CHHATURAM HORILRAM LTD Vs. STATE OF BIHAR

JUDGEMENT

(1.) This reference is made by the Income-tax Appellate Tribunal under Section 66 (1), Income-tax Act.

(2.) The assessee Chaturam Horilram Limited of Kodarma is a private limited company which is composed of two Hindu undivided families of which Chaturam & Darshanram are the kartas. The assessee carried on the business of exporting mica for sale to foreign countries. On 22-12-1939 the Income-tax officer made assessment for the year 1939-40 & determined the total income to be Rs. 1,09,200. In appeal the Appellate Tribunal set aside the assessment on the ground that the Indian Finance Act of 1939 was not in force in Chotanagpur which was a partially excluded area. At the instance of the Commissioner of the Income-Tax reference was made to the High Court on the following question: "whether levy of income-tax should be made on the assessee for the year 1939-40 in the absence of a notification under Section 92 (1), Govt. of India Act, by the Governor extending the Finance Act of 1939 to the excluded area." On 30-9-1943, the High Court answered the question in the negative.

(3.) After the decision of the Appellate Tribunal but before the date of the judgment of the High Court the Governor of Bihar enacted Bihar Regulation IV of 1942 to which the Governor-General gave assent on 30-6-1942. The notification was published in the Bihar Gazette on 7-7-1942. As a result, the Indian Finance Act of 1939 was brought into force in Chotanagpur Division & the Santal Parganas District with retrospective effect from 30-3-1939.