COMMISSIONER OF INCOME-TAX, MADHYA PRADESH versus M/S. BINODIRAM BALCHAND, LNDORE

Citation: [1970] 3 S.C.R. 328 · Decided: 16-12-1969 · Supreme Court of India · Bench: J.C. SHAH · Disposal: Dismissed

Judgment (excerpt)

328 
COMMISSIONER OF INCOME·TAX, MADHYA PRADESH 
1'. 
MIS. BINODIRAM BALCHAND, lNDORE 
December 16, 1969 
(J. C. SHAH AND K. S. HEGDE, JJ .] 
lnco111e-tax-PC1rt B States 
(Tct.x,ation 
ConcesJious) 
Order, 
1950. 
pcirar, 3(v), 4. 5. 6. 11 coul l2-Di1'idend inco111e, receii·ed h.r as.~'esseL< 
" resident of Pctrt B State-/11co111e-tax and super fllX payah/e by ns.res.\'ee. 
· Previous yeC1r-Rigl11 of tl.'isessee of change. 
The assessee was a Hindu undivided family with its head office in tr 
Part B State with several sources of income including managing agency 
commission and shares in companies and firms. 
Till the assessment year 
1947-48 the previous year adopted by the assessec \\-'as the appropriate 
Diwali year. Du'ring the Diwali year 1948-49 it derived dividend income 
· from a company registered in a Part B State. 
A part of the income. 
however, was attributable to the profits that accrued to the company in 
a P".trt A State. 
For the assessment year l 9S0~5 l 
the assessec claimc<l 
that in respect of its income by "''ay of commission from the managing 
and selling agency of the company, its· •previous year' was the one ending 
on ~larch 3l, 1950 and that in respect of the dividend income received 
from the company-the provisions of Part B States (Taxation ConccssionsJ 
Order, 1950. were applicable to it. 
HELD : ( J ) The asscssee was entitled to take the financial year as 
the relevant previous year.- [330 F-G] 
B 
( 
£) 
C.l.T .. M.P. v. Kcmclwnhni, C.A. No. 19."69 dt. 16-12-1969, followed. 
L 
'_2) As the asscssee. in the relevant previous year. was a resident of 
a P<.1rt B State, under paragraph 4 oflhe- O'rder, the assessce was entitled 
·to the benefit of paragraphs 5, 6. 11( 11. 12 and 13 of the Order. Since 
the relevant income was dividend income. 
paragraph~ 6 and 12 of the 
Order were applicable and the income-tax and super-tax payable hy the 
<isscssee had to be computed on the basis of the formulae given in pa,1'a-
graph 6 read with the Explunation to paragraph 3(vl of the Orde!. So 
f 
computed, so far as income tax is concerned, that part of the <l1y1den<l 
income attributable to profits accuring in the .Part A State \\'·as sub1ect to 
incon1e-tax onh• lit the concc.n·ional rarf!.\· prescribed in the Order. ao<l so 
f;ir :.is the supfr tax is concerned the l!ntirc dividend incon1c v.'<is subject :. 
to ).Uper tax llf the co11ce.n·ional rafe.\' mentioned in the Order. f.13 I F: 332 
E: 333 A-CJ 
CIVIL APPELLATE JuR1so1cT10~ ~. Civil Appeal No. 27 of 
1969. 
Appeal from the judgment and order dated October 2&. 1960 
of the Madhya Pradesh High Court in Misc. Civil Case No. 281 
of 1958. 
. 
. 
S. K. Aiyar and B. D. Sharma, for the appellant. 
H: 
M. C. Chagla, Rameshwar Nath. 
Mahinder Narain. 
and 
Swuranjit Sodhi, for the respondent. 
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· c.i:T. v: BINODIRAM (Hegde, I.) 
329 
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_, ,._-.....==.-, -=----_,-
-The JudgTI1ent of the Court was delivered by 
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. 
, Hegde, J. In this appeal by certificate brought by· the Com~ 
missioner of Income Tax, Nagpur,'· two questions arise for con-
sideration. They are,:. 
· 
-
· ., 
· 
· 
( 1) What· is. the "previous year·· in r~spect of ;the source of 
inco~!_e, viz. man'!g!rtg agcricy and~ selling ag(!ncy _ and financing 
of the Binod Mills Limited, Ujjain for the purpose of assessment 
for the assessment year\ 1950-51-whether· the year· ended 
31-3-1950 or Jhe ,year ended Diwali, 1949 '? and (2} Whether 
for the purpose ~of· bringing to tax the dividend .income of the 
assessee for the assessinei:tt year · 1950-51 and having regard to 
Ihe provisions of Pan B !>tates (Taxation Concessions) Order, 
1950 (in short 'Order'), the dividend income say of Rs. 34,468 
(gross Rs. 50,137·) as well as the dividend income of Rs. 2,28,392 
should be subjected io tax at the concessional rates mentioned in 
the Schedule to the 'Order' as held by 'the High Court .. 
' 
, 
--
The assessee ·is a Hindu. Undivided Family. with its Head-
office ·at Indore and _branches at several o<l1er. places· in some of 
the -former B States including the State of Madhya ~harat. II 
derived its income from several sources such as property, busi-
nesses, managing· agency. commission,' shares' in' partnership firms, 
. etc. The assessce's fam.ily .at one time was carrying on business 
-at Bombay and was assessed in the status of non-resident . Hindu 
Undivided Family. Its business in Bombay was, however, closed 
down sometim

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