Law: Income Tax Act, 1922

Section: 60A

Section 294A of the Income-tax Act, 1961 [Corresponding to section 60A of the Indian Income-tax Act, 1922], read with Para 16 of the Part B States (Taxation Concession) order 1950 and articles 372, 278(1)(a) and 295(1)(b) of the Constitution of India - Power to make exemption, etc., in relation to certain Union Territories - Assessment years 1950-51 to 1952-53 - Assessee-company inter alia was granted exemption from taxation on income for period of 12 years by order dated 18-1-1947 of Ex-Ruler of Gwalior State which was incorporated in agreement dated 7-4-1947 between Ruler of Gwalior State and assessee-company - Gwalior State became part B State of Madhya Bharat on 26-1-1950 and Indian Income-tax Act was extended to part B States from 1-4-1950 - Subsequently, assessee applied under clause 16 of concession order for concession regarding income-tax and super tax - Government of India granted exemption for assessment years 1950-51 to 1959-60 - ITO finalised assessment proceedings and passed assessment order for assessment years in question - Assessee claimed that under order dated 18-1-1947 and agreement following thereon, company was entitled to exemption on grounds that order dated 18-1-1947 was special law and that in view of article 295(1)(b) of Constitution obligation cast on Ruler of Gwalior by agreement of 7-4-1947, became obligation of Government of India through Government of Madhya Bharat, and that agreement was binding under article 278(1)(a) of Constitution - Whether only those orders of Ruler which were jurisdictionally legislative acts continued as law under article 372 of Constitution - Held, yes - Whether simply because order dated 18-1-1947 was passed by an absolute ruler it did not necessarily follow that it was law for purpose of article 372 of Constitution - Held, yes - Whether devolution of rights and liabilities prescribed by article 295 of Constitution does not involve and is not intended to involve any change in character of said rights and liabilities ; and so pleas which could have been raised in respect of said rights and liabilities prior to devolution remain entirely unaffected - Held, yes - Whether, therefore, there was no question…

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