THE COMMISSIONER OF INCOME-TAX versus THE PATIALA CEMENT CO. LTD.

Citation: [1957] 1 S.C.R. 1161 · Decided: 17-05-1957 · Supreme Court of India · Bench: NATWARLAL HARILAL BHAGWATI · Disposal: Appeal(s) allowed

Judgment (excerpt)

• ' 
S.C.R. 
SUPREME COURT REPORTS 
1161 
THE COMMISSIONER OF INCOME-TAX 
v. 
THE PATIALA CEMENT CO. LTD. 
[BHAGWATI, S. K. DAs and J .. L. KAPUR JJ.l 
Income 
Tax~Patiala 
State 
Income-tax 
Law-Income-tax 
Officer's 
Orders-A ppealability-Assessmcnt 
years 
1948-49 
and 
1949-50-Applicability of Indian Income-tax Act to Part R States-
Patiala Income-tax Act, 2001 (VIII of 2001), s. 18(3A)(7)-Finance 
Act, 1950 (XXV of 1950), s. 13--lndian Income-tax Act, 1922 (XI 
of 1922), s. 2(14A). 
The respondent was a company incorporated in the former 
Patiala State with its registered office in the territory of Pepsu, a 
Part B State.· For the assessment years 1948-49 and 1949-50 in 
respect of the amounts of income-tax and super-tax which it failed 
to deduct from out of the remuneration 
paid to its 
managing 
agents, the Income-tax Officer took action under the provisions of 
s. 18 of the Patiala Income-tax Act. The Act did not provide for 
an appeal against the orders of the Income-tax Oflic·er under that 
section and the question for determination was whether an appeal 
lay under the provisions of the Indian Income-tax 
Act, 1922, 
which was extended to all Part 13 States with effect from April 1, 
1950, by s. 13 of the Finance Act, 1950, and s. 2(14A) of the 
Indian Income-tax Act, 1922 : 
Held, that the result of the extension of the Indian Income-
tax Act, 1922, to Part B States was that that Act was applicable 
to the assessment years 1950-51 and subsequent years and that 
for the assessment years 1948-49 and 1949-50 the law applicable 
was the Patiala Income-tax Act. 
Accordingly, an appeal against 
the order of the Income-tax Officer in question was n~t competent. 
The Union of India v. Madan G.opal Kabra, (1954) S.C.R. 541 
and D. R. Madhavakrishnaiah v. The Income Tax Officer, (1954) 
S.C.R. 537, followed. 
CIVIL 
APPELLATE 
No. 118 of 1955. 
JURISDICTION : 
Civil 
Appeal 
Appeal from the judgment and order dated May 26, 
1954, of the P.E.P.S.U. High Court in Misc. 
Case 
No. 31 of 1953. 
G. N. f oshi and R. H. Dhebar, for the appellant. 
The respondent did not appear. 
1957. 'May 17. The Judgment of the Court was 
.,. 
delivered qy 
B-81 S. c, India/.'iq 
1957 
May 17 
1957 
The Commissioner 
of Income-lax 
Y. 
The Paliala 
1162 
SUPREME COURT REPORTS 
[1957] 
KAPUR, J .-This is an appeal under certificate of 
the Pepsu High Court and the question for decision 
relates to 
the 
applicability 
of 
the 
Indian Income-
tax Act, 1922, to the erstwhile Pepsu area in the years 
of assessment 1948-49 and 1949-50. 
CemenJ Co. Ud. 
The assessee company (the respondent before us), 
was incorporated in the Patiala State and had its regis-
Kapu, J. 
tered office at Surajpur in Pepsu. For the year of 
assessment 1948-49 the company failed to deduct from 
out of the. remuneration paid to its managing agents, 
who were non-residents, the income~tax and the super-
tax which, it, under the law, was required to do. It 
also paid to its auditors auditing fees and from out of 
this sum also it did not deduct the income-tax and 
super-tax under the provisions of the Patiala Income-
tax Act. The two sums in dispute were Rs. 59,787-1-0 
and Rs. 581-4-0 respectively. For the assessment year 
1949-50 also the assessee company failed to make the 
deduction from the remuneration paid to its manag-
ing 
agents 
and 
the 
income-tax 
deductible 
was 
Rs. 
52,484-14-0 
and 
super-tax 
Rs. 
21,611-6-0. 
The 
Income-tax 
Officer took 
action against 
the assessee 
company under ss. \8(3A) and 18(7) of the Patiala 
Income-tax Act and consequently issued two demand 
notices for the amounts 
above 
mentioned. 
Against 
this order of the Income-tax Officer the assessee com-
pany took an appeal to the appellate Assistant Commis-
sioner who reduced the amount demanded but did not 
decide the question whether the assessee company was 
bound to make the deductions or not. The assessee com-
pany then appealed to the Income-tax Appellate Tribu-
nal and it held that under s. 18(7) of the Patiala Income-
tax- Act no order was required to be passed by the 
Income-tax Officer and that po appeal 
lay 
to 
the 
Appellate Assistant 
Commissioner 
against 
the order 
under s. 18(3A) as there was no provisio!l for it under 
the Patiala Income-tax Act. 
Before the Tribunal it 
was contended that at the time when the appeals were 
decided by the Appellate Assistant Commissioner, the 
Patiala Income-tax 
Act had ceased to be in force 
and 
therefore the appeals we

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