Income Tax Officer, Special Investigation Circle 'A', Nagpur Vs. J. B. Mangharam and Company and Others
of the concern4. Within two years from the date of the Government order, the respondents would install and work an up-to-date biscuit factory in Gwalior of a capacity of 8 tons and a confectionary factory of 5 tons per day of 8 hours and invest a total capital on machinery and buildings of approximately Rs. 15 lakhs5. The respondents would start construction of the buildings and take all necessary steps in regard to the project expeditiously from the date of sanction and show reasonable progress in regard to construction within one year6. The concessions mentioned in clauses 1, 2 and 3 above would not be transferable to any other party without the sanction of Government2. This order was passed before the Constitution of India came into force. But as the Constitution was likely to be applied to the State of Madhya Bharat, the respondents wrote to the Government of Madhya Bharat that though there was no income-tax at the time in Madhya Bharat, it was likely that income-tax would be introduced after the Constitution came into force. The respondents, therefore, wanted to know if exemption from income-tax would be available to them for the whole period of seven years. In reply to this the respondents were told by the Government of Madhya Bharat that their concession would continue for the whole period. On the faith of this undertaking, the respondents said that they built their factory at Gwalior and that the factory started working in June, 1951. On January 26, 1950, the Constitution of India came into force and the former State of Madhya Bharat became the Part B State of Madhya Bharat thereunder. The Indian Income-tax Act was extended to the territory of the Part B State of Madhya Bharat from April 1, 1950, by the Finance Act (XXV of 1950). Further in view of section 60A of the Income-tax Act the Government of India promulgated the Part B States (Taxation Concession) Order, 1950 (hereinafter referred to as the Concessions Order) in December, 1950 and clause 16 thereof provided for concessions to industrial undertakings. The respondents thereupon applied under that clause for exemption as a matter of abundant caution, though they were entitled to exemption by virtue of the agreement with the former State of Madhya Bharat. They were, however, granted exemption only for five years from 1952-53 to 1956-57 and they were further informed that though the exemption was granted, their income from the factory in Madhya Bharat would be liable to inclusion in their total income. When the concession granted by the Government of India expired, the Income-tax Officer proceeded to assess the respondents to income-tax. Consequently, the respondents filed the writ petition in the High Court claiming the reliefs already set out. They based their claim on the agreement with the former State of Madhya Bharat and contended that in view of article 295(1)(b) the obligation arising out of that agreement devolved on the Government of India which was bound to fulfil that obligationThe petition was opposed on behalf of the Government of India by the Income-tax Officer, who was made party to it, and his case was that the respondents were not entitled to any further exemption beyond what had been granted to them by the Government of India under the Concessions Orders3. This petition was heard by the High Court along with another petition Gwalior Rayon Silk Manufacturing (Weaving) Co. Ltd. v. Union of India, and in view of the decision of the High Court in that case, on the scope and effect of article 295(1)(b), it held that the concession granted to the respondents by the Madhya Bharat Government which became an obligation of the Government of India entitled them to exemption from income-tax for seven years and was binding on the Government of India in spite of the legislative provisions made in connection with income-tax from April 1, 1950. The High Court, therefore, granted a writ restraining the Income-tax Officer from taking any action against the respondents in pursuance of the Income-tax Act in regard to the profits of the business of the factory at Gwalior for the period ending on June 30, 1958. Thereupon, the Income-tax Officer applied for a certificate which was granted ; and that is how the appeal hascome up before us4. This appeal has been heard along with the appeals of Union of Indio v. Gwalior Rayon Silk Mfg. (Wvg.) Co. Ltd., judgment in which has just been delivered. We have in that case considered the scope and effect of the provision contained in article 295(1)(b) of the Constitution and have held that in view of the position emerging on April 1, 1950, by the extension of the Income-tax Act to the territory of the Part B State of Madhya Bharat by the Finance Act of 1950 and in view of the Concessions Order, the concessions granted by the Government of the former State of Madhya Bharat, which became the obligation of the Government of India under article 295(1)(b), must be held to have been superseded by the legislative provisions made as from April 1, 1950, and that corporations or individuals who had any concessions before April 1, 1950, would thereafter, be entitled only to such concessions as would be permissible under the Concessions Order. In the circumstances the respondents cannot rely on the agreement with the former State of Madhya Bharat, which must be deemed to have been superseded by the legislative provisions which came into force from April 1, 950, and can only get such concessions as may be allowed to them under the Income-tax Act read with the Concessions Order. We have already pointed out that the Government of India allowed concessions for five years, which the respondents have already availed of. They are not entitled to any further concession by virtue of the agreement with the Government of Madhya Bharat. In conformity with what we have held in Union of India v. Gwalior Rayon Silk Mfg. (Wvg.) Co. Ltd., this appeal must succeed.
1[ds]4. This appeal has been heard along with the appeals of Union of Indio v. Gwalior Rayon Silk Mfg. (Wvg.) Co. Ltd., judgment in which has just been delivered. We have in that case considered the scope and effect of the provision contained in article 295(1)(b) of the Constitution and have held that in view of the position emerging on April 1, 1950, by the extension of theAct to the territory of the Part B State of Madhya Bharat by the Finance Act of 1950 and in view of the Concessions Order, the concessions granted by the Government of the former State of Madhya Bharat, which became the obligation of the Government of India under article 295(1)(b), must be held to have been superseded by the legislative provisions made as from April 1, 1950, and that corporations or individuals who had any concessions before April 1, 1950, would thereafter, be entitled only to such concessions as would be permissible under the Concessions Order. In the circumstances the respondents cannot rely on the agreement with the former State of Madhya Bharat, which must be deemed to have been superseded by the legislative provisions which came into force from April 1, 950, and can only get such concessions as may be allowed to them under theAct read with the Concessions Order. We have already pointed out that the Government of India allowed concessions for five years, which the respondents have already availed of. They are not entitled to any further concession by virtue of the agreement with the Government of Madhya Bharat. In conformity with what we have held in Union of India v. Gwalior Rayon Silk Mfg. (Wvg.) Co. Ltd., this appeal must succeed.
### Instruction:
Predict whether the case will result in an affirmative (1) or negative (0) decision for the appeal, and then provide a thorough explanation using key sentences to support your prediction.

### Input:
of the concern4. Within two years from the date of the Government order, the respondents would install and work an up-to-date biscuit factory in Gwalior of a capacity of 8 tons and a confectionary factory of 5 tons per day of 8 hours and invest a total capital on machinery and buildings of approximately Rs. 15 lakhs5. The respondents would start construction of the buildings and take all necessary steps in regard to the project expeditiously from the date of sanction and show reasonable progress in regard to construction within one year6. The concessions mentioned in clauses 1, 2 and 3 above would not be transferable to any other party without the sanction of Government2. This order was passed before the Constitution of India came into force. But as the Constitution was likely to be applied to the State of Madhya Bharat, the respondents wrote to the Government of Madhya Bharat that though there was no income-tax at the time in Madhya Bharat, it was likely that income-tax would be introduced after the Constitution came into force. The respondents, therefore, wanted to know if exemption from income-tax would be available to them for the whole period of seven years. In reply to this the respondents were told by the Government of Madhya Bharat that their concession would continue for the whole period. On the faith of this undertaking, the respondents said that they built their factory at Gwalior and that the factory started working in June, 1951. On January 26, 1950, the Constitution of India came into force and the former State of Madhya Bharat became the Part B State of Madhya Bharat thereunder. The Indian Income-tax Act was extended to the territory of the Part B State of Madhya Bharat from April 1, 1950, by the Finance Act (XXV of 1950). Further in view of section 60A of the Income-tax Act the Government of India promulgated the Part B States (Taxation Concession) Order, 1950 (hereinafter referred to as the Concessions Order) in December, 1950 and clause 16 thereof provided for concessions to industrial undertakings. The respondents thereupon applied under that clause for exemption as a matter of abundant caution, though they were entitled to exemption by virtue of the agreement with the former State of Madhya Bharat. They were, however, granted exemption only for five years from 1952-53 to 1956-57 and they were further informed that though the exemption was granted, their income from the factory in Madhya Bharat would be liable to inclusion in their total income. When the concession granted by the Government of India expired, the Income-tax Officer proceeded to assess the respondents to income-tax. Consequently, the respondents filed the writ petition in the High Court claiming the reliefs already set out. They based their claim on the agreement with the former State of Madhya Bharat and contended that in view of article 295(1)(b) the obligation arising out of that agreement devolved on the Government of India which was bound to fulfil that obligationThe petition was opposed on behalf of the Government of India by the Income-tax Officer, who was made party to it, and his case was that the respondents were not entitled to any further exemption beyond what had been granted to them by the Government of India under the Concessions Orders3. This petition was heard by the High Court along with another petition Gwalior Rayon Silk Manufacturing (Weaving) Co. Ltd. v. Union of India, and in view of the decision of the High Court in that case, on the scope and effect of article 295(1)(b), it held that the concession granted to the respondents by the Madhya Bharat Government which became an obligation of the Government of India entitled them to exemption from income-tax for seven years and was binding on the Government of India in spite of the legislative provisions made in connection with income-tax from April 1, 1950. The High Court, therefore, granted a writ restraining the Income-tax Officer from taking any action against the respondents in pursuance of the Income-tax Act in regard to the profits of the business of the factory at Gwalior for the period ending on June 30, 1958. Thereupon, the Income-tax Officer applied for a certificate which was granted ; and that is how the appeal hascome up before us4. This appeal has been heard along with the appeals of Union of Indio v. Gwalior Rayon Silk Mfg. (Wvg.) Co. Ltd., judgment in which has just been delivered. We have in that case considered the scope and effect of the provision contained in article 295(1)(b) of the Constitution and have held that in view of the position emerging on April 1, 1950, by the extension of the Income-tax Act to the territory of the Part B State of Madhya Bharat by the Finance Act of 1950 and in view of the Concessions Order, the concessions granted by the Government of the former State of Madhya Bharat, which became the obligation of the Government of India under article 295(1)(b), must be held to have been superseded by the legislative provisions made as from April 1, 1950, and that corporations or individuals who had any concessions before April 1, 1950, would thereafter, be entitled only to such concessions as would be permissible under the Concessions Order. In the circumstances the respondents cannot rely on the agreement with the former State of Madhya Bharat, which must be deemed to have been superseded by the legislative provisions which came into force from April 1, 950, and can only get such concessions as may be allowed to them under the Income-tax Act read with the Concessions Order. We have already pointed out that the Government of India allowed concessions for five years, which the respondents have already availed of. They are not entitled to any further concession by virtue of the agreement with the Government of Madhya Bharat. In conformity with what we have held in Union of India v. Gwalior Rayon Silk Mfg. (Wvg.) Co. Ltd., this appeal must succeed.

### Response:
1

### Explanation:
4. This appeal has been heard along with the appeals of Union of Indio v. Gwalior Rayon Silk Mfg. (Wvg.) Co. Ltd., judgment in which has just been delivered. We have in that case considered the scope and effect of the provision contained in article 295(1)(b) of the Constitution and have held that in view of the position emerging on April 1, 1950, by the extension of theAct to the territory of the Part B State of Madhya Bharat by the Finance Act of 1950 and in view of the Concessions Order, the concessions granted by the Government of the former State of Madhya Bharat, which became the obligation of the Government of India under article 295(1)(b), must be held to have been superseded by the legislative provisions made as from April 1, 1950, and that corporations or individuals who had any concessions before April 1, 1950, would thereafter, be entitled only to such concessions as would be permissible under the Concessions Order. In the circumstances the respondents cannot rely on the agreement with the former State of Madhya Bharat, which must be deemed to have been superseded by the legislative provisions which came into force from April 1, 950, and can only get such concessions as may be allowed to them under theAct read with the Concessions Order. We have already pointed out that the Government of India allowed concessions for five years, which the respondents have already availed of. They are not entitled to any further concession by virtue of the agreement with the Government of Madhya Bharat. In conformity with what we have held in Union of India v. Gwalior Rayon Silk Mfg. (Wvg.) Co. Ltd., this appeal must succeed.
