Retrospective tax liability rejected where statutory definitions left no assessment year or previous year for the relevant period.

Agricultural income-tax under the Bhopal State Agricultural Income-tax Act, 1953 could not be levied for income earned in 1952-53 because the Act came into force only on 15 July 1953 and its definitions left no assessment year or corresponding previous year covering that broken period. The court treated the charging provision as confined to the statute's express temporal scheme and noted that no special machinery existed to tax a period outside those definitions. It also held that the additional proposed questions on status, deductions, and notice validity were not properly referable, as the status point was factual and the others lacked a sufficient factual foundation to raise questions of law.

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Issues: (i) Whether agricultural income-tax under the Bhopal State Agricultural Income-tax Act, 1953 could be levied for the assessment year 1953-54 on income earned during 1952-53 when the Act came into force only on 15 July 1953; (ii) Whether the Commissioner was bound to refer the additional questions relating to the assessee's status, deductions, and validity of notice as questions of law.

Issue (i): Whether agricultural income-tax under the Bhopal State Agricultural Income-tax Act, 1953 could be levied for the assessment year 1953-54 on income earned during 1952-53 when the Act came into force only on 15 July 1953.

Analysis: The charging provision levied tax on the total agricultural income of the previous year for each assessment year. The statutory definitions linked the previous year to the twelve months ending on 31 May preceding the assessment year, and the assessment year to the agricultural year under the Bhopal State Land Revenue Act, 1932. Since the Act itself was brought into force only on 15 July 1953, there was no assessment year in existence for the period beginning 1 June 1952 and ending 31 May 1953, and therefore no corresponding previous year within the meaning of the Act. The Act contained no special machinery to tax a broken period, and a taxing statute cannot operate by inference beyond its clear words.

Conclusion: No assessment could be made on the assessee on the basis of income earned in 1952-53, and the answer was in favour of the assessee.

Issue (ii): Whether the Commissioner was bound to refer the additional questions relating to the assessee's status, deductions, and validity of notice as questions of law.

Analysis: The status question turned on fact, and the remaining proposed questions were stated in a vague manner without material facts showing how they raised questions of law. In the absence of a proper factual foundation, the Commissioner was justified in declining the reference.

Conclusion: The refusal to refer the additional questions was upheld.

Final Conclusion: The reference on the taxability issue was answered against the Revenue and the connected miscellaneous proceeding seeking further references did not succeed.

Ratio Decidendi: A taxing statute cannot be applied to a period for which, by the statute's own definitions and commencement date, no assessment year and no corresponding previous year exist, unless the Act expressly provides machinery for such taxation.

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