A H WADIA Vs. COMMISSIONER OF INCOME-TAX

JUDGEMENT

(1.) The appellant is the agent of the Gwalior Durbar. The Durbar was participating in various trade and business operations, in and outside the Gwalior State for many years. The record shows that those activities in any event existed in 1924 when the predecessor of the present Maharaja was on the throne. That Maharaja had appointed Mr. F.E. Din-shaw as his agent in Bombay for his, trade or business operations. The record shows that money was advanced as loan and also on the security of immovable properties. The Gwalior Durbar as such has not been treated as an assessee under the Indian Income-tax Act, but in respect of certain trading and business operations of the Durbar the Indian Income-tax authorities sought to make the Durbar liable under the Government Trading Taxation Act, III of 1926. Section 2 of that Act, which alone is material for the present case, runs as follows: 2 (1) Where a trade or business of any kind is carried on by or on behalf of the Government of any part of His Majesty's Dominions, exclusive of British India, that Government shall, in respect of the trade or business and of all operations connected therewith, all property occupied in British India and all goods owned in British India for the purposes thereof, and all income arising in connection therewith, be liable: (a) to taxation under the Indian Income-tax Act 1922, in the same manner and to the same extent as in the like case a company would be liable, (b) to all other taxation for the time being in force in British India in the same manner as in the like case any other person would be liable. (2) For the purposes of the levy and collection of income-tax under the Indian Income-tax Act, 1922, in accordance with the provisions of Sub-section (1), any Government to which that sub-section applies shall be deemed to be a company within the meaning of that Act, and the provisions of that Act shall apply accordingly.

(2.) The Maharaja died in about 1925 and a Council of Regency was appointed, presumably as the present Maharaja was a minor at the time. Till his death Mr. F.E. Dinshaw continued to act as the Agent of the Durbar. Thereafter the present appellant was appointed the agent of the Durbar.

(3.) In response to notices issued under the Income-tax Act Mr. Dinshaw and thereafter the present appellant submitted returns to the Income-tax authorities in Bombay from year to year. The disputes between the parties in the present appeal relate to the assessment of the Durbar for the assessment year 1939-40. Being dissatisfied with the assessment order of the Income-tax Officer the appellant filed an appeal to the Appellate Assistant Commissioner, Income-tax, Bombay. Being dissatisfied with the order of the Appellate Assistant Commissioner the appellant asked for a reference to elicit the opinion of the High Court on certain questions. That application was made in 1940. The Income-tax Commissioner made a reference to the Court on October 17, 1946. We are unable to find any, much less satisfactory, reasons for this deplorable delay. As will be noticed hereafter, this delay has contributed largely to the difficulties of the High Court and of this Court in satisfactorily disposing of the matter. The statement of facts in the letter of reference is far from satisfactory, is scrappy and leaves this Court to find out relevant facts from different papers, if it can do so. These defects were noticed by the High Court and adversely criticised in the judgment of that Court. We endorse the observations of the High Court in this respect.