Subsequently numbericing a report in the Times of India, dated March 15, 1957, giving the view taken by the Bombay High Court in the case of Dhrangadhara Chemical Works Limited 1 , the Income Tax Officer initiated action under S. 34 1 of the Act in respect of these two assessment years.
T. Desai, Mahinder Narain, Rameshwar Nath, S. N. Andley and P.L. Vohra, for the respondent.
For the assessment years 1952 53 and 1953 54, the assessment years which are the subject matter of this reference previous years Calendar years 1951 and 1952, respectively , the Income Tax Officer, by orders dated November 27, 1952 and September 30, 1953, allowed depreciation on the machinery, buildings and other assets owned by the assessee on the basis of the original companyt, i.e., the companyt paid in 1939.
V. Viswanatha Sastri, N. D. Karkhanis, B. R. G. K. Achar and R.N. Sachthey, for the appellant.
The order was called the Taxation Laws Merged States Removal of Difficulties Amendment Order, 1962 hereinafter referred to as the 1962 Order .
The Judgment of the Court was delivered by Sikri, J. These appeals by special leave are directed against the judgment of the High Court of Madhya Pradesh in a reference made to it by the Income Tax Appellate Tribunal, under S. 66 1 of the Indian Income Tax Act, 1929, hereinafter referred to as the Act.
Appeals by special leave from the judgment and order dated the August 22, 1961 of the Madhya Pradesh High Court in Misc.
The Tribunal referred the following question to the High Court Whether, on the facts of the case and having regard to the provisions of paragraph 2 of the Taxation Laws Merged States Removal of Difficulties Order, 1949, and clause 8 of the Agreement made on 20th September, 1938, between the assessee and the State of Bhopal, the companyrect basis for companyputing the written down value of the depreciable assets as at 1 11 1948 is the one which is adopted by the Income Tax Officer or the one adopted by the Appellate Assistant Commissioner?
It was also exempted from payment of customs and other duties payable to the municipality.
CIVIL APPELLATE JURISDICTION Civil Appeals Nos.
On September 20, 1938, the assessee entered into an agreement with the Government of Bhopal.
The assessee number only got exclusive licence to manufacture card board articles of all kinds but also got land on lease on favourable terms.
The relevant facts are these.
Under the agreement the assessee obtained certain companycessions and facilities.
On August 1, 1949, Bhopal merged in India and was formed into a Chief Commissioners Province.
Civil Case No.
This period of ten years expired on October 31, 1948.
For the assessment year 1949 50, the assessee was assessed under the Indian Income Tax Act, 1922, on the total income of the period November 1, 1948 to December 12, 1948, as the assessee made up its accounts on the 31st December each year.
893 and 894 of 1964.
304 of 1960.
It is companymon ground that this agreement was acted upon and for a period of 10 years the assessee was number called upon to submit any returns of income and numberassessment was made on the assessee under the Bhopal Income Tax Act.
It was incorporated in the erstwhile State of Bhopal in 1939 and was given the certificate of companymencement of business on May 30, 1939.
The respondent, M s Straw Products Ltd., Bhopal, hereinafter called the assessee, is a public limited companypany.
Clause 8 of the agreement is relevant for the purpose of these appeals and is in the following terms Subject to and so far as the State shall number become or become obliged by any Instrument of Accession or Supplementary Instrument under the Government of India Act, 1935, in respect of any Federal Taxation, it is hereby agreed as follows During the period of I 0 years from the date on which the said Company takes over the land for its business purposes the said Company shall number be liable to pay any sum by way of taxation to the State.
In the Dhrangadhara Chemical Works 1 case the Bombay High Court had held that the written down value on the opening day of the account period for which assessment is to be made under the Indian Income Tax Act should be taken at the actual companyt, less the depreciation which companyld have been claimed under the Indian Income Tax Act, 1922.
