COMMISSIONER OF INCOME TAX KERALA vs. HELEN RUBBER INDUSTRIES LTD .

CIVIL APPEAL No. 466/1960Supreme Court1962 INSC 816 January 1962Bench: 5 JudgesAuthor: BHUVNESHWAR PRASAD SINHA, J.L. KAPUR, M. HIDAYATULLAH, J.C. SHAH, J.R. MUDHOLKAR8 pages
AI SummaryAllowed

What were the facts?

The respondent, Helen Rubber Industries Ltd., was incorporated in the former State of Travancore. The dispute concerns the respondent's right to carry forward a loss incurred in the accounting year 1946. This loss was incurred under the Travancore Income-tax Act, 1121 M.E. The respondent sought to carry forward this loss to the assessment year 1951-52 under Section 24(2) of the Indian Income-tax Act, 1922, and the Taxation Laws (Part B States) (Removal of Difficulties) Order, 1950. The Income-tax Officer, the Appellate Assistant Commissioner, and the Appellate Tribunal held that the loss could not be carried forward as it had lapsed after two years under Section 32 of the Travancore Act, and Section 24(2) was not applicable due to paragraph 3 of the Order. The High Court, however, answered the question in favour of the assessee.

What did the Supreme Court hold?

The Supreme Court held that the Taxation Laws (Part B States) (Removal of Difficulties) Order, 1950, particularly paragraph 3, was not intended to enlarge the rights of assessees brought under the Indian Income-tax law. The purpose of the Order was to create a clear dividing line between previous years governed by the earlier State law and those governed by the Indian Income-tax Act. Paragraph 3 stipulated that the carry-forward of losses would be in the same manner, to the same extent, and up to the same year of assessment as laid down in the State law. In this case, the Travancore Act allowed carry-forward for only two years. Since the loss of 1946 was incurred in a previous year to which the Travancore Act applied, and the carry-forward period under that Act was two years, the loss could only be carried forward for two years. The assessment year 1951-52 was beyond this period. Therefore, the High Court was incorrect in its decision. The appeal was allowed, reversing the High Court's judgment.

What were the issues?

1. Whether the respondent assessee is entitled to carry forward the loss of the year 1946 for a period of six years under the provisions of the Indian Income-tax Act, notwithstanding that the loss occurred when the Travancore Income-tax Act was applicable? (Mixed question of law and fact, concerning Section 24(2) of the Indian Income-tax Act, 1922, and Section 32 of the Travancore Income-tax Act, 1121 M.E., read with paragraph 3 of the Taxation Laws (Part B States) (Removal of Difficulties) Order, 1950). Assessee's contention: The assessee argued that they were entitled to carry forward the loss for six years under the Indian Income-tax Act. The High Court ruled in their favour. Revenue's contention: The Revenue contended that the loss had lapsed after two years under the Travancore Act, and the provisions of the Indian Income-tax Act, specifically Section 24(2), were not applicable due to paragraph 3 of the Removal of Difficulties Order, 1950. The lower authorities (ITO, AAC, Tribunal) agreed with the Revenue.

Which sections of the Income-tax Act were involved?

Section 24(2),Section 32,Section 12,Section 66A(2),Section 66(2)

AI-generated summary — verify with the full judgment below

2 s.c.R. SUPREME COURT REPORTS 605 J9t2 in a Bank to the account of the Company. Thus, the amount mnst he held, on the terms of the aO'reement, to have been received by the Japanese C;mpany, and this attrncts the application of s.(4)(l)(a).

Indeed, the Japanese Company did <li;poses of a part of those arnrmnts by instructing the assessee firm that they be applied in a particular way. Jn our opinion, the High Court was right in answering the question against the assessee. P. V. Rathava Rttldi v.

The appeals fail, an<l 11.re dismissed with costs, one hearing foe.

Appeal dismi88ed. COMMTSSIO';ER OF INCOME.TAX KER.ALA v. 'TELEN RUBBER INDUSTRIES LTD . . srxHA, c .. r., J. L. KAruR, M. HmAvATULLAH, .J.C. SHAH and J. R. MunHOLKAR, JJ.)

Incon1e Tax-Lo.<J~ incurred in Travancore Stat£ in 1946- ·if!JJlication of India la•o,9 to tl1f' /.._'Jtate-Asse-9.r;ee, if entitled to rarry Joru·ard the fnss to six ~1ears once the rigf,,t lapsed under 1';fafe lau)~~-'l'ravanrore l11cnrne-tax .. Act, I 121 M.FJ. (Travancore XX!lf of 1121 M. fi:.) .<. 32-India1' lnrome-tax Act, 1922 (11 of 1922), s. 21-ludinn Finance Art, J.?50 (2•j of 1950), •· 12-Taxntion lntr-< (Part B St,

The order continues below.

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