Law:

Section:

Section 14(2)(c) of the Indian Income-tax Act, 1922 (As amended by the Indian Income-tax (Amendment) Act, 1953] - Exemption of income accruing in Part B States - Assessment years 1950-51 to 1953-54 - Assessee company had its registered office in Part B State - Its first assessment was made for assessment year 1950-51 after financial integration - Amendment Act 1953 withdraw exemption available under section 14(2)(c) in respect of income accruing in Part B State with retrospective effect from 1-4-1950 - Whether assessee was liable to pay tax on its part B State income for assessment years in question - Held, yes Paragraph 6A of the Part B States (Taxation Concessions) Order 1950 - Rates of tax - Assessment years 1952-53 and 1953-54 - Whether in computing rebate due to assessee-company by virtue of paragraph 6A for assessment years in question, words "Indian rates of tax" should be taken to be effective rates after reduction of rebates allowed under relevant Finance Acts - Held, yes FACTS The assessee company had its registered office in Part B State and was carrying on business there. The first assessment on the assessee company under the 1922 Act, was made for the assessment year 1950-51. The 1922 Act, was extended to Part B States from 1-4-1950 Formerly, incomes accruing in Indian States were not subjected to any Indian tax but were taken for rate purposes only in the case of resident assessees. When the financial integration took place the incomes accruing in Indian States were subjected to tax, though at graduated rates, by means of the Taxation Concessions Order. However, a corresponding amendment was not made in section 14(2)(c) which still authorized that the State income should be taken only for rate purposes. This was set right on 1953, by means of the Indian Income-tax (Amendment) Act, 1953 whereby in section 14(2)(C) ', the words "part B state" were substituted as the words 'the State of Jammu and Kashmir' with effect from the 1-4-1950. The Income-tax authorities held that the assessee was liable to pay tax on its Part B State income for the assessment years in question. The assessee contended before the Tribunal that the amendment made with…

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