1961 (3) TMI 8

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....aly & Co., Madras, which was carrying on business in hardware, stocks, shares, etc. For the assessment years 1942-43 to 1945-46 this firm was treated as a registered firm under the Indian Income-tax Act and, therefore, the partners were assessed on their respective shares of the profits from the business of the firm. All assessments were completed before 1949 and the total income for the purpose of assessment for those four years was about Rs. 29,00,000. In 1955 the petitioners under a " Voluntary Disclosure Scheme " with regard to profits which had escaped assessment made a disclosure of their income and proceedings were taken under section 34 of the Income-tax Act. In the month of April, 1959, there was a reassessment on all the four part....

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.... 1935 (25 and 26 Geo. V, ch. 42), to impose a surcharge " for the purposes of the Central Government. " The legislative power of the Federal Legislature was given in section 100 of the Government of India Act, 1935, and the power to tax income was contained in item 54 of List I of the Seventh Schedule which was as follows : " Taxes on income other than agricultural income. " Part VII of the Government of India Act, 1935, deals with Finance, Property and Suits and the first chapter deals with Finance. The relevant section which has been relied upon by, the petitioners, i.e., section 138(1) of that Act, is in that Part which deals with Distribution of Revenues between the Federation and the Federal Units. That section reads : " 138(1) T....

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....construed as a reference to British India, the Governor-General in Council, or the Governor-General, as the circumstances and the context may require. " On the basis of this section it was argued that the term " Federal purposes " in section 138(1)(b) of the Government of India Act, 1935, means the purposes of the Federal Government, i.e., of the Governor-General in Council or the Governor-General as the case may be and that in the context it is a term of lesser amplitude than the term " purposes of the Central Government ". " Central Government " in section 3(8ab)(a) of the General Clauses Act, 1897, was defined as follows : " 3. (8ab) 'Central Government' shall-- (a) in relation to anything done or to be done after the commencement ....

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....purposes the Provincial Governments acting within the scope of the authority given to them under section 124(1) of the Government of India Act, 1935. This argument, in our opinion, is wholly fallacious. The power of the Federal Legislature to legislate was conferred by section 100, sub-sections (1) and (2). The first sub-section deals with the power of the Federal Legislature to legislate in regard to items contained in the First List which was exclusively within the power of the Federal Legislature. The Federal Legislature therefore had the power to legislate in regard to any subject contained in List I and item 54 relating to taxes on income was in that list. It has been held that the items have to be given the widest possible amplitude....