Law: Income-tax Act (XI of 1922)

Section: 10(2),10(vii),10(vi)

  Income-tax Act (XI of 1922), S. 10(2) (vii), second proviso - Independent provision having no relation with main clause (vii) nor with use of "building, machinery or plant" in relevant accounting year-Proviso takes back depreciation allowance given in preceding "years" and not only in "previous year"-Condition on which allowance taken back not dependent to use of "building, machinery or plant" in previous year but to total allowance given since assessee came to use such assets for purposes of business Word "such" occurring in second proviso-Interpretation and import.   Liquidator of Pursae Limited v. Commissioner of Income-tax, Bihar (1954) 26 I T R 265 and Commissioner of Income-tax, Bombay City v. National Syndicate (1961) 41 1 T R 225 ref.   Interpretation of statutes-Proviso to section-Cannot travel beyond scope of main enactment.   Income-tax Act (XI of 1922), S. 10 (2) (vi), (vii), second proviso-Surplus from sale of factories-AssessmentDepreciation allowed during preceding years-Held, liable to be taken back to extent sale price exceeding cost price, notwithstanding such factories not used for purposes of assessee's business during relevant accounting period.   Dates of hearing: 17th and 18th November 1965.   JUDGMENT   MUHAMMAD YAQUB ALI, J.-On the application of the Commissioner of Income-tax, North Zone, Lahore, under section E6 (1) of the Income-tax Act the following question has been referred to this Court for opinion:-   "Whether on the facts and in the circumstances of the case, the Tribunal was right in holding that the surplus arising out of the sale of factory was not liable to tax within the meaning of the second proviso to section 10(2)(vii) of the Income-tax Act?"   The question came to be formulated out of the order of the Income-tax Appellate Tribunal, dated the 11th July 1963, allowing the appeal of M./s. West Punjab Factories Ltd., Okara, (assessee) and holding that the surplus made by them by the sale of two cotton factories was not liable to charge under the second proviso to section 10 (2) (vii) of the Incometax Act.  …