LexS.S.GADGIL, INCOME-TAX OFFICER, BOMBAY versus LAL AND COMPANY
Open in Lexace · Ask the AI about this caseJudgment (excerpt)
1964
State of Madra1
v.
C. 1. Coelho
Sikri
1.
1964
April, 30.
72
SUPREME COURT REPORTS
[1964]
amount borrowed for the purchase of the plantation when
the whole transaction of purchase and the working of the
plantation is viewed as an integrated whole, is so closely
related to the plantation that the expenditure can be said
to be laid out or expended wholly and exclusively for the
purpose of the plantation. In this connection, it is perti-
nent to note that what the Act purports to .tax is agricul-
tural income and not agricultural receipts.
from the agri-
cultural receipts must be deducted all expenses which in
ordinary conunercial accounting must. be debited against
the receipts.
There is nothing in the Act which prohibits
such expenses from being deducted.
No farmer would
treat interest paid on capital borrowed for the purchase
of the plantation as anything but expenses, and as long as
the deductions he claims, apart from any statutory prohi-
bition, can be fairly said to lead to the determination of
the true net agricultural income, these must be allowed
under the Act.
In principle, we do not. see any distinction
between interest paid on. capital borrowed for the acquisi-
tion of a plantation and that between interest paid on capi-
tal borrowed for the purpose of running an existing planta-
tion; both are for the purposes of the plantation.
In the result, we agree with the High Court that the
deduction claimed by the assessee fell within the scope of
s. 5 ( e) of the Act, and that the whole of Rs. 22,628-9-8
and not merely Rs 1,570-10-7 sho_uld have been deducted
from his assessable income. The appeal fails and is dis-
missed with costs.
Appeal dismissed.
S. S. GADGIL, INCOME-TAX OFFICER, BOMBAY
v.
LAL AND COMPANY
(K. SUBBA RAo, J. c. SHAH AND s. M. S!KRr, JJ.)
Jnconu Tax-Assessment as agent of non-resident party-Time limit
for issuing notice-Scope of amending
statute
extending
time
'\
8 S.C.R.
SUPREME COURT REPORTS
73
limit-Validity of notice-Indian Income-tax A.ct 1922 (11
of
1922). 1. 34(1)(b)(iii) proviso.
The appellant company was carrying on business in
Bombay
as
commission agents.
In the course of assessment proceedings for the
year 1954-551 the Income-tax Officer noticed from the assessee"s
books
of account tnat the assessee had business connections with certain non-
resident parties and found that the transactions disclosed that through
the assessee those non-resident parties were receiving income, profits
and gains. He considered that s. 43 of the Indian Income-tax Act, 1922,
was applicable to the assessee and issued on March 27, 1957, a notice
under s. 34 of the Act for assessment of the assessee as an agent of
the said non-resident parties. The assessee pleaded, inter alia, that the
proceedings intiated by the Income-tax Officer under s. 34 were barred
since the notice issued by him was after the expiry of one year from
the end of the assessment year 1954·55, but the Income.tax
Officer
rejected the contention relyin'g on the amendment made to the proviso
to s. 34(1)(b)(iii) by the Finance Act, 1956, under which the period
of one year was changed to two years.
The amendment
was given
retrospective operation upto April 1, 1956, but since the power to issue
a notice under the unamended Act had come to an end on Marcil 31,
1956, the question was whether the Income·tax Officer could issue a
notice of assessment to a person as an agent of a non.resident party
under the amended provision when the period prescribed for such a
notice had before the amended Act came into force expired.
HELD:
The proceedings initiated by the Income·tax Officer by the
notice dated March 27, 1957, were barred; the authority of the Income-
tax Ofticer under the Indian Income·tax Act before it was amended by
the Finance Act of 1956 having come to an end, the amending provision
would not entitle him to commence a proceeding even though at the
date when he issued the notJce it was within the period provided by the
amendment.
Notwithstanding the fa('t that there was no determinable point of
time between the expiry of the time provided under the old Act and
the commencement of the An1tndn1ent Act, in the absence of an express
provision or clear implication, the legislature could not be said to have
intended to attribute
to
the Amending provision
a greater
retros·
pectivity than was expressly n1entioned.
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