Case: Commissioner Of Income-Tax, Madhya Pradesh Etc Vs. M/S. Straw Products Ltd., Bhopal

law to a problem raised by the reference before the High Court is not normally excluded merely because at the date when the Tribunal decided the question the relevant law was not or could not be brought to its notice.Therefore, following this judgment, we must hold that Mr. Sastri is entitled to rely on the 1962 order and it is our duty to answer the reference in accordance with the amendment made by the order, unless the question referred is not couched in terms of sufficient amplitude to cover an enquiry into the question in the light of the amended law.13. Mr. Desai then raises two questions in respect of the order. First he says that it is the first time that the order is being relied on in these proceedings and he is entitled to urge before us that the order is bad. He has given a number of reasons in support of his plea that the order is ultra vires, but in view of the decision of this Court in K. S. Venkataraman v. State of Madras, Civil Appeal No. 18 of 1963 dated 18-10-1965: (AIR 1966 SC 1089 ), we refused to allow him to develop these objections. We may mention that he seeks to distinguish Venkataramans case, C. A. No. 618 of 1963 dated 18-10-1965: (AIR 1966 SC 1089 ) on the ground that the Supreme Court and the High Court are not creatures of the order which he was impugning. He further says that the Appellate Tribunal would also have been entitled to go into the question of the validity because the order is not part of the Income-tax Act, and it is not the creature of the order in the sense mentioned in Venkataramans case, C. A. No. 618 of 1963 dated 18-10-1965: (AIR 1966 SC 1089 ). We are not able to sustain the distinction sought to be made by Mr. Desai. The order is in effect an amendment of the Indian Income-tax Act insofar as it is applicable to the merged States. If it had not been for the order only the provisions of S. 10(5) of the Act would have been applied for the purpose of working out depreciation. Now, in view of the Taxation Laws (Merged States) (Removal of Difficulties) Order, 1949, as explained by the 1962 order, a different rule has been directed to be applied and the Income-tax Officer is bound to follow this statutory direction. We are unable to see how the judgment in Venkataramans case, C. A. No. 618 of 1963 dated 18-10-1965: (AIR 1966 SC 1089 ) does not apply.14. Mr. Desai then contends that the 1962 order did not apply to this case because income of the assessee had not been exempted under the agreement with the ruler. He says that the words "exempted from tax in the 1962 order means that the assessee must have been liable to pay tax and then exemption granted. He points to the definition of the word "assessee in the Bhopal Income-tax Act, 1936 (VIII of 1936), which has been defined as "a person by whom income tax is payable. Then he refers to the charging section the relevant part of which reads as follows:"3. Whereby a notification in the jarida the Government declares that income-tax shall be charged for any year at any rate or rates applicable to the total income of an assessee, tax........He says that the respondent was not an assessee because under the agreement no income-tax was payable by it and for this reason no notice or assessment had been made under the Bhopal Income-tax Act.We are unable to sustain this contention. The definition of assessee must mean a person by whom income-tax is payable under the Bhopal Act. If it had not been for the agreement, the respondent would have been liable to pay tax and it is the agreement alone which exempted it from taxation.15. Mr. Desai then contends that the 1962 order is not retrospective and does not apply to assessments made before the order came into force. We see no force in this contention because the terms of the order are plain and if it is deemed, as directed by the order, that the expression "actually allowed under any laws or rules of a merged State should have the meaning ascribed to it by the Explanation, as from December 3, 1949, when the Taxation Laws (Merged States) (Removal of Difficulties) Order. 1949, came into force, the Explanation must apply to the assessments for the years 1952-53 and 1953-54.16. Lastly, Mr. Desai contends that the question referred to the High Court in this case is not couched in terms of sufficient amplitude to cover the points he has tried to make, namely, whether the order dated August 22, 1962 is retrospective and whether the assessee is covered by the terms of Cl. (b) of the Explanation. Looking at the question it seems to us that the substance of the question which was referred was whether the view held by the Income-tax Officer or the Appellate Assistant Commissioner was right, and the words "having regard to occurring in the question did not have the effect of restricting the laws that could be considered for answering the question. It may also be said that when paragraph 2 of the Taxation Laws (Merged States) (Removal of Difficulties) Order, 1949, is referred to, it would include paragraph 2 as amended retrospectively. We must, therefore, overrule Mr. Desais objection and hold that the question framed by the Appellate Tribunal is wide enough to include a discussion of the amendments made retrospectively in the Taxation Laws (Merged States) (Removal of Difficulties) Order, 1949.17. In conclusion, applying the 1962 order to the facts of this case it is clear that the answer to the question referred must be that the correct basis for computing the written down value of the depreciable assets as on November 1, 1948. is the one which was adopted by the Income-tax Officer. I

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

Explanation:
1[ds], Mr. Desai contends that the question referred to the High Court in this case is not couched in terms of sufficient amplitude to cover the points he has tried to make, namely, whether the order dated August 22, 1962 is retrospective and whether the assessee is covered by the terms of Cl. (b) of the Explanation.Looking at the question it seems to us that the substance of the question which was referred was whether the view held by the Income-tax Officer or the Appellate Assistant Commissioner was right, and the words "having regard to occurring in the question did not have the effect of restricting the laws that could be considered for answering the question. It may also be said that when paragraph 2 of the Taxation Laws (Merged States) (Removal of Difficulties) Order, 1949, is referred to, it would include paragraph 2 as amended retrospectively. We must, therefore, overrule Mr. Desais objection and hold that the question framed by the Appellate Tribunal is wide enough to include a discussion of the amendments made retrospectively in the Taxation Laws (Merged States) (Removal of Difficulties) Order, 1949.17. In conclusion, applying the 1962 order to the facts of this case it is clear that the answer to the question referred must be that the correct basis for computing the written down value of the depreciable assets as on November 1, 1948. is the one which was adopted by the Income-tax Officer.We are unable to give such an artificial meaning to the expression "all depreciation actually allowed under any laws or rules, and we agree with the High Court that the expression "actually allowed is unambiguous and connotes the idea that the allowance was actually given effect to.If it was intended to include any allowances which are not actually allowed then the Central Government would have added a deeming provision as the legislature did in the Explanation to S. 10(5) of thefollowing this judgment, we must hold that Mr. Sastri is entitled to rely on the 1962 order and it is our duty to answer the reference in accordance with the amendment made by the order, unless the question referred is not couched in terms of sufficient amplitude to cover an enquiry into the question in the light of the amended law.