# October 13 Appeal dismissed. THE MAHALAXMI MILLS LTD v. THE COMMISSIONER OF INCOME-TAX, BOMBAY

- **Citation:** [1964] 5 S.C.R. 216
- **Court:** Supreme Court of India
- **Decided:** 1964
- **Case number:** Civil Appeals Nos. 599-602 of 1962
- **Bench:** A. K. Sarkar, M. HrnAYATULLAH, K. C. Das Gupta
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/october-13-appeal-dismissed-the-mahalaxmi-mills-ltd-v-the-commissioner-of-2972
- **Pages:** 15

## Headnote

Income Tax-Depreciation-Computation of written down
value-Deduction of depreciation in earlier years-Scope-Saurashtra
Income Tax Ordinance, 1949, s. 13(5) (b)-Taxation Laws (Part B
States) (Removal of Difficulties) Order, 1950, para 2-Indlan
Income Tax Act, 1922 (11 ofl922), s. 10(5) (b).
The assessces were carrying on business in Bhavnagar which
was formerly an Indian State. In 1948 Bhavnagar became part
of the United State of Saurashtra and on March 16, 1949 the
Saurashtra Income-tax Ordinance was promulgated. For the
purpose of calculating the depreciation allowance to which the
assessees were entitled in computing the profits or gains of the
business, the written down value of the building, machinery etc.,
had to be ascertained in accordance with the provisions of the
Ordinance. Section 13(5) (b) of the Ordinance provided that
"the written down value meant, in the case of assets acquired
before the previous year, the actual cost to the assessee less all
depreciation actually allowed to him under this Ordinance or .........
which would have been allowed to him if the Indian Income-tax
(1) A.LR. 1964 S.C. 449.
·-
, ...
•
-' J •
5 S.C.R.
SUPREME COURT REPORTS
217
Act, 1922, was in force in the past". For the assessment year
1963
1949-50, as the assets of the assessees had been acquired before
the previous year, the Income-tax Officer, in ascertaining the writ- The Maha/axmi
ten down value, deducted the depreciation which would have been
Mills Ltd
allowable under the Indian Income-tax Act, 1922, if it had been
·
in force and a claim had been made supported by the prescribed
v. . .
particulars.
The assessees claimed that on the wording of it The Comm1sswns. 13(5) (b) of the Ordinance did not enable the Income-tax Olli- er of Income-Tax
cer to make the deduction, as, in fact, no claim was made or could
Bombay
be made for such allowance.
For the assessment year 1951-52, as by that time Saurashtra
had become a Part B State of the Union of India and the Indian
Income-tax Act, 1922 had been extended to it, the Income-tax
Officer, applied the provisions of s. 10(5) (b) of the Indian Incometax Act read with para 2 of the Taxation Laws (Part B States)
(Removal of Difficulties) Order, 1950, while computing the written down value and deducted not only the depreciation allowed
in the assessment year 1950-51 under the Indian Income-tax
Act and the depreciation allowed in the assessment year 1949-50
under the Saurashtra Income-tax Ordinance but also the depreciation availed of in the previous years by the assessees under the
Bhavnagar War Profits Act. Paragraph 2 of the Removal of
Difficulties Order of 1950 provided: "In making any assessment
μnder the Indian Income-tax Act, 1922, all depreciation 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 shall be taken into account in computing the written
down value under s. 10(5) (b) of the Act".
The assessees
contended that it was only when a difficulty was actually experienced in giving effect to the A-ct that the provision of the
Order could come into operation in a particular case and as no
such difficulty was actually experienced the said provision had
no application, and that, in any case, as the Bhavnagar War Profits Act was not a law of the Part B State, para 2 of the Order
was not applicable.
Held:
(i) On the true construction of s. 13(5)(b) of the Saurashtra Income-tax Ordinance, the words "which would have been
allowed to him" in that sub-section meant "which should have
been allowed if proper claim had been made", and that in ascertaining the written down value the depreciation that would have been
allowed if proper claim had been made if the Indian Income-tax
Act, 1922, which was not in force in the State before, had been
in force, should be deducted.
Commissioner of Income-tax v. Kamala Mills Ltd., [1949]
17 I.T.R. 130 and Rajaratna Naranbhai Mills Ltd. v. Commissioner
of Income-tax [195

## Text

216
SUPREME COURT REPORTS
1963
removal. The same view has been taken in Jagadish
Mitter v. Union of lndia< 1 )
Champak/a/
. .
Chimanlal Shah
~e are. therefore of ?pmion tha. t on the fa.cts
v
of this case it cannot be said that the order by which
The U~ion of the appellants, .seryi~es were tei:minated und~r ~. 5
India
was an order mfhctmg the pumshment of d1sm1ssal
or removal to which Art. 311(2) applied. It was
Wanchoo J. in our opinion an order which was justified under
r. 5 of the rules and the appellant was not entitled
to the protection of Art. 311 (2) in the circumstances.
The appeal therefore fails and is hereby dismissed.
In the circumstances we pass no order as to costs.
1963
October 13
Appeal dismissed.
THE MAHALAXMI MILLS LTD.
v.
THE COMMISSIONER OF INCOME-TAX,
BOMBAY
(And connected appeals)
(A. K. SARKAR, M. HrnAYATULLAH AND K. C. DAS
GUPTA JJ.)
Income Tax-Depreciation-Computation of written down
value-Deduction of depreciation in earlier years-Scope-Saurashtra
Income Tax Ordinance, 1949, s. 13(5) (b)-Taxation Laws (Part B
States) (Removal of Difficulties) Order, 1950, para 2-Indlan
Income Tax Act, 1922 (11 ofl922), s. 10(5) (b).
The assessces were carrying on business in Bhavnagar which
was formerly an Indian State. In 1948 Bhavnagar became part
of the United State of Saurashtra and on March 16, 1949 the
Saurashtra Income-tax Ordinance was promulgated. For the
purpose of calculating the depreciation allowance to which the
assessees were entitled in computing the profits or gains of the
business, the written down value of the building, machinery etc.,
had to be ascertained in accordance with the provisions of the
Ordinance. Section 13(5) (b) of the Ordinance provided that
"the written down value meant, in the case of assets acquired
before the previous year, the actual cost to the assessee less all
depreciation actually allowed to him under this Ordinance or .........
which would have been allowed to him if the Indian Income-tax
(1) A.LR. 1964 S.C. 449.
·-
, ...
•
-' J •
5 S.C.R.
SUPREME COURT REPORTS
217
Act, 1922, was in force in the past". For the assessment year
1963
1949-50, as the assets of the assessees had been acquired before
the previous year, the Income-tax Officer, in ascertaining the writ- The Maha/axmi
ten down value, deducted the depreciation which would have been
Mills Ltd
allowable under the Indian Income-tax Act, 1922, if it had been
·
in force and a claim had been made supported by the prescribed
v. . .
particulars.
The assessees claimed that on the wording of it The Comm1sswns. 13(5) (b) of the Ordinance did not enable the Income-tax Olli- er of Income-Tax
cer to make the deduction, as, in fact, no claim was made or could
Bombay
be made for such allowance.
For the assessment year 1951-52, as by that time Saurashtra
had become a Part B State of the Union of India and the Indian
Income-tax Act, 1922 had been extended to it, the Income-tax
Officer, applied the provisions of s. 10(5) (b) of the Indian Incometax Act read with para 2 of the Taxation Laws (Part B States)
(Removal of Difficulties) Order, 1950, while computing the written down value and deducted not only the depreciation allowed
in the assessment year 1950-51 under the Indian Income-tax
Act and the depreciation allowed in the assessment year 1949-50
under the Saurashtra Income-tax Ordinance but also the depreciation availed of in the previous years by the assessees under the
Bhavnagar War Profits Act. Paragraph 2 of the Removal of
Difficulties Order of 1950 provided: "In making any assessment
μnder the Indian Income-tax Act, 1922, all depreciation 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 shall be taken into account in computing the written
down value under s. 10(5) (b) of the Act".
The assessees
contended that it was only when a difficulty was actually experienced in giving effect to the A-ct that the provision of the
Order could come into operation in a particular case and as no
such difficulty was actually experienced the said provision had
no application, and that, in any case, as the Bhavnagar War Profits Act was not a law of the Part B State, para 2 of the Order
was not applicable.
Held:
(i) On the true construction of s. 13(5)(b) of the Saurashtra Income-tax Ordinance, the words "which would have been
allowed to him" in that sub-section meant "which should have
been allowed if proper claim had been made", and that in ascertaining the written down value the depreciation that would have been
allowed if proper claim had been made if the Indian Income-tax
Act, 1922, which was not in force in the State before, had been
in force, should be deducted.
Commissioner of Income-tax v. Kamala Mills Ltd., [1949]
17 I.T.R. 130 and Rajaratna Naranbhai Mills Ltd. v. Commissioner
of Income-tax [1950] 18 I.T.R. 122, distinguished.
(ii) It was for the Central Government to determine if any
difficulty had arisen in giving effect to the provisions of the Indian
218
SUPREME COURT REPORTS
[1964]
1963
Income-tax Act, 1922, and then to make such order as appeared
to it necessary to remove the difficulty, that once the order was
The Mahalaxmi made it operated under its own terms, and that in giving effect
M'll Ltd
to the order it was not necessary for the Income-tax Officer to
1 s
·
examine first in any particular case whether any difficulty had
v.
arisen. Accordingly, para 2 of that Taxation Laws (Part B States)
The Commission-(Remova1 of Difficulties Order, 1950, was applicable.
er of Income-Tax
Commissioner of Income-tax v. Dewan Bahadur Ram Gopal
Bombay
Mills Ltd., [1961] 2 S.C.R. 318, followed.
Das Gupta J.
(iii) The Bhavnagar War Profits Act was a law within the
words " any law relating to tax on profits of business" in para 2
of the Removal of Difficulties Order of 1950.
CIVIL APPELLATE JURISDICTION:
Civil Appeals
Nos. 599-602 of 1962.
Appeals from the judgment and order dated
April 7, 8, 1960 of the Bombay High Court in JncomeTax Reference Nos. 70 and 71 of 1956.
R. J. Kolah, Ravinder Narain, J. B. Dadachanji
and 0. C. Mathur for the appellants (Jn all the
Appeals).
N. D. Karkhanis and R. N. Sachthey, for the
respondent (In all the Appeals).
The Judgment of the Court was delivered by
DAS GUPTA J.-The assessee is the appellant
in each of these four appeals arising out of four
references under s. 66(1) of the Indian Income-tax Act
to the High Court of Bombay. In two of these
appeals (C.A. Nos. 599 & 600 of 1962) the assessee
who has filed the appeals is the Mahalaxmi Mills
Ltd., in the other two (C.A. Nos. 601 and 602 of 1962)
the Master Silk Mills Ltd., is the appellant-assessee.
Appeals Nos. 599 and 601 are in respect of the assessment year 1949-50; the other two are in respect of
assessment year 1951-52. The controversy in all
these cases is as regards the computation of written
down value in calculating depreciation allowance.
Both the assessees had from before 1949-50
been carrying on business in Bhavnagar which was
formerly an Indian State.
In 1948
Bhavnagar
along with other Indian States of Kathiawar formed
themselves into a union by the name of United States
• •
•
•
)
5 S.C.R.
SUPREME COURT REPORTS
219
of Kathiawar. Later the name Kathiawar was changed
1963
to Saurashtra. On March 16, 1949, the Raj Pramukh
-
of thi> newly-formed State instituted the Saurashtra The Maha/axmi
Income-tax Ordinance, 1949. This Ordinance was
Mills Ltd.
in force for one year only-the assessment year 1949v. . .
50. In asses~ing the profits of business by the two The Commisswnappellant-companies for the year 1949-50 the Income- er 0! Income-Tax
tax Officer had therefore to proceed in accordance
Bombay
with the provisions of this Ordinance. For the
purpose of calculating the depreciation allowance
Das Gupta J.
to which the assessee was entitled in computing the
profits or gains of the business the written down
value of the building, machinery and plants or furniture had first to be ascertained in accordance with
s. 13(5) of the Ordinance which ran thus:-
"Written down value" means:-
(a) in the case of assets acquired in the previous year, the actual cost to the assessees;
(b) in the case of assets acquired before the
previous year the actual cost to the assessee
less all depreciation actually allowed to him
under this Ordinance or allowed under any Act
repealed hereby or which would have been allowed to him if the Indian Income-tax Act, 1922,
was in force in the past."
As the assets-of both the assessees- had been
acquired before the previous year s. 13(5) (bJ applied.
Reil;ding the "'.?rd~ in the last part of s. 13(5) (b) as
equivalent to which would have been allowable to
him if the Indian Income-tax Act, 1922, was in force"
the Income-tax Officer, in ascertaining the written
down value, deducted depreciation which would have
been allowable under the Indian Income-tax Act
1922, if it had been in force and a claim had bee~
!11ade supported by prescribed particulars. This amount
m the case of the Mahalaxmi Mills Ltd., the appellant in C.A. ~o. 599/62, was
computed as
Rs. 17,21,041 and m the case of the Master Silk Mills
Ltd., the appellant in C.A. No. 601/62, was calculated
as Rs. 2,02,500. The obvious result of deducting
220
SUPREME COURT REPORTS
[1964]
1963
this amount was that the written down value became
-
considerably lower than what it would have been
The Mahalaxmi otherwise and so the depreciation allowance became
Mills Ltd.
less. The assessee's contention that no deduction
v.
should have been made on the strength of the words
The Commission- "which would have been allowed to him if the Indian
er of Income-Tax Income-tax Act, 1922, was in fact in force in the past"
Bombay
as in fact no claim was made or could be made for
such allowance, was rejected by the Income-tax
Das Gupta J. Officer. The Appellate Assistant Commissioner as
also the Income-tax Tribunal, however, took a different
view and held that this expression "or which would
have been allowed to him if the Indian Income-tax
Act, 1922, was in force in the past" did not permit
the Income-tax Officer to make any deduction under
this head. The question of law which was referred
to the High Court under s. 66(1) of the Indian Incometax Act on the application of the Commissioner
of Income-tax has therefore been framed thus:-
"Whether on the above facts and circumstances
of the case and upon a proper construction of the
expression "or which would· have been allowed to
him if the Indian Income-tax Act, 1922, was in force
in the past" in Section 13(5)(b) of the Saurashtra
Income-tax Ordinance, 1949 the written down value
has to be computed by deduction from the actual
cost of depreciation allowance which was allowable
under the Indian Income-tax Act, 1922, even though
not claimed?"
In each of the case, the High court answered
the question in the affirmative, but gave a certificate
that it was a fit case for appeal to the Supreme Court
under s. 66(A) 2 of the Indian Income-tax Act. The
present appeals have been filed on the basis of these
certificates.
On behalf of the appellants Mr. Kolah has argued
that the Ordinance has not used the words "would
have been allowable to him" nor the words" would
have been allowed to him if a claim supported by
prescribed particulars had . been made", a~d there
is no justification for readmg these words rnto the
•
•
-.
5 S.C.R.
SUPREME COURT REPORTS
221
Ordinance. He has stressed the fact that in manv
1963
cases where the Indian Income-tax Act is in force
the assessee might find it to his interest not to make a The Mahalaxrni
claim for the depreciation allowance and so no deMills Ltd.
preciation allowance would then be allowed to him.
v.
He concedes that it may be that the intention of the Raj The CommissionPramukh in using these words in the Ordinance was er of Income-Tax
that the depreciation which could have been and would
Bombay
have been allowed if a proper claim had been made and
substantiated, assuming the Indian Income-tax Act,
Das Gupta J.
1922, was in force in the past, should be deducted in
ascertaining the written down value. He contends
however that the words actually used are not sufficient to express and give effect to this intention. According to him, it was necessary in order to give effect
to such an intention that the words "if a ~!aim had
been made supported by proper particulars" or at
least the words "if a claim had been made" had been
used in this clause. 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 down value.
Mr. Kolah complains that on this construction
the position of the assessee becomes worse than
222
SUPREME COURT REPORTS
[1964]
1963
if the Indian Income-tax Act, 1922, had actually
been in force in Saurashtra. If that had been the
The Mahalaxmi case only the depreciation actually allowed in the
Mills Ltd.
earlier years would have been deductible and so,
v.
if no claim had been made and therefore no depreThe Commission- ciation had been actually allowed, nothing would
er 01 Income-Tax be deductible under this head. It does not stand to
Bombay
reason, argues Mr. Kolah, that the position of the
assessee should be made worse by this fiction in
Das Gupta 1· s. 13(5) (b) of the Ordinance than it would have been
if the Act had in fact been in force. It is 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 that intention.
Mr. Kolah urged that it would cause undue
hardship to the assessee, that without having actually
availed of any depreciation he would be treated as
if he had done so. The words used do not however
leave any doubt about the meaning and whether or
not any hardship has been caused is beside the point.
Neither of the two cases cited by Mr. Kolah
in support of his argument is of any assistance.
Jn
Commissioner of Income-tax v. Kamala .Mills Ltd.< 1lthe
Calcutta High Court decided that the words "actually
allowed" ins. 10(5) (b) of the Indian Income-tax Act
as amended by the Income-tax (Amendment) Act
(XXIII of 1941) are unambiguous and connote the
idea that the allowance was in fact given effect to.
The Court rejected a contention of the Income-tax
authorities that the expression "actually allowed"
means "allowable" under the law in force. In that
case the Court had not to deal with any expression
similar to "depreciation which would have been
allowed if the Indian Income-tax Act, 1922, was in
(I) [1949] 17 I.T.R. 130.
•
(
•
5 S.C.R.
SUPREME COURT REPORTS
223
force". In Rajaratna Naranbhai Mills Ltd., v. Com1963
missioner of Income-tax(1 J the Bombav High Court
had to construe the words "the amount of depreciaThe Maha/axmi
tion applicable" and held that as the words were not
Mills Ltd.
"depreciation allowed" but "depreciation applicav.
hie" it was immaterial whether the assessee got any The Commissionbenefit of depreciation in any previous year. Here also, er of Income-Tax
the Court was not called upon to consider the effect
Bombay
of the words under our present consideration, viz.,
the depreciation which would have been allowed
Das Gupta J.
if the Indian Income-tax Act,
1922 had been in
force. Thus, neither of these
decisions has any
application to the present appeals.
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.
For the assessment years 1951-52 the controversy
arises in a different way. In 1950, Saurashtra became
a Part B State of the Union of India; by s. 3 of the
Indian Finance Act, 1950, the Indian Income-tax
Act was extended to it. ln 1951-52 therefore the
Indian Income-tax Act, 1922, was in force in Saurashtra
in which Bhavnagar was included. So, in calculating
the written down value of assets acquired before the
previous year the Income-tax Officer had to apply the
provisions of s. 10(5) (b) of the Indian Income-tax
Act, 1922, which runs thus:-
"In the case of assets acquired before the previous year the actual cost to the assessee less
all depreciation actually allowed to him under
this Act, or any Act repealed thereby, or under
executive orders issued when the Indian Incometax A~t. 1886 (Il of 1886) was in force."
What the Income-tax Officer did was to deduct
not only the depreciation allowea in the assessment
year 1950-51 under the Indian Income-tax Act but
also the depreciation allowed in the assessment year
(I) [1950] 18 l.T.R. 122.
224
SUPREME COURT REPORTS
(1964]
1963
1949-50 under the Saurashtra Income-tax Ordinance
-
and the depreciation availed of in the previous years
The Mahalaxmi by the assessee under the Bhavnagar War Profits
Mills Ltd.
Act. There is or can be no dispute that the deprev.
ciation allowed in the assessment year 1950-51 was
The Commission- rightly deducted. There might have been a dispute
er 0! Income-Tax about the depreciation allowed in 1949-50 under the
Bombay
Saurashtra Income-tax Ordinance, but, as before
the High Court the assessee conceded that this amount
Das Gupta J. was also rightly deducted, and no controversy on
this was raised either before the High Court or before
us. The only dispute that remains is whether the
depreciation availed of under the Bhavnagar War
Profits. Act-Rs. 5,93,285 in C.A. No. 600/62 by the
Mahalaxmi Mills Ltd., and Rs. 1,26,707 in C.A.
No. 602/62 by the Master Silk
Mills Ltd.-was
deductible in law. The Appellate Assistant Commissioner agreed with the Income-tax Officer that this
was allowable. The. Appellate Tribunal, however,
took a different view, but on the prayer of the Commissioner of Income-tax referred the following two
questions to the High Court under s. 66(1) of the
Indian Income-tax Act:-
"I. Whether on the above facts and circumstances of the case and on a correct interpretation of
the relevant provisions of s. 10(5) lb) read with
the Taxation Laws (Part B States) (Removal of
Difficulties) Order, 1950, paragraph 2 and the
Notification No. 19 (S.R.0.477) dated 9th March
1953 under Section 60A the written down value is
to be computed after deducting depreciation
allowance which could have been claimed under
the Indian Income-tax Act, 1922?
2. Whether the Notification No. 19 (S.R.O. 477)
dated
9th March 1953 is
ultra vires of the
powers of the Central Government?"
The High Court has answered the second question in the affirmative and the correctness of that
is no longer in dispute before us.
..
',
·--
J
• •
5 S.C.R.
SUPREME COURT REPORTS
225
As regards the first question it appear.s to us
1963
that the matter in controversy between the parties
which was actually considered by the High Court The Mahalaxmi
is not clearly brought out by the question as framed.
Mills Ltd.
Both parties agree that the real question on which
v.
the High Court's view was sought and which has The Commissionbeen actually cansidered by the High Court may er of Income-Tax
be expressed thus:-
Bombay
"Whether on the above facts and circumstances Das GuptaJ.
of the case and on a correct interpretation of
the relevant provisions of Section IO (5) (b) of the
Indian Income-tax Act, 1922 read with the Taxation Laws (Part B States) (Removal of Difficulties) Order, 1950, paragraph 2 and the Notification No. 19 (S.R.O. 477) dated the 9th March 1953
under section 60A the depreciation availed of by
the assessees under the Bhavnagar War Profits
Act was a deductible amount in computing the
written down value of the assets."
It will be noticed that the validity of the Notification referred to in the question was the subjectmatter of the second question and the correctness
of the High
Court's
answer that it was invalid,
was not questioned before us. What really remained
to be considered by the High Court was the effect
of paragraph 2 of the Taxation laws (Part B States)
(Removal of Difficulties)
Order,
1950-to which
we shall later refer as the "Removal of Difficulties
Order". The High Court held that the provisions
of this paragraph applied to these two cases of assessment for 1951-52 and under them the depreciation
already availed of by the assessees under the Bhavnagar War Profits Act had to be deducted in computing the written down value. The correctness of this
decision is challenged before us in C.A. Nos. 600
and 602 of 1962.
The Removal of Difficulties Order was made
by the Central Government on December 2, 1950,
in exercise of the powers conferred by s. 12 of the
Finance Act, 1950, and Section 5 of the Opium and
,. I SCI/64-15
226
SUPREME COURT REPORTS
(1964]
1963
and Revenue Laws (Extension of Application) Act,
-
1950. We are concerned in the present case only
The Mahalaxmi with s. 12 of the Finance Act, 1950. That section runs
Mills Ltd.
thus:-
v.
"If any difficulty arises in giving effect to the
The Commissionprovisions of any of the Acts, rules or orders
er of Income-Tax
extended by section 3 or section 11 to any State
Bombay
or merged territory, the Central Government may,
Das Gupta J.
by order, make such provision or give such
direction as appears to it to be necessary for
removing the difficulty."
•
Section 3 of the Act had the effect of extending
the Indian Income-tax Act, 1922, to Part B States in
the Union of India. It was not disputed that it was
within the competence of the Central Government to
make the Removal of Difficulties Order, 1950, if any
difficulty arose in giving effect to the Indian Incometax Act in an area to which it so became extended. In
making the order the Central Government has expressly said: "That certain difficulties had arisen in giving
effect to the provisions of the Indian Income-tax
Act, 1922 ....................... .in Part B States" and so,
the order was made. In Commissioner of Income-tax
Hyderabad v. Dewan Bahadur Ram Gopal Mills Ltd., (ll
this Court held that it was for the Central Government
to determine if any difficulty of the nature indicated in
s. 12 had arisen and then to make such order or give
such direction as appeared to it to be necessary to
remove the difficutly. It was in view of this decision
that Mr. Kolah conceded that the order was validly
made. He contends however that it is only when
a difficulty is actually experienced in giving effect
to the Indian Income-tax Act that the provision of
the Order can come into operation in a particular
case. In the cases now under consideration, he
argues, no such difficulty was actually experienced
and so, paragraph 2 would have no application.
In our opinion, the High Court rightly rejected
this contention. The consequence of the Removal
of Difficulties Order being validly made under s. 12
(I) [196!] 2 S. C.R. 318.
..
'J -
- y
SS.C.R.
SUPREME COURT REPORTS
227
of the Finance Act, 1950, is that paragraph 2 of the
1963
Order (as also the other paragraphs) have to be ap-
-
plied and no exception can be made. Paragraph 2 The Mahalaxmi
runs thus:-
Mills Ltd.
"In making any assessment under the Indian Th c v. . .
Income-tax Act, 1922, all depreciation actually
e.r ,ommissi:,n11
d
d
l
l
f
P
S
er o1 income-iax
a owe un er any aws or ru es o a art B tate
B
b
relating to income-tax and super-tax or any law
om ay
relating to tax on profits of business shall be
Das Gupta J.
taken into account in computing the aggregate
depreciation allowance referred to in sub-clause
(c) of the proviso to clause (iv) of sub-section 2,
and the written down value under clause (b) of
sub-section 5, of section 10, of the said Act."
These words require "all depreciation 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" to be taken into
account in computing the written down value under s.10
(5) (b) of the Indian Income-tax Act,-irrespective
of whether any di:tlkulty has or has not arisen in
a 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
each for 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 Incometax Officer to see first whether any difficulty has arisen.
We are of opinion that whether any difficulty
did actually arise in the cases now under considera-
228
SUPREME COURT REPORTS
[1964]
1963
tion in applying the Indian Income-tax Act, 1922,
-
. in this Part B State or not, paragraph 2 of the ReThe M~halaxmz moval of Difficulties Order must be applied according
Mills Ltd.
to its terms. It is therefore not necessary to examine
v.
whether any such difficulty did arise in these cases.
The Commissioner of Income-Tax
This brings us to Mr. Kolah's main contention
Bombay
that the Bhavnagar War Profits Act is not one of the
laws depreciation allowed under which bas to be
Das Gupta J. deducted under paragraph 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." Thi&
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 depreciation 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 on 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 se~ond 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 i;entence 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.
After careful consideration we have however
come to the conclusion that the omission of the words
I
•
r
'( -
S S.C.R.
SUPREME COURT REPORTS
229
"of a Part B State" in this paragraph is not by way
1963
of ellipsis but a deliberate omission with the intention of including laws which could not be stated The Mahalaxmi
to be laws of a Part B State but had been Jaws in the
Mills Ltd.
same area at a time before they formed part of a
v.
Part B State. lf the omission had been by way of The Commissione\lipsis, as argued by Mr. Kolah, it would be reason- er of Income-Tax
able to think that the words "any law relating to tax"
Bombay
would also have been omitted and this part of the
paragraph would have read as "all depreciation actualDas Gupta J.
ly allowed under any Jaws 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 Jaw 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 Jaw relating to tax on profits of business."
For, "a law relating to tax on profits of business"
is also a Jaw relating to Income-tax and, so, depreciation actually allowed under a law relating to tax
on profits of business wnicn was law of a Part B State
would come within the first portion of the clause.
It is worth notidng 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 they were not
laws "of a Part B State" but of a component State.
We have come to the conclusion that the Bhavnagar War Profits Act is within the words "any law
230
SUPREME COURT REPORTS
[1964]
1963
relating to tax on profits of business" in paragraph
2 of the Removal of Difficulties Order. We hold
The Mahalaxmi that the High Court has rightly decided that the deMills Ltd.
preciation availed of by the assessee under the Bhavv.
nagar War Profits Act was a deductible amount in
The Commission- computing the written down value of the assets.
er of Income-Tax
All h
1
h
C'.
d"
·
d · h
B
b
t e appea s are t ere1ore 1sm1sse wit costs.
om ay
There will be one set of hearing fee in all the appeals.
Das Gupta J.
1963
October 24
Appeal dismissed.
STATE OF MAHARASHTRA
v.
MISHRI LAL TARACHAND LODHA AND
OTHERS
(P. B. GAJENDRAGADKAR,
K. SUBBA RAO,
K. N.
WANCHOO, J.C. SHAH AND RAGHUBAR DAYAL JJ.)
Bombay Court Fees Act, 1959 (36 of 1959), Art. I, Sch. I-
" Value of the subject-matter in dispute in appeal-Construction of
-A.ward of interest pendente lite noi specifically challenged-Court
fees, if payable.
The plaintiff-respondent No. I instituted a suit for recovery
of the amount lent to the defendant with interest upto the date of
the suit. His claim was decreed in a sum of Rs. 13,033-6-6 with
future interest from the date of suit till realisation at 4 % per annum
on a sum of Rs. 10,120.
Against this decree the defendant appealed
to the High Court and valued the appeal at Rs. 13,033-6-6 and
paid the requisite court fee on that amount.
All his grounds
of appeal related to the merits of the plaintiff's claims and did
not deal with the correctness of the trial court awarding future
pendente lite interest on the rate at which it was to be calculated.
The Taxing Officer directed the defendant to pay the deficit court
fee of Rs. 70 on the memorandum of appeal as he was of the opinion
that the appeal was against the whole decree and that the amount
of value of the subject-matter in dispute for purpose of court fee
was Rs. 14,036.SOnP. as the amount of interest from the date of the
suit till the date of the decree on Rs.10,120 came to Rs. l,033.40nP.