9911796707
TMI Blog1989 (11) TMI 26X X X X Extracts X X X X X X X X Extracts X X X X ..... raised by the petitioners, viz., (1) that the Ordinance having lapsed on March 11, 1981, could not be invoked and no tax be levied thereunder ; (2) the Commissioner of Agricultural Income-tax had issued a circular on September 13, 1985, Circular No. 2 of 1985-86, wherein he had clearly stated that in cases where assessments were pending, the surcharge shall not be levied under the lapsed Ordinance. The learned single judge, however, did not agree with these contentions. On the first question, the view expressed by the learned single judge may be stated in the words used in an earlier judgment quoted in the order under appeals, as follows (See [1987] 168 ITR 381, 383) : "Though the duration of the Ordinance is limited to the period laid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... all observe and follow the orders, instructions and directions of the State Government and the Commissioner : Provided that no such order, direction or instruction shall be given so as to interfere with the discretion of any appellate authority in the exercise of its appellate functions." From the above provision, it is clear that the authorities acting under the Act are bound to follow the orders, instructions and directions issued by the Commissioner. The circular issued by the Commissioner certainly is either an order or a direction falling within the scope of the above provision. The said provision is similar to section 119 of the Income-tax Act and the circular issued under the relevant provisions of the Income-tax Act were conside ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taxable under the Act and this would include any loan or advance made in any previous year relevant to any assessment year prior to the assessment year 1955-56, if such loan or advance remained outstanding on the 1st day of the previous year relevant to the assessment year 1955-56. The constitutional validity of these two sections was assailed on the ground that they imposed unreasonable restrictions on the fundamental right of the assessee under article 19(1)(f) and (g) of the Constitution by taxing outstanding loans or advances of past years as dividend. The Revenue, however, relied on a circular issued by the Central Board of Revenue under section 5(8) of the Indian Incometax Act, 1922, which corresponded to section 119 of the present Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on all officers and persons employed in the execution of the Act under section 5(8) of the Act. This circular pointed out to all the officers that it was likely that some of the companies might have advanced loans to their shareholders as a result of genuine transactions of loans, and the idea was not to affect such transactions and not to bring them within the mischief of the new provision," The directions given in that circular clearly deviated from the provisions of the Act, yet this court held that the circular was binding on the Income-tax Officers. The two circulars of the Central Board of Direct Taxes referred to above must, therefore, be held to be binding on the Revenue in the administration or implementation of sub-section (2 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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