Case: The Mahalaxmi Mills Ltd Vs. The Commissioner Of Income-Tax,Bombay(And Connected Appeal

particular case in giving effect to the provisions of the Indian Income-tax Act. What is necessary in law is that before an order can be made by the Central Government under S. 12, the Central Government must be satisfied that in certain cases difficulties have actually arisen in giving effect to the provisions of the Indian Income-tax Act. Once on such satisfaction an order is made it is not again necessary for the application of the order in a particular case that difficulty must be found to have arisen. A separate Order under S. 12 has not got to be made for each particular case. The order once made on the satisfaction of the Central Government that in some cases difficulties have arisen in giving effect to the provisions of the Indian Income-tax Act the order operates under its own terms and so in giving effect to the order it is not necessary for the Income-tax Officer to see first whether any difficulty has arisen.17. We are of opinion that whether any difficulty did actually arise in the cases now under consideration in applying the Indian Income-tax Act 1922, in this Part B State or not, Para. 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.18. This brings us to Mr. Kolahs main contention that the Bhavnagar War Profits Act is not one of the laws depreciation allowed under which has to be deducted under Para. 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 words " 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 depreciating actually allowed under any laws or rules of a Part B State relating to Income-tax and super tax" or "any law relating to tax on profits of business", we notice that the words "of a Part B State" were used to qualify the phrase "any laws or rules in the first portion of the clause. Similar words were not used to qualify the words "any law" in the second part. According to Mr. Kolah these words "of a Part B State" were intended to be read also after the words "any law" in the latter portion and were omitted by way of ellipsis so that the sentence might not appear cumbersome. Ellipsis is a well-known figure of speech by which words needed to complete the construction or sense are omitted to produce better rhythm or balance in the structure of the sentence.19. After careful consideration we have however come to the conclusion that the omission of the words "of a Part B State" in this paragraph is not by way of ellipsis but a deliberate omission with the intention of including laws which could not be stated to be laws of a Part B State but had been laws in the same area at a time before they formed part of a Part B State. If the omission had been by way of ellipsis, as argued by Mr. Kolah, it would be reasonable to think that the words "any law relating to tax" would also have been omitted and this part of the paragraph would have read as all depreciation actually allowed under any laws or rules of a Part B State relating to Income-tax and super tax or tax on profits of business." It also appears to us that if the intention had not been to include the depreciation allowed under a law which had been law in a component part of the Part B State before it became included in the Part B State, it was unnecessary to add the words "or any law relating to tax on profits of business." For, "a law relating to tax on profits of business" is also a law relating to Income-tax and. so, depreciation actually allowed under a law relating to tax on profits of business which was law of a Part B State would come within the first portion of the clause. It is worth noticing In this connection that in 1949 when by an ordinance certain taxation laws were extended to Merged States the Central Government made under S. 8 of that Ordinance "The Taxation Laws (Merged States) (Removal of Difficulties) Order 1949". Paragraph 2 of that Order merely said "all depreciation actually allowed under any laws or rules of a merged State relating to Income-tax and super tax shall be taken into account." Nothing was said in that Order as regards "any law relating to tax on profits of business. The Removal of Difficulties Order add the words "any law relating to tax on profits of business". This appears to have been done with the deliberate intention of including depreciation allowed under such laws even though tines were not laws of a Part B State" but of a component State.20. We have come to the conclusion that the Bhavnagar War Profits Act is within the words "any law relating to tax on profits of business" in Para. 2 of the Removal of Difficulties Order. We hold that the High Court has rightly decided that the depreciation availed of by the assessee under the Bhavnagar War Profits Act was a deductible amount in computing the written down value of the assets.

Decision (1 = appeal accepted, 0 = rejected): 0

Explanation:
0[ds]In our opinion, the words which according to Mr. Kolah were necessary to give effect to the above intention are implicit in the very language that has been used though they have not been expressly used. The authority which made the Ordinance should be credited with having appreciated the position that no depreciation would have been allowed even if the Indian Income-tax Act, 1922 had been in force. if no claim supported by proper particulars had been made. When therefore the words "which would have been allowed to him" were used they were used to mean "which should have been allowed if proper claim had been made. For, it would be meaningless to speak of a depreciation allowance being allowed without a claim. The words used, in our opinion, are apt and sufficient to express the intention that if the Income-tax Act, 1922 which was not in force in the State before, had been in force, the depreciation that would have been allowed if proper claim had been made should be deducted in ascertaining the written downis not unreasonable to think however that when making this Ordinance the Raj Pramukh thought that if the Indian Income-tax Act, 1922, had been in force a proper claim would ordinarily have been made and whatever was allowable under that law would have been allowed as depreciation. The words used not only leave no doubt as regards the intention of the authority, but as we have already stated, are apt and sufficient to give effect to thatwords used do not however leave any doubt about the meaning and whether or not any hardship has been caused is beside the point.8. Neither of the two cases cited by Mr. Kolah in support of his argument is of any assistance.For the reasons we have already given, we are of opinion that the High Court was right in answering the question referred in these cases out of which Civil Appeals Nos. 599 and 601 have arisen, in the affirmative.The High Court has answered the second question in the affirmative and the correctness of that is no longer in dispute before us.As regards the first question it appears to us that the matter in controversy between the parties which was actually considered by the High Court is not clearly brought out by the question as framed.It will be noticed that the validity of the notification referred to in the question was the subject-matter of the second question and the correctness of the High Courts answer that it was invalid, was not questioned beforereally remained to be considered by the High Court was the effect of Para. 2 of the Taxation Laws (Part B States) (Removal of Difficulties) Order, 1930-to which we shall later refer as the "Removal of Difficulties Order".In our opinion, the High Court rightly rejected this contention. The consequence of the Removal of Difficulties Order being validly made under S. 12 of the Finance Act, 1950, is that Para. 2 of the Order (as also the other paragraphs) have to be applied and no exception can be made.We are of opinion that whether any difficulty did actually arise in the cases now under consideration in applying the Indian Income-tax Act 1922, in this Part B State or not, Para. 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.After careful consideration we have however come to the conclusion that the omission of the words "of a Part B State" in this paragraph is not by way of ellipsis but a deliberate omission with the intention of including laws which could not be stated to be laws of a Part B State but had been laws in the same area at a time before they formed part of a Part B State. If the omission had been by way of ellipsis, as argued by Mr. Kolah, it would be reasonable to think that the words "any law relating to tax" would also have been omitted and this part of the paragraph would have read as all depreciation actually allowed under any laws or rules of a Part B State relating to Income-tax and super tax or tax on profits of business." It also appears to us that if the intention had not been to include the depreciation allowed under a law which had been law in a component part of the Part B State before it became included in the Part B State, it was unnecessary to add the words "or any law relating to tax on profits of business." For, "a law relating to tax on profits of business" is also a law relating to Income-tax and. so, depreciation actually allowed under a law relating to tax on profits of business which was law of a Part B State would come within the first portion of the clause. It is worth noticing In this connection that in 1949 when by an ordinance certain taxation laws were extended to Merged States the Central Government made under S. 8 of that Ordinance "The Taxation Laws (Merged States) (Removal of Difficulties) Order 1949". Paragraph 2 of that Order merely said "all depreciation actually allowed under any laws or rules of a merged State relating to Income-tax and super tax shall be taken into account." Nothing was said in that Order as regards "any law relating to tax on profits of business. The Removal of Difficulties Order add the words "any law relating to tax on profits of business". This appears to have been done with the deliberate intention of including depreciation allowed under such laws even though tines were not laws of a Part B State" but of a component State.20. We have come to the conclusion that the Bhavnagar War Profits Act is within the words "any law relating to tax on profits of business" in Para. 2 of the Removal of Difficulties Order. We hold that the High Court has rightly decided that the depreciation availed of by the assessee under the Bhavnagar War Profits Act was a deductible amount in computing the written down value of the assets.