Pre-Constitution tax concession was superseded by later statutory framework, limiting relief to the concession expressly preserved.

A pre-Constitution tax concession granted by the former State of Madhya Bharat was treated as an obligation under Article 295(1)(b), but it was superseded when the Income-tax Act was extended to the Part B State and the Part B States (Taxation Concession) Order, 1950 was brought into force under section 60A. The claimants could rely only on the relief preserved by the later statutory regime, not on the earlier agreement for a further seven-year exemption. The prior concession therefore did not survive the new constitutional and statutory framework, and continued immunity from income-tax was unavailable.

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Issues: Whether the pre-Constitution tax concession granted by the former State of Madhya Bharat continued to bind the Government of India under Article 295(1)(b) despite the extension of the Income-tax Act and the Part B States (Taxation Concession) Order, 1950.

Analysis: The concession originally granted by the former State was treated as an obligation falling within Article 295(1)(b), but the Court held that, after the Income-tax Act was extended to the Part B State from 1 April 1950 and the Concessions Order was brought into force under section 60A, the earlier concession stood superseded by the legislative regime then introduced. The respondents could claim only such relief as was available under the Income-tax Act read with the Concessions Order, and not a further exemption for the full seven-year period on the basis of the pre-Constitution agreement.

Conclusion: The respondents were not entitled to rely on the former State agreement for any further exemption, and the claim to continued immunity from income-tax failed.

Final Conclusion: The prior concession did not survive the later statutory framework and the writ relief granted by the High Court could not be sustained.

Ratio Decidendi: A pre-Constitution tax concession is superseded, for purposes of enforceability, where a later constitutional and statutory regime governs the field and the claimant can seek only the concession expressly preserved by that regime.

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