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TMI Blog1964 (12) TMI 7X X X X Extracts X X X X X X X X Extracts X X X X ..... -tax Act, 1922, hereinafter referred to as the Act. Before we deal with this question, it is necessary to set out the relevant facts. The appellant, at the material time, carried on business not only in India but also outside India, i.e., Ceylon, the former States of Kolhapur and Kapurthala and other places. It is not necessary to give the facts relating to the income in Ceylon and Kolhapur because if the facts relating to the income made in Kapurthala are stated, these will bring out the real controversy between the appellant and the revenue. We may mention that it is common ground that the facts relating to Ceylon income and Kolhapur income are substantially similar. On July 9, 1954, the appellant wrote a letter to the Income-tax Offi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the appellant within the time prescribed. The appellant reiterated its own plea that it was not " physically practicable " for the assessee to lodge its claim for double-tax relief within the time prescribed. The Commissioner, however, rejected the petition. He observed that " the assessment in the Kapurthala State was made on March 20, 1950, i.e., much before the assessment was completed by the Bombay Income-tax Officer. Nothing prevented the petitioner, therefore, from filing a provisional claim before the period of limitation was over. At least, it should have made such a claim before the Income-tax Officer at the time of assessment. I regret I cannot condone the delay in filing the claim as there is no provision under section 50 for s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e appellant also approached the Central Board of Revenue, urging similar points. The Central Board of Revenue, however, by its letter dated June 24, 1960, declined to interfere in the matter. The appellant then on October 7, 1960, filed a petition under article 226 of the Constitution. After giving the relevant facts and submissions, the appellant prayed that the High Court be pleased to issue a writ in the nature of mandamus or a writ, direction or order under article 226 of the Constitution, directing the respondents to set off the refunds due to the petitioner under the aforesaid double taxation relief rules against the tax payable by it for the assessment year 1955-56. It appears that in the meantime the petitioner had paid tax for th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... apply, and consequently, the refund was due to the appellant notwithstanding rule 5. But we cannot go into the question whether rule 5 was rightly or wrongly applied by the income-tax authorities. The orders dated August 23, 1958, and December 31, 1958, cannot be attacked in these proceedings. Therefore, we must proceed on the basis that those orders were validly passed. We express no opinion whether the view of the income-tax authorities that rule 5 was applicable in the circumstances of the case was correct or not. This takes us to the construction of section 49E. Section 49E reads thus : " 49E. Power to set off amount of refunds against tax remaining payable.--Where under any of the provisions of this Act, a refund is found to be du ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n precedent to the applicability of section 49E that the Income-tax Officer must be under an obligation to make a payment. He points out that the expression " in lieu of payment of the refund " clearly indicates that the Income-tax Officer must be under an obligation to make a payment of refund. He further contends that the refund is not due under the Act but under the said Rules, and, therefore, section 49E does not apply. There is difficulty in refuting the contention of the learned counsel for the revenue that the refund, if due, was due under the provisions of the Act. Section 59(5) provides that the Rules made under this section shall have effect as if enacted under this Act. This provision thus makes the Indian State Rules, 1939, pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tor of Public Prosecutions. It was held there that where a liability has to be discharged by A in lieu of B, there must be a binding obligation on B to do it before A can be charged with it. In our opinion, there must be a subsisting obligation to make the payment of refund before a person is entitled to claim a set-off under section 49E. In this case, in view of the orders of the Commissioner and the Central Board of Revenue mentioned above, there was no subsisting obligation to pay, and, therefore, the claim of the appellant must fail. Therefore, agreeing with the High Court, we hold that section 49E of the Act is of no assistance to the appellant and that the petition was rightly dismissed by the High Court. The appeal accordingly fail ..... X X X X Extracts X X X X X X X X Extracts X X X X
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