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TMI Blog1952 (11) TMI 18X X X X Extracts X X X X X X X X Extracts X X X X ..... Contractors who had their office within the Mysore State limits. During the conferred account year ending March 1942 they did some building construction work for a war camp in Bangalore at Jalahalli which place is also situate within the limits of the Mysore State. It is not disputed that the contract for these works was accepted by the Commander, Royal Engineering, Bangalore, whoso office was then in the C. M. Station, Bangalore. The then Income Tax Officer of the C. M. Station assessed the income which the firm had derived from these contracts as he was of the view that the same was derived from contracts made in the C. M. Station, Bangalore and the income therefrom accrued or arose in the station within the meaning of Section 4 (1), Indian Income Tax Act as applied to it. The assessees carried up the matter in appeal and the Appellate Assistant Commissioner of Income Tax, C. M. Station, Mr. P. W. A. Morris, the then Collector of the Station, by an order dated 4-12-43 allowed the appeal and set aside the assessment. He held that the income of the respondents was not liable to taxation in the station either on the ground of accrual or receipt and that no part of the busin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the functions of such authority and the Indian Income Tax Act, 1922, or the Excess Profits Act, 1946, as the case may be, as in force in the Retrocede Area immediately prior to the first day of July 1948, shall apply to such appeal or application. By Section 4 of Act 23 of 1947, the Retrocession (Application of Laws) Act, 1947, the words High Court and Court of Resident in any enactment in force in the C. M. Station shall be construed as a reference to the High Court of Mysore; and under Section 5 of Act 24 of 1947, the Retrocession (Transitional Provisions) Act, 1947, any proceeding under a law in force in the Civil and Military Station prior to the date of retrocession initiated before an authority in the Civil and Military Station which is not finally disposed of or decided before that date, shall on that date be deemed to be a proceeding initiated before an authority in Mysore vested with or ordinarily exercising the functions of such authority and the proceeding may be continued thereafter before the authority in Mysore, as if first initiated before him. If the High Court of Madras was an authority which was exercising jurisdiction in the C. M. Station under the In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... financial arrangements referred to by Mr. Section K. Venkataranga Iyengar. 6. Neither Mr. Section K. Venkataranga Iyengar nor Mr. D.M. Chandrasekhar has been able to cite any precedent which might have been of use to us in deciding this rather interesting question apparently because the situation that has given rise to it is out of the ordinary. But it must be admitted that there appears to be considerable force in that objection. The Mysore Government's claim to assess and collect the tax from the assessee having been fully satisfied it is not easy to see how they can again seek to collect afresh or recover any more Income Tax revenue from the assessee. If a creditor has once chosen to accept a certain payment or adjustment from his debtor and given a full and final discharge of his claim, it can hardly be doubted, that he cannot, merely by employing an agent disclaim or revoke the settlement or discharge, and seek to collect some extra sums under colour of a totally inconsistent claim put forward through the agent. That is apparently the legal position occupied by the Commissioner of Income Tax vis-a-vis the Government of Mysore with regard to the assessment for the year c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome from carrying on of the business is to be taxed, it can be suggested that such business was carried on in any part of Civil and Military Station, Bangalore, and therefore the income accrued or arose in that place. The mere acceptance of the tender in C. M. Station was merely a chain in the causation but it was not the proximate cause from which the income by carrying on business of house building had arisen or accrued as contemplated by Section 4 read with Section 10, Income Tax Act in the C. M. Station. They also agreed with the Appellate Assistant Commissioner in holding that merely because the cheques were drawn on the Imperial Bank of India in C. M. Station, Bangalore, by the Military authorities, it could not be said that the income had been received or could be deemed to have been received in the station by or on behalf of the respondent firm. They relied on a case in -- 'Commissioner of Income Tax, Bombay Presidency and Aden v. Chunilal B. Mehta' AIR 1932 PC 232 (A), and to observations therein which are as follows : These considerations lead their Lordships to the conclusion that under the Indian Act a person resident in British India carrying on busi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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