TaxTMI 
TaxTMI 
1962 (7) TMI 51
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....ny, for the assessment year 1954-55 by taking recourse to the provisions of section 34 and the original assessment made upon it for the assessment year 1956-57. The corresponding previous years are the calendar years 1953 and 1955. The dispute between the assessee company and the department is in regard to the levy of corporation tax, more popularly known as super-tax, on income derived by the assessee company from Mysore Durbar Securities. The relevant facts relating to the said issue are these. The Government of the erstwhile Indian State of Mysore issued certain Durbar Securities between 1930 and 1946. There was in force the State income-tax law. The said Government issued notifications directing that the interest income derived from these securities was to be included in the computation of total income of an assessee for the purpose of determining the rate applicable to the taxable income. In other words, such interest income was partially exempt. Section 60(1) of the Indian Income-tax Act empowered the Governor-General in Council (subsequently changed to the Central Government) to make exemptions, etc., and the material portion of it (with verbal changes made subsequentl....
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....onsideration the interest received by the assessee on Mysore Durbar Securities, In other words, he acted upon the Notification No. 878-F (Income-tax) of 21st March, 1922. Obviously, he acted in completing this assessment as he did in ignorance of the latter Notification No. 39(I.T.) dated 5th July, 1954. In all probability, he was quite unaware of the said notification. It is, however, alleged by the assessee that the said notification was before the Income-tax Officer when he made the assessment on 31st July, 1954, and that he did not choose to act upon it. Unfortunately, no finding on this disputed fact has been given either by the Appellate Assistant Commissioner or the Tribunal. Hence, we would reproduce the reasons recorded by the Income-tax Officer in making his proposal to the Commissioner for initiating action under section 34. It is as follows : "(Note: We wanted to reproduce the reasons recorded by the Income-tax Officer ; but the Income-tax Officer's file was 'lost' during transit from Udipi to Bombay in connection with this reference application. Proposal on the record of the Commissioner's file could not also be secured since the relevant file was mi....
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....ssment year 1954-55), disposed of the assessee's contention by observing as follows: "Levy of super-tax on interest receivable on securities issued by the Mysore and Hyderabad Governments : For the reasons stated by me in my order in ITA No. 890/56-57 dated June 23, 1957, the contention of the appellant cannot be sustained." Being aggrieved by the decisions given by the Appellate Assistant Commissioner, the assessee brought the matters in appeal to the Tribunal. Having regard to certain allegations made in the statement of facts, enclosed with the applications made under section 66(1), we find it desirable to reproduce the actual and relevant written grounds of appeal: " 1954-55 : (1) The Appellate Assistant Commissioner in construing that the notification dated 5th July, 1954, could have retrospective effect on the assessment of 1954-55 and holding that the rights of holders of Mysore Durbar Securities, could, by notification, be denied. (2) In view of the clear inducement offered at the time of the issue of these securities, the appellant contends that such rights cannot, on principles of equity and justice, be denied till the maturity of these securities ; ....
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....ification is also attacked on another ground, viz., that instead of rescinding the exemption by means of the aforesaid notification (i.e., Notification No. 39(I.T.) of 5th July, 1954-CLP), the Central Government should have asked the concerned State Government to pay the taxes pursuant to the third (sic) proviso to section 8". (The reference is presumably to the second proviso). It rejected both these contentions for the reasons given by it in its order (annexure "B"). But now the assessee requires the Tribunal to refer to the High Court the following questions : Assessment year 1954-55 "(a) Whether the notice under section 34(1)(b) and the proceedings thereunder are valid? (b) If the answer to the first question is in the affirmative, whether the interest on Mysore Durbar Securities held by the assessee or any of them was chargeable to super-tax under the Indian Income-tax Act?" Assessment year 1956-57 "(a) Whether the exemption in respect of the income from Mysore Durbar Securities can be modified or deleted so as to prejudicially affect the rights of the assessee. (b) Whether the treatment of the income from Mysore Durbar Securities in the hands of the asses....
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....he meaning of the expression found in section 34(1)(b). Assuming that the Income-tax Officer had the relevant notification before him but he either did not read it or was unable to understand its implications and later either by himself or with the assistance of others, he became aware of its true meaning, can that be said to be an "information" empowering him to take action under section 34(1)(b). The words "information" and "escaped" have been widely interpreted in Maharaj Kumar Kamal Singh's case (supra). Therein their Lordships held that if the word "information" in its plain grammatical meaning includes information as to facts as well as information as to the state of the law, it would be unreasonable to limit it to information as to the facts on the extraneous consideration that some cases of assessment which need to be revised or rectified on the ground of mistake of law may conceivably be covered by sections 33B and 35 ; the word "information" in section 34(1)(b) includes information as to the true and correct view of the law. Their Lordships further observed, judging by the dictionary meaning alone, it would be difficult to confine the meaning of the word "escape" i....