Retrospective tax amendment and annual value valuation: Parliament's validating power upheld, and no question of law on facts.

Parliament could retrospectively amend a pre-Constitution income-tax provision saved by Article 372, and Article 245 was held to permit such validation; the amendment did not offend Articles 14, 141, 245, or 372 because the saved law remained amendable and the classification had a rational basis. On the property valuation issue, annual value was treated as a notional figure based on reasonable letting value, with actual rent and other surrounding factors relevant; municipal valuation was only one evidentiary factor. As the Tribunal applied the correct approach on the facts, no referable question of law arose on annual value.

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Issues: (i) Whether Parliament was competent to amend retrospectively the pre-Constitution income-tax law so as to alter the effect of a Supreme Court decision, and whether the validating provision offended Articles 14, 141, 245, or 372 of the Constitution. (ii) Whether, on the facts, any question of law arose for reference on the determination of the annual value of the property, including the role of municipal valuation.

Issue (i): Whether Parliament was competent to amend retrospectively the pre-Constitution income-tax law so as to alter the effect of a Supreme Court decision, and whether the validating provision offended Articles 14, 141, 245, or 372 of the Constitution.

Analysis: The saved pre-Constitution law continued in force under Article 372, but it remained open to competent legislation to alter, repeal, or amend it. Article 245 conferred legislative competence in the widest terms, and no limitation was found in Article 372 restricting Parliament to prospective amendment only. The law declared by the Supreme Court bound courts so long as the statute remained unaltered, but Parliament could amend the statute and thereby change the law for the future and, where authorised, validate it retrospectively. The classification created by the amendment was also held to rest on a rational basis, since a distinction in favour of assessees who had carried their matters to judgment before the stated cut-off date could reasonably be made.

Conclusion: The constitutional challenge failed, and the validating amendment was upheld.

Issue (ii): Whether, on the facts, any question of law arose for reference on the determination of the annual value of the property, including the role of municipal valuation.

Analysis: Annual value under the income-tax provision is a notional figure based on what the property might reasonably be expected to let for, and actual rent is only one relevant factor. The Tribunal had considered the rent received together with other benefits and obligations borne by the lessee, and it did not treat municipal valuation as the sole test. Since the Tribunal applied the correct approach on the facts and did not lay down an erroneous general rule, no referable question of law arose.

Conclusion: The request for an additional reference was declined.

Final Conclusion: The reference was answered against the assessee, the constitutional attack on the retrospective amendment failed, and no further question of law was required to be referred.

Ratio Decidendi: A competent legislature may retrospectively amend a pre-Constitution statute saved by the Constitution, and a tribunal's fact-based determination of annual value does not give rise to a question of law merely because municipal valuation was adopted as one evidentiary factor.

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