemy action. Certain advances have been paid both to the Scindia and to the Bombay Steam in connection with the loss of these steamers. The final amount to be paid, in connection with each of these four ships, has, however, not yet been settled. Whenever it is settled and the payments in connection with these ships are made, they will be obviously deferred payments. The company ought to have received these fill payments immediately after loss of these ships. You will remembers that in case of the amount of hire to be paid for the ships taken by the Government, although the full payment will be made in due course, the amounts when paid, will be appropriated against the respective steamers in a ye ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a' should be deemed to have been received on April 16, 1944, that is to say in the year of account prior to the previous year for the assessment year 1946-47. It was further contended that what Government paid on July 17, 1944, December 22, 1944, and August 10, 1946, was in discharged of a book debt created on April 16, 1944. In this connection, it was pointed out that the sum of Rs. 20 laces received on July 17, 1944, was credited by the assessee company to the Fleet Replacement Account as on June 30,. 1944. Similarly, the sum of Rs. 23 lacs received on December 22, 1944 was credited to the Fleet Replacement Account as on June 30, 1945, Apparently, the sum of Rs. 23 lacs was credited to the Fleet Replacement Account as on June 30, 1945, because the books for the year ended on June 30, 1944, had been closed by them. 11. The contentions referred to above were not accepted by the Appellate Tribunal for the reasons recorded by it in its order, a copy of which is annexure ' A ' and forms part of the case. 12. The question of law that, therefore, arises, out of the facts stated above is : Whether the sum of Rs. 9,26,532 was properly included ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... luded in the total income of the assessee. It does not follow that because a particular aspect of the question was not urged before the Tribunal that it is not open to the assessee to urge that aspect before us. If all the facts necessary to decide a question from a particular aspect are before the Court, then the assessee is entitled to justify its contention that it is not liable to pay tax having regard to the provisions of the Indian Income-tax Act. It is not incumbent upon the assessee in order to put forward a particular point of law before this Court that it should necessarily have urged that very point of law before the Tribunal. If that point of law is implicit in the question raised by the Tribunal and if no additional facts are necessary to support that point, then it is open to the assessee to urge it notwithstanding the fact that it was not considered by the Tribunal. It would be throwing an intolerable burden upon the assessee if we were to hold that although the assessee is not liable to tax under the provisions of the Indian Income-tax Act merely because it did not point out to the Tribunal the specific provision of the law or it was ignorant of the specific provisi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... total income' means total income as determined for the purposes of income-tax or super-tax, as the case may be, in accordance with the provisions of the Indian Income-tax Act, 1922, and the expression 'earned income' has the meaning assigned to it in clause (6AA) of Section 2 of that Act. Therefore the total income that has to be computed is in accordance with the provision of the Indian Income-tax Act and it is clear that as this provision is being made on the 1st of April, 1946, the provisions of the Indian Income-tax Act are the provisions as they obtained on that date. The contention, on the other hand, put forward by Mr. Joshi on behalf of the Department is that once an amendment is introduced in the Indian Income-tax Act that amendment comes into force immediately and is applicable to all assessments which are made after the amendment is effected. In other words, the submission of Mr. Joshi is that every assessment made after the 4th of May, 1946, must take into consideration the amendment s introduced in the Indian Income-tax Act and inasmuch as the assessee was assessed after the 4th of May, 1946, its assessment must be governed by the Indian Income-tax A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arned Chief Justice points out at page 6 : When the Income-tax Officer made the assessment in this case the amending Act had come into force. The Income-tax act says that the assessee shall pay tax in respect of an assessment year based on the income received by him in the previous year. The assessee's income which the Income-tax Officer had to assess for the year 1939-40 included the income received from the properties which were covered by these revocable deed of transfer. The income had actually been received by the daughters but as a result of the amending Act that income in trust must be deemed to the income of their father. Therefore we agree with the Commissioner of Income-tax in his opinion that it was the law in force at the time of the assessment which governs the assessment in this case and not the law as it was during the year in which the income was earned. Strong reliance is placed by Mr. Joshi on the expression used by the learned Chief Justice that it is law in force at the time of assessment which governs the assessment. With respect to the learned Chief Justice, this expression has been rather loosely used as in that particular case the Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Finance Act which the Privy Council was considering is identical with the Finance Act which we are considering and the Privy Council construed that language to mean that the computation of the total income in accordance with the provisions of the Indian Income-tax Act means the Indian Income-tax act as it stood amended at the date of the coming into force to the Finance Act. Now, it will be noticed that the case of the Privy Council was considering was a converse case to the one which we are considering. There the assessee was seeking to escape tax on the ground that the amending Act did not apply when the income was earned. The Privy Council rejected that contention holding that the material date was not the previous year but the first of April of the assessment year, and the liability to tax depended upon the provisions of the Indian Income-tax Act as it was in force on that date. Here the amendment has come into force after the 1st April, 1947, and the attempt of the Department is to tax the assessee on his total income for the previous year, not according to the Act as it stood on the 1st of April, 1946, but according to the Act as it was subsequently amended. In our op ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Income-tax Officer to assess escaped income for eight years previous to the amending section came into force, and therefore the learned Chief Justice in his judgment at page 487 points out that in the view he has taken of Section 34 no question of retrospective operation as a question of interpretation arises in that case. But reliance is placed on certain observations of the learned Chief Justice and the view taken by the learned Chief Justice is that the decision of the Privy Council could not apply to the procedural provisions of the Indian Income-tax Act. In other words, the view taken by him is that if an amendment is made to the procedural part of the Indian Income-tax Act, it would have a retrospective effect and the principle enunciated by the Privy Council would not apply to such amendment. We express no opinion, with respect, as to whether the learned Chief Justice is right in the view that he had taken, but it is clear that the provision that we have to consider is not a procedural amendment. The amendment seeks to make a part of the income of the assessee liable to tax, which but for the amendment would not have been so liable, and the learned Chief Justice does not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hedule shall be made in the Indian Income-tax Act, 1922, and shall be deemed to have been made therein with effect from the 1st day of April, 1949, and in clause (6) there is a similar provision with regard to the amendment of Act XXI of 1947. Therefore by this Ordinance the Governor-General made it clear that he wanted to the amendments introduced into the Indian Income-tax Act to have a restrospective effect and to apply to income earned in the previous year to the assessment year 1949-50. We may look at the recent Act passed by the Parliament which is Act XXV of 1953 and sub-section (2) of Section I provides : Subjection to any special provision made in this behalf in this Act, it shall be deemed to have come into force on the 1st day of April, 1952. Therefore, although the Act was passed in 1953 the Parliament gave a retrospective effect to it and made it applicable to assessments made for the assessment year 1952-53. Now, the difficulty of Mr. Joshi is that there is no such provision whatsoever in Act VIII of 1946, and there is no reason why we should assume against the assessee that the Parliament intended, although it did not say so, that Act VIII of 194 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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