LexTHE MAHALAXMI MILLS LTD. versus THE COMMISSIONER OF INCOME-TAX, BOMBAY
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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 Comm1sswn- s. 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 Income- tax Act read with para 2 of the Taxation Laws (Part B States) (Removal of Difficulties) Order, 1950, while computing the writ- ten 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 deprecia- tion 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 ex- perienced 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 Pro- fits 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 Saura- shtra Income-tax Ordinance, the words "which would have been allowed to h
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