Accrued tax liability survives later residence change and partition when income was chargeable within the taxing jurisdiction

Tax liability that accrued during the accounting period within British India was not displaced by a later change in residence or the post-partition territorial change. The income had arisen from territories that formed part of British India when the liability attached, and the Indian Independence (Income-tax Proceedings) Order, 1947 did not apply because there was no demonstrated transfer of the case between Dominions or prior change in jurisdiction before the appointed day. The income-tax authority therefore retained jurisdiction to complete the assessments for the relevant years, and the assessments were competent.

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Issues: Whether the income-tax authority retained jurisdiction to complete assessments for accounting periods ending before the appointed day notwithstanding the assessee's later change of residence and the partition of India.

Analysis: The relevant income had arisen from territories which formed part of British India during the accounting years, and the assessee's liability to tax had already attached during that period. The Indian Independence (Income-tax Proceedings) Order, 1947 was not attracted on the footing of a transfer of the case between Dominions by agreement, nor was there any established alteration of jurisdiction before the appointed day bringing the matter within that Order. The later contention that the assessee became a non-resident after the accounting period did not divest the taxing authority of jurisdiction over income that had already become chargeable while the assessee was within the taxing jurisdiction. The findings also showed that the income was derived from within British India as it then stood, and that the liability to be taxed had accrued before 15 August 1947.

Conclusion: The jurisdiction of the income-tax authority was upheld and the reference was answered in the affirmative, against the assessee.

Final Conclusion: The assessments for the relevant years were held to be competent, and the taxing authority's power to proceed was sustained despite the subsequent territorial change.

Ratio Decidendi: Where tax liability has accrued during the relevant accounting period within the taxing jurisdiction, a later change in residence or political territory does not by itself extinguish the authority's jurisdiction to assess that income.

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