9911796707
TMI Blog1963 (10) TMI 5X X X X Extracts X X X X X X X X Extracts X X X X ..... ng with other Indian States of Kathiawar formed themselves into a union by the name of the United States of Kathiawar. Later the name Kathiawar was changed to Saurashtra. On March 16, 1949, the Raj Pramukh of this newly formed State instituted the Saurashtra Income-tax Ordinance, 1949. This Ordinance was in force for one year only---the assessment year 1949-50. In assessing the profits of business by the two appellant companies for the year 1949-50 the Income-tax Officer had therefore to proceed in accordance with the provisions of this Ordinance. For the purpose of calculating the depreciation allowance to which the assessee was entitled, in computing the profits or gains of the business the written down value of the building, machinery and plant or furniture had first to be ascertained in accordance with section 13(5) of the Ordinance, which ran thus : " 'Written down value' means : (a) in the case of assets acquired in the previous year, the actual cost to the assessee ; (b) in the case of assets acquired before the previous year, the actual cost to the assessee less all depreciation actually allowed to him under this Ordinance or allowed under any Act repealed hereby or w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... affirmative, but gave a certificate that it was a fit case for appeal to the Supreme Court under section 66A(2) of the Indian Income-tax Act. The present appeals have been filed on the basis of these certificates. On behalf of the appellants Mr. Kolah has argued that the Ordinance has not used the words " would have been allowable to him " nor the words " would have been allowed to him if a claim supported by prescribed particulars had been made ", and there is no justification for reading these words into the Ordinance. He has stressed the fact that in many cases where the Indian Income-tax Act is in force the assessee might find it to his interest not to make a claim for the depreciation allowance and so no depreciation allowance would then be allowed to him. He concedes that it may be that the intention of the Raj Pramukh in using these words in the Ordinance was that the depreciation which could have been and would have been allowed if a proper claim had been made and substantiated, assuming the Indian Income-tax Act, 1922, was in force in the past, should be deducted in ascertaining the written down value. He contends however that the words actually used are not sufficient t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at intention. Mr. Kolah urged that it would cause undue hardship to the assessee, that without having actually availed of any depreciation he would be treated as if he had done so. The words used do not however leave any doubt about the meaning and whether or not any hardship has been caused is beside the point. Neither of the two cases cited by Mr. Kolah in support of his argument is of any assistance. In Commissioner of Income-tax v. Kamala Mills Ltd., the Calcutta High Court decided that the words " actually allowed " in section 10(5)(b) of the Indian Income-tax Act as amended by the Income-tax (Amendment) Act (XXIII of 1941) are unambiguous and connote the idea that the allowance was in fact given effect to. The court rejected a contention of the income-tax authorities that the expression " actually allowed " means " allowable " under the law in force. In that case the court had not to deal with any expression similar to " depreciation which would have been allowed if the Indian Income-tax Act, 1922, was in force ". In Rajaratna Naranbhai Mills Ltd. v. Commissioner of Income-tax, the Bombay High Court had to construe the words " the amount of depreciation applicable " and h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct ----Rs. 5,93,285 in C.A. No. 600 of 1962 by the Mahalaxmi Mills Ltd., and Rs. 1,26,707 in C.A. No. 602 of 1962 by the Master Silk Mills Ltd. was deductible in law. The Appellate Assistant Commissioner agreed with the Income-tax Officer that this was allowable. The Appellate Tribunal, however, took a different view, but on the prayer of the Commissioner of Income-tax referred the following two questions to the High Court under section 66(1) of the Indian Income-tax Act : " 1. Whether on the above facts and circumstances of the case and on a correct interpretation of the relevant provisions of section 10(5)(b) read with the Taxation Laws (Part B States) (Removal of Difficulties) Order, 1950, paragraph 2 and the Notification No. 19 (S.R.O. 477) dated 9th March, 1953, under section 60A the written down value is to be computed after deducting depreciation allowance which could have been claimed under the Indian Income-tax Act, 1922 ? 2. Whether the Notification No. 19 (S.R.O. 477) dated 9th March, 1953, is ultra vires of the powers of the Central Government ? " The High Court has answered the second question in the affirmative and the correctness of that is no longer in dispute ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 3 of the Act had the effect of extending the Indian Income-tax Act, 1922, to Part B States in the Union of India. It was not disputed that it was within the competence of the Central Government to make the Removal of Difficulties Order, 1950, if any difficulty arose in giving effect to the Indian Income-tax Act in an area to which it so became extended. In making the order the Central Government has expressly said : " That certain difficulties had arisen in giving effect to the provisions of the Indian Income-tax Act, 1922 ...... in Part B States " and so, the order was made. In Commissioner of Income-tax v. Dewan Bahadur Ram Gopal Mills Ltd., this court held that it was for the Central Government to determine if any difficulty of the nature indicated in section 12 had arisen and then to make such order or give such direction as appeared to it to be necessary to remove the difficulty. It was in view of this decision that Mr. Kolah conceded that the order was validly made. He contends however that it is only when a difficulty is actually experienced in giving effect to the Indian Income-tax Act that the provision of the Order can come into operation in a particular case. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 922, in this Part B State or not, paragraph 2 of the Removal of Difficulties Order must be applied according to its terms. It is therefore not necessary to examine whether any such difficulty did arise in these cases. This brings us to Mr. Kolah's main contention that the Bhavnagar War Profits Act is not one of the laws, depreciation allowed under which has to be deducted under paragraph 2 of this order. He points out that the Bhavnagar War Profits Act had ceased to be in force long before the Part B State---the United States of Saurashtra---came into existence. It was therefore never a law of a Part B State and so depreciation which the assessee availed of under it will not come within the words " all depreciation actually allowed under any laws or rules of a Part B State relating to income-tax and super-tax. " This appears to be correct ; but the question still remains whether the Bhavnagar War Profits Act is covered by the word " any law relating to tax on profits of business " in the paragraph. If it does, the depreciation which the assessee availed of under the Act has to be deducted in computing the written down value. Analysing the clause : " all depreciation actually allo ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
