THE COMMISSIONER OF EXCESS PROFITS TAX, HYDERABAD versus M/S. S. R. V. G. PRESS COMPANY, KURNOOL

Citation: [1962] 1 S.C.R. 232 · Decided: 10-03-1961 · Supreme Court of India · Bench: J.L. KAPUR · Disposal: Dismissed

Judgment (excerpt)

232. 
SUPREME COURT REPORTS 
[1962] 
'96' 
orders that had become final before tho Act came into 
Dafeda-;;iranjan force. 
Singh & Another 
Nor do we find any force in the argument of learned 
v. 
counsel for the State that under s. 27 of the Act, the 
Custodian, 
Custodian-General may at any time revise the order 
Evacuee Property of any Custodian and, therefore, the Custodian-Gene' 
(Pb.) 6- Anoth" 
1 
· 
'th t 
l' 't f t' 
d 
ra can revise w1 ou any im1 o 
ime any or er 
Subba Rao J. made by any Custodian under any previous law. Sec-
tion 27 of the Act can be given retrospective opera-
tion only to the extent permitted by s. 58(3) of the 
Act. We have held thats. 58(3) does not affect the pre-
vious operation of the Jaw and therefore cannot affect 
the finality of the orders made under the Ordinance. 
So the words in the section "any time" or "any Custo-
dian" must necessarily be confined only to orders of 
any one of the Custodians defined in the Act and to 
orders of Custodians deemed to have been made under 
the Act but had not become final before the Act came 
into force. 
Marek zo. 
No other point was raised. In the result, the order 
of the Custodian-General is set aside and that of the 
Custodian dated June 6, 1949, is restored. The res-
pondents will pay the costs to the appellants. 
Appeal allowed. 
THE COMMISSIONER OF EXCESS PROFITS 
TAX, HYDERABAD 
v. 
M/S. S. R. V. G. PRESS COMPANY, KURNOOL 
(J. L. KAPUR and J. C. BRAH, JJ.) 
Excess Profits Tax-Sales Tax-Provisional payment in 
advance, if permissible deduction-Excess Profits Tax Act, r940 
(XV of r940), r. I2, Sch. I. 
,1
• 
• 
The respondents were entitled to a rebate of sales tax on 
'. 
goods purchased by them and used,in their manufacturing process. 
They had adopted the system which was permissible under law, 
" 
·\ 
1 S.C.R. SUPREME COURT REPORTS 
233 
' 
I96I 
of paying sales tax provisionally assessed by the Sales Tax 
Officer on the basis of turnover of the previous year, the liability Tl 
Connnissioner 
being adjusted at the end of the year of account in the light of 
" 
I 
f 
h. h . 
of Excrss Profits 
the actual turnover of that year, as a resu t o w 1c , m some 
d 
· 
Taz, Hyderabad 
years the respondents were assesse to pay tax in excess of the 
v. 
amount provisionally assessed, in others they obtained refund of 
the excess tax paid under ·the provisional assessment. 
The M/s. 5 · R. v. G. 
ffi 
. d h 
d 
. 
d d d 
Press Co1npany, 
Income Tax 0 cer recognise t e system an perm1tte 
e uc-
J( urnool 
tion of sales tax actually paid under the provisional assessment. 
The Excess Profits Tax Officer had in assessing liability to ex-
cess profits tax for previous periods adopted the same method of 
computation, but for the chargeable accounting period, he did 
not allow the deduction of the full amount of tax provisionally 
debited to the sales tax, because in his vie\V it \Vas not reason-
able and necessary expenditure and thus not a permissible 
deduction. 
·The question was whether the sales tax payments were 
unreasonable and unne<essary having due regard to the require-
ments of the business and consequently not deductible under 
r. 12 Sch. 1 of the Excess Profits Tax Act. 
Held, that it.is for the Excess Profits Tax Officer to decide 
whether the deductions claimed are reasonable and necessary 
having regard to the requirements of the business. But the 
reasonableness and necessity of the expenditure sought to be 
deducted under r. 12 Sch. 1 of the Excess Profits Tax Act in 
assessing excess profits tax liability must be adfudged in the 
light of commercial expediency, and not on any legalistic con-
sideration. Payments made in satisfaction of liability which 
arises by virtue of assessment made by the Sales Tax Officer 
cannot be called unreasonable. Payment of sales tax as assessed 
being obligatory and necessary for the purpose of carrying on the 
business, it must be deemed to satisfy the requirements of r. 12 
of Sch. 1 of the Excess Profits Tax Act. 
In re M. P. Kumaraswami Raja, (1955) 6 Sales Tax Cases 
n3, referred to. 
CIVIL 
APPELLATE 
JURISDICTION: 
Civil 
Appeal 
No. 270 of 1960. 
Appeal from the judgment and order dated Febru-
ary 21, 1956, of the Andhra Pradesh High Court in 
Case Reference No. 4 of 1955. 
K. N. Rajagopal Sastri and D. Gupta, for the appel-
lant. 
H.J. Umrigar, Thiyagaraja and G. Gopalakrishnan, 
for the respondents. 
1961. March 10. The Judgment of the Court was 
delivered by 
30 
234 
SUPREME COURT REPO

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