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TMI Blog1960 (8) TMI 4X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of the amendment was to reach this result from the assessment year 1950-51 onwards, and there could be no saving. The argument assumes the premise that the Income-tax Act was incorporated in the Indian Finance Act, 1950, but there is neither precedent nor warrant for the assumption that when one Act applies another Act to some territory, the latter Act must be taken to be incorporated in the former Act. It may be otherwise, if there were words to show that the earlier Act is to be deemed to be re-enacted by the new Act. The Indian Finance Act, 1950, was concerned with the application of the Indian Income-tax Act to this area, which it did by amending the definition of "taxable territories" in the Indian Income-tax Act, and by applyin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... whole of India, except the State of Jammu and Kashmir, and suitably amended the Indian Income-tax Act. Rajasthan then became, from April 1, 1950, a taxable territory. For the assessment year 1950-51, income-tax was sought to be imposed in the State of Rajasthan. One Madan Gopal Kabra moved the High Court under article 226 of the Constitution to restrain the taxing authorities from claiming tax for the period prior to April 1, 1950, contending that inasmuch as Rajasthan was not a taxable territory before April 1, 1950, no tax for a period prior to that date could be demanded. This court in an appeal by the Department against the decision of the High Court of Rajasthan, which had accepted the contention, held that the tax was leviable. It ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se (c) of sub-section (2), for the words and letter 'Part B State' the words 'the State of Jammu and Kashmir' shall be substituted and shall be deemed to have been substituted with effect from the 1st day of April, 1950." The result of this amendment was described by this court in Kabra's case to be as follows : "It may be mentioned here that the exemption from tax under section 14(2)(c) of the Indian Act of income accruing within Part B States was abrogated, except as regards the State of Jammu and Kashmir, by the amendment of that provision with effect from the first day of April, 1950." Mr. N. C. Chatterjee appearing for the appellant contends that the point cannot be considered to have been finally decided, and that the remark ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... misconceives the nature of the Indian Finance Act, 1950. By that Act, the Indian Income-tax Act was applied, but the Income-tax Act was not incorporated by reference in the Indian Finance Act to become a part of it. The application of the Indian Income-tax Act made Rajasthan a taxable territory subject to the Indian income-tax law, and Parliament was competent to enact a new law for the area, just as it did for the whole of the rest of India. The fiction in the amendment made the exemption to disappear as if it had never been granted, and unless there was a saving, the amendment must operate to obliterate the exemption. In fact, the whole purpose and intent of the amendment was to reach this result from the assessment year 1950-51 onwards, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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