Saved tax declarations under the old Act do not automatically carry into the new regime when taxpayer status has changed.

A declaration or option made under section 17(1) of the 1922 Income-tax Act did not automatically survive under section 113(3) of the 1961 Act. The saving provision preserved earlier elections only where they could operate under the corresponding new provision, and the altered statutory scheme, including the treatment of non-residents and persons not ordinarily resident, prevented mechanical transposition of the old option. A declaration made when the assessee was non-resident was therefore not binding for assessment year 1964-65 when he was assessed as resident but not ordinarily resident, and he was not chargeable at the rate applicable to total world income.

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Issues: (i) Whether a declaration made by an assessee under section 17(1) of the Indian Income-tax Act, 1922 remained operative under section 113(3) of the Income-tax Act, 1961. (ii) Whether the declaration made when the assessee was a non-resident continued to bind him for assessment year 1964-65 when he was assessed as resident but not ordinarily resident. (iii) Whether the assessee was liable to be charged to income-tax on his total income at the rate applicable to his total world income.

Issue (i): Whether a declaration made by an assessee under section 17(1) of the Indian Income-tax Act, 1922 remained operative under section 113(3) of the Income-tax Act, 1961.

Analysis: The declaration was made under the 1922 Act in a statutory setting that differed materially from the 1961 Act. Section 297(2)(h) preserved earlier elections or options only to the extent that they could operate under the corresponding provision of the new Act. The scheme of section 113, the inclusive definition in section 2(30), and the revised treatment of non-residents and persons not ordinarily resident showed that the old option could not be carried over mechanically into the new regime.

Conclusion: The declaration did not remain operative under section 113(3) of the Income-tax Act, 1961, and the finding was in favour of the assessee.

Issue (ii): Whether the declaration made when the assessee was a non-resident continued to bind him for assessment year 1964-65 when he was assessed as resident but not ordinarily resident.

Analysis: The option was exercised in a different status, namely non-resident, whereas for the year under reference the assessee was assessed as resident but not ordinarily resident. The Court treated status as integral to the assessment scheme and held that the inclusive definition treating such a person as non-resident only for section 113 could not extend the earlier declaration to a different statutory setting and status.

Conclusion: The earlier declaration was not binding for assessment year 1964-65, and the finding was in favour of the assessee.

Issue (iii): Whether the assessee was liable to be charged to income-tax on his total income at the rate applicable to his total world income.

Analysis: Because the 1953 option under the 1922 Act could not be transplanted into the 1961 Act for a person assessed as resident but not ordinarily resident, the basis adopted by the revenue for charging tax at the rate applicable to total world income could not stand. The Court relied on the difference in statutory language and the altered scope of the concept of non-resident under the 1961 Act.

Conclusion: The assessee was not liable to be charged at the rate applicable to his total world income, and the finding was in favour of the assessee.

Final Conclusion: The reference was answered in favour of the assessee on all the questions, and the Tribunal's view was upheld.

Ratio Decidendi: An option or declaration made under a repealed income-tax regime is preserved by a saving clause only if the same option can operate under the corresponding provision of the new Act in the assessees' then-applicable statutory status and under the changed definition of the relevant class of taxpayers.

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