judgement:
l Appeals Nos.
2321 to 2324 of 1966.
Appeals from the judgment and order dated August 2, 1965 of the Madras High Court in Tax Cases Nos. 198 to 201 of 1962 (References Nos.
114 to 117 of 1962).
B.Sen, G. C. Sharma, R. N. Sachthey and B. D. Sharma, for the appellant (in all the appeals).
Gobind Das and Lily Thomas, for the respondents (in all the, appeals).
The Judgment of the Court was delivered by Shah, J.
Sri Ganapathy Mills Co. Ltd. distributed divident to its shareholders out of the business profits earned by it in the years ending December 31, 1953 and December 31, 1954.
The Company however carried in its accounts a large balance of unabsorbed depreciation admissible under section 10(2) (vi) and section 10 (2) (vi a) of the, Income tax Act, and on that account it had no taxable income in the relevant assessment years 1954 55 and 1955 56.
In assessing the income, of the shareholders for the, assessment years 1955 56 and 1956 57 the Income tax Officer rejected their claim for exemption from tax under section 15 C(4) of the Incometax Act, 1922, and brought the dividend income to tax.
order was confirmed by the Income tax Appellate Tribunal.
The Tribunal referred the following question to the High Court of Madras for opinion : "Whether on the facts and in the circumstances of the case, the assessees are entitled to the benefit of 436 S.15 C(4) in respect of the dividend income received from Sri Ganapathy Mills Co. Ltd., Tinnevelly ?" The High Court answered the question in the affirmative.
The ,Commissioner of Income tax has appealed to this Court with a ,certificate under section 66A(2) of the Income tax Act.
In the year ending December 31, 1953, the Company had ,earned in its business transactions a profit of Rs. 87,184, but it ,had no taxable profits, for the depreciation for the current and the previous years amounted to Rs. 2,83,343 which was an admissible allowance in the computation of income under section 10 of the Income tax Act.
Since full effect could not be given to the allowance, the Company was entitled to add to the depreciation for the following year the unabsorbed depreciation of Rs. 1,96,159 under section 10(2)(vi) proviso (b).
In the year ending December 31, 1954, the Company earned a profit of Rs. 4,36,821 ,and the depreciation admissible for the year was Rs. 2,41,809.
Taking into account the unabsorbed depreciation of the previous _year in computing the taxable income, it was found that the Company had suffered a loss of Rs., 1,147.
Accordingly the Company had no taxable profits in either of the two years and so tax was ,levied from the Company.
But the Company had still distributed dividend out of profits earned by it and the taxing authorities levied tax on the dividend received by the shareholders.
The answer to the question referred to the Tribunal depend , upon the true interpretation of section 15 C of the Indian Income tax Act, 1922.
Section 15 C of the Income tax Act.
insofar as it is ,relevant, provides " (1) Save as otherwise hereinafter provided, the tax shall not be payable by an assessee on so much of the profits or gains derived from any industrial undertaking to which this section applies as do not exceed ,six per cent per annum on the capital employed in the undertaking, computed in accordance with Such rules as may be made in this behalf by the Central Board of Revenue.
. . (3) The profits or gains of an industrial under,taking to which this section applies shall be computed in accordance with the provisions of section 10.
(4) The tax shall not be payable by a share holder in respect of so much of any dividend paid or deemed to be paid to him by an industrial undertaking 4 3 7 as is attributable to that part of the profits or gains on which the tax is not payable under this section. .
" The Company was an industrial undertaking to which section 15 C applied.
It had in the two relevant years derived from the industrial undertaking no profits or gains within the meaning of sub section
(1) read with sub section
(3) of section 15 C.
The profits or gains derived the industrial undertaking within the meaning of sub section
(1) of section 15 C are not business profits : they are taxable profits computed in accordance with the provisions of section 10 of the Income tax Act.
Under section 15 C(1) no tax is payable by the industrial undertaking on its taxable profits equal to six per cent per annum of the capital employed.
Sub section (4) of section 15 C exempts the shareholders of an industrial, undertaking to which section 15 C applies, from liability to pay tax in respect of the dividend paid or deemed to be paid as is attributable to that part of the profits or gains on which the tax is not payable under section 15 C (1).
Exemption under section 15 C(1) from payment of income tax is not related to the business profits: it is related to the taxable profits.
The language of sub section
(3) is clear : the profits or gains of an industrial undertaking have to be determined under section 10 of ,the Act.
Even if the undertaking has earned profits out of its commercial activity, if it has no taxable profits it cannot claim exemption from payment of tax under sub section
(1) of section 15 C; and it ' the undertaking cannot claim the benefit under sub section
(1) the shareholders will not get the benefit of sub section
(4), for there is no dividend paid which is attributable to that part of the profits or gains on which the tax was not payable by the undertaking.
The Company had no taxable profit in the year of accounts it did not accordingly qualify for exemption from payment of tax under sub section
(1) and since there was no such taxable profit, the dividend received by the shareholders could not be said to be attributable to that part of the profits or gains on which the tax was not payable under sub section
On the plain terms of section 15 C the shareholders cannot obtain the benefit of exemption from payment of tax.
We are unable to agree with the High Court that in deter mining the profits of the Company the unabsorbed depreciation of the previous years will not be taken into account.
Section 10 of the Income tax Act, insofar as it is relevant, provides : "(1) The tax shall be payable by an assessee under the head "Profits and gains of business, profession or vocation" in respect ' of the profits or gains of any business, profession or vocation carried on by him.
L12SupCI 70 14 438 (2) Such profits or gains shall be computed after making the following allowances, namely: .
. " Clause (vi) deals with depreciation allowance in respect of buildings, machinery, plant or furniture being the property of the assessee, at a sum equivalent to such percentage on the original cost thereof as may be prescribed.
Under cl.
(vi a) in respect of buildings newly erected, or of machinery or plant being new which had been installed after March 31, 1948, a further sum which is deductible in determining the written down value equal to the amount admissible under cl.
(vi) is allowable.
If the depreciation under cls.
(vi) and (vi a) cannot be given full effect in any year owing to there being no profits or gains chargeable for that year, or owing to the profits or gains chargeable being less than the allowance, then subject to the provisions of cl.
(b) of the proviso to sub section
(2) of section 24, the allowance or part of the allowance to which effect has not been given, as the case may be, shall be added to the amount of the allowance, for depreciation for the following year and deemed to be part of that allowance.
It tion of an year is to be deemed depreciation for the succeeding year into the account of which it is carried forward, and the aggregate of the depreciation for the year of assessment and the unabsorbed depreciation of the previous year is deemed to be depreciation allowance for the year of assessment.
The High Court, however, said that in computing the profits of the year of an industrial undertaking for determining whether the benefit of exemption under section 15 C(1) is admissible, the unabsorbed depreciation cannot be taken into account.
The High Court observed: "In effect, it computing the profits or gains for the purpose of section 15 C(1) and (4) the only allowances that could be made in respect of current year 's additional or extra depreciation under section 10(2) (vi a).
The set off of losses under section 24(2) and allowances in respect of unabsorbed depreciation both under section 10(2) (vi) and 10(2) (vi a) would not enter into the computation under section 15 C(3).
It is true that when the net result of assessment on the company is taken there is 'nil, profit and there might be no occasion at all for the application of section 15 C.
But, in our view, it does not follow from it that on that ground the benefit of that section can be denied to the shareholders if on a computation of the profits and gains of the industrial undertaking under 43 9 section 15 C(3), the company had made profits out of which dividends had been paid to its shareholders.
Where the company has 'nil, ' profits under its final assessment, the non application of section 15 C is not due the fact that it made no profits and it was not entitled to the benefit of section 15 C(1).
But, in view of the overall result of the assessment, there is no need for the company to claim exception under that provision, as there is no tax liability at all.
Viewed from this angle, we consider that the shareholders are entitled to take the position of the profits or gains of the company as computed under sub section (3) of section 15 C and subject to the limits provided by that sub section, and claim the benefit under section 15 C(4).
" The opinion of the High Court that in computing the profits of an industrial undertaking under section 10, unabsorbed depreciation for the previous years must be ignored, is inconsistent with the plain terms of section 10(2)(vi) proviso (b).
Again the assumption that the right to claim allowance of unabsorbed depreciation arises out of section 24(2) of the Act is in our judgment erroneous.
Under the scheme of section 15 C the profits or gains of an industrial undertaking must be determined under and in the manner provided by section 10 of the Income tax Act.
For that purpose all the allowances under sub section
(2) must be taken into account, and the resultant amount forms a component of the taxable profit.
If by proviso (b) to section 10 (2) (vi) the unabsorbed depreciation of the previous year is deemed depreciation for the subsequent year, there is no room for making any distinction between the unabsorbed depreciation for the previous year and the depreciation for the current year.
The right to appropriate the profits towards the unabsorbed depreciation of the previous year does not arise under section 24 ( 1); it arises by virtue of section 10 (2) (vi) proviso (b) We are also unable.
to agree with the High Court that if an industrial undertaking has distributed dividend, the shareholders will be entitled to exemption from payment of tax on that dividend, even if the Company is not entitled to claim exemption from liability to pay tax under sub section
(1) of section 15 C.
The right of the shareholders to obtain the benefit of exemption under section 5 C(4) depends upon the Company obtaining the benefit of exemption under sub section
(1) of section 15 C, for the exemption from payment of tax on the dividend received by the shareholders is admissible only in that part of the profits or gains on which the tax is not payable by the Company under sub section
440 Section 24(2) proviso (b) on which reliance was placed has, in our judgment, no application.
That proviso enacts "Provided that (b) where depreciation allowance is, under clause (b) of the proviso to, clause (vi) of sub section (2) of section 10, also to be carried forward,effect shall first be given to the provisions of this sub section.
" Sub section (2) of section 24 deals with "the carry forward of losses" and proviso (b) to section 24(2) sets out the sequence in which the losses carried forward and the depreciation allowance which remains unabsorbed in the previous year are to be allowed.
Whether any practical effect may be given to the terms of proviso (b) to section 24(2), in the view which this Court has taken in Commissioner of Income tax, Calcutta vs Jaipuria China Clay Mines (P) Ltd.(1) is a matter on which we need express no opinion.
If on its plain terms, proviso (b) to section 24(2) deals merely with priority and does not convert what is unabsorbed depreciation of the previous year which is deemed to be depreciation for the current year ', into loss for the purpose of carry forward," sub section
(2) of section 24 proviso (b) presents no difficulty in the present case.
This Court in Jaipuria China Clay Mines ' case(1) held that unabsorbed depreciation of past years cannot be kept out of accounts in determining the net income of an assessee for a particular year; it has to be set off against the profits from other heads.
In that case the assessee had for the year 1952 53 a total business income of Rs. 14,000 odd and the depreciation amounted to Rs. 5,360.
The assessee company had a large dividend incomes.
The tax payer claimed that the unabsorbed depreciation of the previous year should be deducted from the dividend income and the total income liable to tax be reduced.
The Income tax Officer rejected the claim.
This Court observed that the Income tax Act draws no distinction between the various allowances mentioned in section 10(2); they all have to be deducted from the gross profits and gains of a business.
Accordingly the ' unabsorbed depreciation of the past years must be added to the depreciation of the current year, and the aggregate of the unabsorbed depreciation and the current year 's depreciation must be deducted from the total income of the year relevant to the assessment year in question.
If the profits do not wipe out the depreciation, the profit and loss account would show a loss.
The Court further observed that "carry forward of depreciation is provided for" in section 10(2) (vi), and section 24(2) only deals with losses other than the losses (1) 441 due to depreciation.
That decision clearly establishes that depreciation in respect of a business has in the first instance to be set off as an allowance against the profits from the business, profession or vocation.
If the depreciation exceeds the profits and there is no other income from any other head, the depreciation may be carried forward to the next year.
If, there is a profit from some other head, then the unabsorbed depreciation of a particular year under the head "Profits and gains of the business, profession or vocation" will be set off against such other income.
In the case in hand, the Company had no other source of income.
The depreciation allowance admissible in the assessment years exceeded the business profits.
The Company had no taxable profit in the two years in question.
The Company could not claim exemption from payment of tax provided in section 15 C (1); and no dividend having been distributed out of the taxable profits there was no dividend attributable to that part of the profits which were exempt from tax in the 'hands of the shareholders.
The answer to the question submitted by the Tribunal is recorded in the negative.
The appeals must therefore be allowed.
Having regard to the Circumstances of the case, the Parties will bear their own costs in this Court and in the High Court.

summary/full:
Shri Ganapathy Mills Co. Ltd., Distributed dividend to its shareholders out of its business profits earned in the years ending December 31, 1953 and December 31, 1954.
The company, however carried in its accounts a large balance of unabsorbed depreciation admissible under section 10(2) (vi) & 10(2) (vi a) of the Income tax Act, 1922 and on that account it had no taxable income in the relevant assessment years 1954 55 and 1955 56.
In assessing the income of the shareholders for the assessment years the Income tax Officer rejected the claim for exemption from tax Linder section 15 C(4) of the Income tax Act and brought the dividend to tax.
This order was confirmed by the Income tax Appellate Tribunal.
The High Court, in a reference, held in favour of the assessees.
With certificate the Revenue appealed.
The question that fell for consideration were : (i) Whether the High Court 's view that unabsorbed depreciation of previous years must be ignored in computing the profits under section 10 and the Implied assumption that unabsorbed depreciation was carried forward and set off under section 22(4) were correct; (ii) Whether, the claim under section 15 C(4) could be made even when there was no taxable profit for which exemption could be claimed Linder section 15 C(4).
HELD : (i) Under proviso (b) to section 10(2) (vi) the unabsorbed depreciation in an year is to be deemed the depreciation for the succeeding year into the accounts of which it is carried forward and the aggregate of depreciation in the year of assessment and the unabsorbed depreciation of the previous year is deemed to be depreciation allowance for the year of assessment.
The opinion of the High Court that in computing the profits of an industrial 'undertaking under section 10, unabsorbed depreciation for the previous years must be ignored is inconsistent with the plain terms of the proviso.
[438 D E; 439 D] The right to claim allowance of unabsorbed depreciation does not arise out of section 24(2) of the Act.
Under the scheme of section 15 C(4) profits and gains of an industrial undertaking must be determined under and in the manner provided by section 10 of the Income tax Act.
For that purpose all the allowances under sub section
(2) are taken into account and the resultant amount forms a component of the taxable profits, By proviso (b) to section 10 (2) (vi), the unabsorbed depreciation in the previous year is deemed depreciation for the subsequent year, and there is no room for making any distinction between the unabsorbed depreciation for the previous year and the depreciation for the current year.
The right to appropriate the profits towards the unabsorbed depreciation in the previous year does not arise under section 24(2); it arises by virtue of section 10(2) (vi) proviso (b).
[439 D F] 435 (ii)The right of the shareholders to obtain benefit of exemption under 15 C(4) depends upon the company obtaining the benefit of exemption under sub section
(1) of section 157C for the exemption from payment of tax on the dividend received by the share holders is admissible only on that part of the profits or gains on which the tax is not payable by the com pany under sub section
[439 HI On this view it must be held that the claim of shareholders in the present case rightly disallowed by the taxing authorities.
[435 H; 441 D] [Proviso (b) 'to section 24(2 held inapplicable, with the observation that it deals merely with priority and does not convert what is unabsorbed depreciation of the previous year which is deemed to be depreciation for the current year into loss "for the purpose of carry forward".[440 D] Commissioner of Income tax, Calcutta vs Jaipuria China Clay Mines (P) Ltd., , referred to.


judgement:
Appeal No. 2560 of 1966.
Appeal from the judgment and order dated May 11, 1966 of the Calcutta High Court in Income tax Matter No. 98 of 1962.
section T. Desai, G. C. Sharma and R. N. Sachthey, for the appellants.
D. K. De, A. N. Sinha, Rathin Das for P. K. Mukherjee, for respondent.
The Judgment of the Court was delivered by Grover, J.
This is an appeal by special leave from a judg ment of the Calcutta High Court answering the following question which was referred to it by the Tribunal in the negative and in favour of the assessee.
"Whether on the facts and in the circumstances of the case, the Income tax authorities were justified in imposing a penalty on the assessee under Section, 28 (1) (c) of the Income tax Act ?" The assessee during the assessment year 1947 48, the corresponding previous year being the financial year ending on March 31, 947 was a partner in the firm of M/s. Haji Sk.
Md. Hussain Md. Jan of Calcutta.
The Income tax Officer while making the assessment discovered an undisclosed bank account of the assessee with the Central Bank of India Ltd. Bettiah, Bihar.
It was found that a cash deposit of Rs. 87,000 had been made by the assessee on November 21, 1946 in that Bank.
He was asked to explain the source, of the amount of deposit.
According to his explanation all his relations got panicky during the communal riots in Bihar in the year 1946 and entrusted him with whatever cash amounts they had with them at that time for safe custody.
448 It was stated that a sum of Rs. 87,000 had been received in the following manner Zahir Hussain alias Md. Zahir (Cousin)Rs.
18,500/ Mohammad Jan (deceased father)Rs.
1,000 Mohd. Haniff (cousin) Rs.1,750 Khairunnessa Bibi (mother)Rs.23,000 Safihan Bibi (Sister) Rs.13,000 Fatema Bibi (Wife) Rs.15,750 Hasuia Bibi (Brother 's wife)Rs.12,000 ___________ Rs.87,000 ____________ These amounts which were received by the assessee from his relations were deposited by him in a fixed deposit account in the joint name of himself and his minor sons in the Bank at Bettiah.
The Income tax Officer did not accept the explanation of the assessee and held that the sum of Rs. 87,000 represented income from undisclosed sources.
He added the amount to the total income of the assessee in his personal assessment.
This addition was maintained by the Appellate Assistant Commissioner in appeal.
The Appellate Tribunal also agreed with the decision of ,the Income tax Officer and the Appellate Assistant Commissioner.
Penalty proceedings were initiated after the assessment and in due course the Income tax Officer imposed a penalty amounting to Rs. 66,000 on the assessee under section 28 (1) (c) for concealing income and deliberately furnishing inaccurate particulars.
The Appellate Assistant Commissioner in appeal held that the case clearly called for a penal action but he reduced the amount of penalty by Rs. 22,000.
Subsequently he rectified his order under section 35 and confirmed the penalty of Rs. 66,000 imposed by the Income tax Officer.
The assessee went up to the Appellate Tribunal in appeal.
The Tribunal took the view that penalty proceedings were of a criminal nature.
The onus lay on the department to show by adequate evidence that the amount of the cash stated to have been concealed by the assessee was of a revenue nature and was assessable as income and that the assessee had concealed it or deliberately furnished false particulars in regard thereto.
This onus, in the opinion of the Tribunal, was not ,discharged by the Income tax authorities by showing merely that the explanation given by the assessee in the assessment proceedings was found to be unacceptable.
The Income tax Officer, according to the Tribunal, must find some material apart from he falsity of the assessee 's explanation to support his finding that the receipt from undisclosed sources was income.
As no satisfactory evidence had been produced by the department to establish 4 49 that the amount in question represented the income of the assessee the Tribunal held that no penalty could be imposed.
Now penalty can be imposed under section 28 (1) (c) if the Income tax Officer, the Appellate Assistant Commissioner or the Appellate Tribunal in the course of any proceedings under the Income tax Act 1922 is satisfied that any person "has concealed the particulars of his income or deliberately furnished inaccurate particulars of such income".
In the judgment under appeal reference has been made to the decisions of the various High Courts on the true ambit and scope of this provision and the burden in the matter of establishing concealment of particulars of income or deliberately furnishing inaccurate particulars of such income.
The majority of High Courts, namely, Bombay in Commissioner of Income tax, Ahmedabad vs Gokuldas Harivallabhdas(1), Gujarat in Commissioner of Income tax Gujarat vs L. H. Vora (2 ) and Patna in Commissioner of Income tax Bihar & Orissa vs Mohan Mallah(3) had expressed the view that proceedings under section 28 ( 1 ) (c) were of a penal nature and it was for the department to establish that the assessee was guilty of concealment of, the particulars of income.
The mere fact that the assessee had given a false explanation did not prove that the receipt necessarily constituted income of the assessee.
Allahabad High Court, however, in Moman Rain Rant Kumar(1) vs Commissioner of Income tax U.P. observed that where the explanation offered by the assessee in respect of an item of income shown as capital receipt was deliberately false it was open to the Income tax authorities to impose a penalty under section 2 8 (1) (c).
In the earlier judgment in Lal Chand Gopal Das vs Commissioner of Income tax U.P.(5) the Allahabad court had said that if a receipt was income but was disguised in the account or in the return as a non assessable receipt it was clearly a case of concealment of the particulars or of furnishing inaccurate particulars of income and a penalty under section 2 8 (1) (c) should be imposed on the assessee.
The first point which falls 'for determination is whether the imposition of penalty is in the nature of a penal provision.
The determination of the question of burden of proof will depend largely on the penalty proceedings being penal in nature or being merely meant for imposition of an additional tax,, the liability to pay such tax having been designated as penalty under section 28.
One line of argument which has prevailed particularly with the Allahabad High Court in Lal Chand Gopal Das(5) cage is that there was no essential difference between tax and penalty because the liability for payment of both was imposed as a part of the (1) (2) 56 I.T.R. 126.
(3) (4) 59 ].T.
P. 135.
(5) , 450 machinery of assessment and the penalty was merely an additional tax imposed in certain circumstances on account of the assessee 's conduct.
The justification of this view was founded on certain observations in C. A. Abraham vs Income tax Officer, Kottayam & Anr.(1).
It is true that penalty proceedings under section 28 are included in the expression "assessment" and the true nature of penalty has been held to be additional tax.
But one of the principal objects in enacting section 28 is to provide a deterrent against recurrence of default on the part of the assessee.
The section is penal in the sense that its consequences are intended to be an effective deterrent which will put a Stop to practices which the legislature considers to be against the public interest.
It is significant that in C. A. Abraham 's(1) case this Court was not called upon to determine whether penalty proceedings were penal or of quasi penal nature and the observations made with regard to penalty being an additional tax were made in a different context and for a different purpose.
It appears to have been taken as settled by now in the sales tax law that an order imposing penalty is the result of a quasi criminal proceedings; (Hindustan Steel Ltd. vs The State of Orissa(1).
In England also it has never been doubted that such proceedings are penal; Fattorini (Thomas) (Lanchashire) (Ltd., vs Inland Revenue Commissioner (3).
The next question is that when proceedings under section 28 are penal in character what would be the nature of the burden upon the department for establishing that the assessee is liable to payment of penalty.
As has been rightly observed by Chagla C.J., in Commissioner of Income tax, Ahmedabad v, Gokuldas Harivallabhdas (4) the gist of the offence under section 2 8 ( 1 ) (c) is that the assessee has concealed the particulars of his income or deliberately furnished inaccurate particulars of such income and therefore the department must establish that the receipt of the amount in dispute ,constitutes income of the assessee.
If there is no evidence on the record except the explanation given by the assessee which ,explanation has been found to be false it does not follow that the receipt constitutes his taxable income.
Another point is whether a finding given in the assessment proceedings that a particular receipt is income after rejecting the explanation given by the assessee as false would prima facie be sufficient for establishing in proceedings under section 28 that the disputed amount was the assessee 's income.
It must be remembered that the proceedings under section 28 are of a penal nature and the burden is on the department to prove that a particular amount (1) 41 (3) 1943 (11) I.T.R. (Supp.)50.
(2) C.A.S. 883 392/66 dt.
4 8 1969.
(4) 451 is a revenue receipt.
It would be perfectly legitimate to say that the mere fact that the explanation of the assessee is false does not necessarily give rise to the inference that the disputed amount represents income.
It cannot be said that the finding given in the assessment proceedings for determining or computing the tax is conclusive.
However it is good evidence.
Before penalty can be imposed the entirety of circumstances must reasonably point to the conclusion that the disputed amount represented income and that the assessee had consciously concealed the particulars of his income or had deliberately furnished.
inaccurate particulars.
In the present case, it was neither suggested before the High Court nor has it been contended before us that apart from the falsity of the explanation given by the assessee there was cogent material or evidence from which it could be inferred that the assessee had concealed the particulars of his income or had deliberately furnished inaccurate particulars in respect of the same and that the disputed amount was a revenue receipt.
The question was, therefore, rightly answered by the High Court.
The appeal fails and it is dismissed with costs.
V.P.S. Appeal dismissed.

dataset_name: IN-Abs

summary/full:
The Income tax Officer, while assessing the respondent to tax discovered an undisclosed bank account of the 'respondent for a large sum.
He did not accept the explanation of the respondent as to the source of the amount and held that it represented income from an undisclosed source.
Thereafter he initiated penalty proceedings under section 28 and imposed a penalty which was confirmed by the Appellate Assistant Commissioner.
In appeal, the Tribunal held that penalty proceedings were of a criminal nature and that the burden lay on the department to show that the amount concealed was of a revenue nature and was assessable as income and that the onus was not discharged in the present case by merely showing that the assessee 's explanation was not accepted in the assessment proceedings.
The High Court agreed with the Tribunal.
In appeal to this Court, HELD.
(1) Penalty proceedings are included in the expression "assessment" and the true nature of a penalty is the imposition of an additional tax.
But, one of the principal objects of section 28 is to provide a deterrent against recurrence of default on the part of the assessee.
There fore, the section is a penal provision and the proceedings were of a penal nature.
[450 B C] C. A. Abraham vs Income tax officer, , explained.
Commissioner of Income tax, Ahmedabad vs Gokuldas Harivallabhdas , Commissioner of Income tax Gujarat vs L. H. Vora, and Commissioner of Income Tax Bihar and Orissa vs Mohan Mallah, , approved.
Moman Rain Ram Kumar vs Commissioner of Income tax, U.P., and Lal Chand Gopal Das vs Commissioner of Income tax, U.P., , not approved.
Hindustan Steel Ltd. vs State of Orissa, C.As.
883 892/66 dt. 4 8 1969 and Fattorini (Thomas) (Lanchashire) Ltd. vs Inland Revenue Commissioner, (1943) (11) I.T.R. Supp. 50, referred to.
(2)The gist of the offence under section 28(1)(c) is that the assessee has concealed the particulars of his income or deliberately furnished inaccurate particulars of such income, and therefore, the department must establish that the receipt of the amount in dispute constitutes income of the assessee.
If there is no evidence on the record except the explanation has been found to be false, if does not follow that the receipt constitutes his taxable income.
[450 E G] 447 Commissioner of, Income tax, Ahmedabad vs
Gokuldas Harivallabhdas, , approved.
(3) 'Since the proceedings under section 28 are of a penal nature and the burden is on the department to prove that a particular amount is a revenue receipt, the finding given in the assessment proceedings that the assessee 's explanation is false and that the disputed amount represents income is evidence but is not conclusive.
Before penalty could be imposed the, entirety of circumstances must reasonably point to the conclusion that the disputed amount represented income and that the assesses , had consciously.
concealed the particulars of his income or had deliberately furnished inaccurate particulars.
[450 451 A C]


judgement:
Appeal No. 350 of 1970.
Appeal by special leave from the judgment and order dated March 21, 1966 of the Madras High Court in O.S. Appeal No. 11 of 1962.
B. R. L. lyengar, M. V. Goswami, section R. Agarwala, A. T. M. Sampat and E. C. Agrawala, for the appellant.
U. P. Singh, Santok Singh, Ugra Shankar Prasad and Shiva Pujan Singh, for respondent No. 1.
section P. Sinha and M. I. Khowaja, for respondents Nos. 2 and 3.
The Judgment of the Court was delivered by Ray, J.
This appeal is by special leave from the judgment dated 21 March, 1966 of the Madras High Court dismissing the appeal preferred by the appellant against the decree holders ' application for execution of the decree.
The appellant is one of the judgment debtors brought on record as legal representative of a deceased judgment debtor Lala Baijnath Prasad.
Respondent No. 1 Lakshman Prasad Gupta was one of the plaintiffs.
Pratap Chand and Basudeb Prasad respondents Nos. 2 and 3 respectively are the sons of a judgment debtor Girdharilal Agarwala.
The plaintiff respondent Lakshman Prasad Gupta was married to the sister of Lala Bansilal.
Bansilal belonged to the joint family which consisted inter alia of the appellant 's father.
There were five 366 branches of the said joint family of the judgment debtors, three whereof were at Banaras, Calcutta and Naini and the other two were the branches of the descendants of Mohanlal and of Lala Baijnath Prasad, father of the appellant, respectively.
The said joint family had valuable properties in and around the town of Arrah in Bihar.
There are alleged to be valuable properties of the joint family also at Allahabad, Banaras, Bombay, Calcutta and Madras.
Some time in the year 1926 Lala Pratap Chand, one of the descendants of Mohanlal who was a grand uncle of Lala Bansilal filed a partition suit in the court of the Subordinate Judge at Allahabad.
A preliminary decree was passed in the said partition suit on 14 February, 1927.
An appeal was preferred and it was dismissed.
An amicable settlement was arrived at in the partition suit on 13 January, 1931 for partition of the properties into five equal lots and allotment of the shares.
Thereafter a Commissioner was appointed in the partition suit to go into accounts and prepare five lots.
The branches inter se raised disputes as to liability for loans alleged against the joint family.
The Commissioner prepared his report on 18 May, 1936.
Final decree was passed on 13 January, 1939.
An appeal was preferred against the said final decree in the partition suit to the High Court at Allahabad.
The appeal was disposed on 6 December, 1949.
The plaintiff Lakshman Prasad Gupta and six others filled suit No. 76 of 1937 in the Court, of the First Subordinate Judge at Arrah in Bihar and obtained a decree on 20 July, 1938 for Rs. 18,540 and for costs Rs. 1,840/4/ aggregating Rs. 20,380/4/ .
This decree was against Banwarilal and other members of the joint family to which the appellant 's father belonged.
The decree was transferred from Arrah to the Court of the Civil Judge at Allahabad where.
on 2 June, 1941 the decree holder commenced execution proceedings marked as Execution Petition No. 38 of 1941.
In that execution petition the decree holder prayed for attachment and sale of Shri Krishna Desi Sugar Works at Jhusi known as the Jhusi Sugar Mills in the District of Allahabad which belonged to the joint family.
The execution proceedings were according to the decree holders stayed under orders of the Allahabad High Court and after the stay order was vacated the execution proceedings were revived on 13 May, 1950.
The jhusi Sugar Mill was attached on 1 1 July, 1952 and it was sold on 19 February, 1955.
The sale was set aside on 31 May, 1955 pursuant to objections of the judgment debtors that the Jhusi Sugar Mill could not be sold because of the provisions of the U.P. Encumbered Estates Act, 1934.
It may be stated here that some time in the month of September, 1935 367 Baijnath Prasad filed an application before the Collector of Allahabad for protection and relief under the U.P.
Encumbered Estates Act of 1934 and it was registered as Encumbered Estates, Suit No. 25 of 1935.
Thereafter the decree holders on 17 March, 1956 made an application in the Arrah Court for transfer of the decree.
On 6, June, 1956, the Subordinate, Judge, at Arrah transferred the decree to the Madras High Court.
On 13 August, 1956 the decree holders, filed in the Madras High Court an application for attaching the properties of the joint family.
This application in the Madras High Court is the subject matter of the present appeal.
The matter was heard first by the Master of the High Court of Madras who held that the application for execution was barred by limitation.
An appeal from the decision of the Master was heard by the learned Single Judge of the Madras High Court who held that the application was not within the mischief of bar of limitation Thereafter Letters Patent Appeal was heard by a Division Bench of the Madras High Court.
The appeal is from the Bench decision upholding the judgment of the learned Single Judge.
Before the Master of the Madras High Court the contention on behalf of the judgment debtors was that the decree was passed on 20 July, 1 9 3 8 and therefore the execution petition filed on 1 3 August, 1956 was barred by limitation.
The decree holders on the other hand contended that the execution of the decree which commenced on 2 June, 1941 before the Civil Judge at Allahabad was stayed till the end of 1949 and was revived on 13 May, 1950 and finally disposed on 31 May, 1955, and, therefore, the execution petition filed on 13 August, 1956 was within time. 'he Master held that the decree holders had failed to prove as to from what point of time the execution of the decree was stayed pursuant to the order of the Allahabad High Court and also the time when the stay was vacated.
The application for execution was therefore found by the Master of the Madras High Court to be barred by limitation.
The learned Single Judge of the Madras High Court referred to the revival of execution proceedings before the Civil Judge at Allahabad on 13 May, 1950 and also the finding of the Civil Judge at Allahabad who in passing the final order on 31 May, 1955 setting aside the sale of the Jhusi Sugar Mill stated that the execution proceedings were stayed by orders of the High Court at Allahabad., The Civil Judge at Allahabad set aside the Sale because of the mandatory provisions of sections 7(2) and 9(5) of the U.P.
Encumbered Estates Act.
The Madras High Court placed reliance on Exhibits P 2, P 3 and P 3A on the question of stay of execu tion proceedings.
It may also be stated here that the judgment 3 68 debtor did not dispute the translation of those Exhibits P 3 and P 3A.
The Exhibits set out the orders of the Civil Judge at Allahabad.
Exhibit P. 2 is the judgment dated 31 May, 1955 passed by the Civil Judge setting aside the sale of the Jhusi Sugar Mill.
Exhibits P 3 and P 3A comprise the orders passed by the Civil Judge.
The three relevant orders in Exhibits P 3 and P 3A are dated 18 August, 1941, 23 August, 1941 and 30 August, 1941 in the said execution proceedings.
The order dated 18 August, 1941 was to the effect that the receivers were to be informed about the execution proceedings and their objections, if any.
The receivers were the receivers in the partition suit No. 4 of 1926.
The said order further recited that the orders of the High Court at Allahabad in the, partition suit were also received in the executing court.
The order dated 23 August, 1941 recited that the execution application of the decree holder was presented in the presence of the lawyers of the decree holder and the receivers.
Further, the order was that the request for permission should be submitted in suit No. 4 of 1926 namely, the partition suit of the defendants judgment debtors.
The order dated 30 August, 1.941 recorded by the Civil Judge at Allahabad was inter alia as follows : "The proceedings remain stopped on account of the injunction of the High Court.
Hence it was ordered that receivers should be informed accordingly.
Further steps will be taken after getting permission .
These orders are relied on by the decree holder to substantiate the case of stay of execution proceedings.
The contention which was advanced before the Madras High Court and repeated in this Court was that there was no absolute stay of the execution of the decree.
It was amplified to mean that the execution proceedings before the Civil Judge at Allahabad related only to one property and therefore the decree holders would not be entitled to claim benefit of exclusion of time by reason of partial stay of execution proceedings at Allahabad.
The Madras High Court rightly found that there was no evidence that the judgment debtors were possessed of other properties in Allahabad where the decree was being executed.
The Madras High Court rightly held that the decree holders were restrained by injunction issued by the Allahabad High Court from executing the decree and were therefore entitled to claim the benefit of section 15 of the Limitation Act in respect of the period of stay of execution of the decree.
It was contended by counsel for the appellant that the decree holder could start execution proceedings in Madras or in other States where the judgment debtors had properties.
Simultaneous 3 6 9 execution proceeding in more places than one is possible but the power is used sparingly in exceptional cases by imposing proper terms so that hardship does not occur to judgment debtors by allowing several attachments to be proceeded with at the same time.
In the present case, however, the important features are that a partition suit was instituted in the year 1926 among the defendants.
and receivers were appointed of the properties.
The judgment of the Allahabad High Court dated 6 December, 1949 disposing the appeals filed by the parties in the partition suit directed inter alia "that the parties will be put in possession of the immoveable properties at once, but the two receivers will be legally discharged only after they have accounted for the period they were in charge of the properties".
Counsel for the decree holder rightly relied on this portion of the judgment of the Allahabad High Court that this would fortify the construction that there was stay of execution of the decree.
In the present case, the effect of the order passed by the Allahabad High Court was recorded by the Civil Judge, Allahabad in his judgment dated 31 May, 1955 to amount to stay of execution proceedings.
The order of the Civil Judge, Allababad dated 30 August, 1941 was that "proceedings remain stopped on account of the injunction order issued by the High Court.
in the Madras High Court the parties proceeded on thee basis of the order as corded by the Civil Judge at Allahabad.
The order indicates that the stay of execution proceedings was in unqualified terms, namely, that the execution proceedings were stopped.
It is not possible to spell out any order of partial stay in the facts and circumstances of the present case as was contended by counsel for the appellant.
The order is on the contrary to the effect that there was an absolute, stay of execution proceedings.
It is, therefore, manifest that the execution proceedings before the Civil Judge at Allahabad were stayed and the decree holder was rightly found by the Madras High Court to the benefit of exclusion of time during which the execution, was stayed, Though the judgment debtors did not question before the Master of the Madras High Court the bona fides of the decree holder in prosecuting the execution proceedings, that contention was advanced before the learned Single Judge of the Madras High Court.
The learned Single Judge of the Madras High Court held that the decree holders commenced execution proceedings for sale of the Jhusi Sugar Mill for realisation of the decretal amount but the attempt of the decree holder failed because of the objections of R the judgment debtors under the provisions of the U.P. Encumbered Estate Act.
The sale was set a side by reason of the mandatory provisions of the statute.
The learned Single Judge of the Madras High Court rightly held that the decree holders prosecuted the exe 370 cution case in good faith and with due diligence and were entitled to protection under section 14 of the Limitation Act.
Before the Division Bench of the Madras High Court no argu ment was advanced touching the bona fides or good faith with which the execution proceedings were carried on.
Counsel for the appellant repeated the contention that the decree holders were guilty of lack of good faith and diligence.
It is not open to the judgment debtors to advance that contention having abandoned the same before the Division Bench of the Madras High Court.
We are furthermore of opinion that the conclusion of the learned Single Judge of the Madras High Court on that point is correct.
The other question which arise before the Madras High Court was whether section 15 of the Limitation Act, 1908 would apply to limitation prescribed in statutes other than the Limitation Act.
Section 48 of the Code of Civil Procedure until its amendment on the passing of the enacted that the decrees of the Civil Courts were to be executed within 12 years and not after that.
The present case is governed by section 48 of the Code of Civil Procedure as it stood prior to the deletion of that section along with the passing of the .
In section 15 of the Limitation Act, 1908 it is enacted that in computing the period of limitation prescribed for any suit or application for a decree execution of which has been stayed by injunction, the time of the continuance of the injunction shall be excluded.
In the Madras High ,Court it was argued that the word 'prescribed ' occurring in section 15 of the Limitation Act could apply only to cases of limitation prescribed by the First Schedule to the Limitation Act, 1908 with the result that the benefit of exclusion of time by reason of operation of stay could not be availed of in cases of limitation prescribed by section 48 of the Code of Civil Procedure.
The Madras High Court relied on the decision in Kandaswami Pillai vs Kannappa Chetty(1) which held that the expression 'prescribed ' in section 15(1) of the Limitation Act would apply not only to limitation prescribed in the First Schedule to the Limitation Act but also to limitation prescribed in general statutes like the Code of Civil Procedure.
That is the correct statement of law and counsel for the appellant did not advance any contention to the contrary.
It may, however, be stated that the effect of section 48 of the Code of Civil Procedure is not to supersede the law of limitation with regard to execution of decrees.
The Limitation Act prescribes a period of limitation for execution of decrees.
Section 48 of the Code of Civil Procedure dealt with the maximum limit of time provided for execution, but it did not prescribe the period within (1) 3 7 1 which each application for execution was to be made.
An application for execution was to be made within three, years from any of the dates mentioned in the third column of Article 182 of the Limitation Act 1908.
An application for execution of a decree would first have to satisfy Article 182 and it would also have to be found out as to whether section 48 of the Code of Civil Procedure operated as a further bar.
In the present case, there was stay of execution proceedings.
On 13 May, 1950 the execution proceedings were revived.
The judgment debtors did not challenge the order dated 13 May, 1950.
The judgment debtors impeached the sale only on a ground covered by the U.P. Encumbered Estates Act, 1934.
The judgment debtor further in impeaching the sale of Jhusi Sugar Mill did not advance before the Civil Judge at Allahabad any contention that any of the orders,of the Civil Judge at Allahabad reviving the execution proceedings, attaching the Jhusi Sugar Mill and directing the sale of the Sugar Mill was barred by limitation.
The principle of res judicata applies to execution procedings.
The judgment debtors in the present case did not raise any objection as to limitation in regard to execution of the decree before the Civil Judge at Allahabad.
On the contrary the judgment debtors asked for setting aside the sale on the basis of revival of execution proceedings.
The revival of execution was not challenged and the judgment debtors are thereby barred by the principle of rem judicate from questioning directly or indirectly the order dated 13 May, 1950 reviving the execution proceedings.
When the appellant made the application for special leave, the appellant referred to an affidavit affirmed by the appellant 's father on 12 February, 1957 in the execution proceedings in the Madras High Court.
The copy of the said affidavit annexed to the petition for special leave in this Court is in seven paragraphs.
In paragraph 6 of the said affidavit it is alleged that the decree is against 5 bran ches and the plaintiff Lakshman Prasad in collusion with the other branches excluded the other four branches and chose to proceed only against the appellant 's branch though the other four branches were possessed of vast properties.
The further allegations in paragraph 6 of the said affidavit are that the object of the plaintiff is to harass only one branch and the application is not bonafide.
The plaintiff respondent in answer to the petition for special leave affirmed an affidavit in this Court that paragraph 6 in the said affidavit was an interpolation and was not at all in existence in the affidavit filed in the Madras High Court.
The plaintiff respondent ti obtained a photostat copy of the said affidavit filled in the Madras High Court.
The photostat copy established that paragraph 6 was not there and further that the affidavit was affirmed at Allahabad bad on 12 February, 1957 and not at Madras.
Furthermore, the 372 affidavit was explained to the deponent Baijnath Prasad as will appear from the photostat copy as annexed to the petition whereas in the copy annexed to the petition for special leave there was no such statement.
It is a serious matter that the appellant asked for relief on the basis of false copies of affidavits.
An explanation was suggested in the affidavit of the appellant that the copy was annexed in accordance with the draft that had been sent by the Madras lawyer.
It is beyond comprehension as to how an incorrect copy would be sent by the Madras lawyer.
Counsel for the appellant realised the gravity of the situation and conceded that the matter should be proceeded, with on the basis as it paragraphs did not exist.
The appellant is guilty of lack of uberrimae fidei.
We have therefore proceeded on the basis that paragraph 6 did not exist in the copy of the said affidavit.
The Madras High Court upheld the order of the learned Single Judge entitling the decree holder to the exclusion of the period spent in prosecuting prior infructuous execution proceedings before the Civil Judge at Allahabad.
The decree holder was allowed to proceed with the execution proceedings and t he Madras High Court remitted the matter to the Master to consider the questions indicated in the judgment and the judgment debtors were allowed to raise objections to the executability of the decree apart from that of limitation as indicated in the judgment of the learned Single Judge.
We are of opinion that the Madras High Court is right in holding that the decree holder is entitled to the benefit of exclusion of time during which the execution proceedings were stayed by the order of the Allahabad High Court and the decree holder proceeded with the said execution proceedings in good faith and with the deligence.
For these reasons we are of opinion that the appeal fails.
The appellant will pay the costs to the respondents.
Y.P. Appeal dismissed.

summary/full:
The first respondent, in 1938, obtained a decree against the appellants branch of a joint family, and in 1941, commenced proceedings for the execution of the decree in Allahabad.
Meanwhile, in 1939, a final decree had been passed in a suit for partitioning the family properties among the members of the joint family, and the matter was taken up in appeal to the High Court of Allahabad.
Certain orders were passed by the High Court which were construed by the executing court in the years 1941 and 1942 as stay orders of the execution proceedings commenced by the respondent.
The High Court passed a final decree in the partition suit in December 1949, but did not immediately discharge the Receivers who were appointed during the pendency of the suit.
The respondent revived the execution proceedings in May 1,950 and a mill belonging to the joint family was attached and sold 'but the sale was set 'aside in 1955 as the appellant 's branch applied for relief under the U.P. Encumbered Estates Act, 1934.
Thereafter, in ' 1956, the decree in favour of the respondent was transferred to Madras High Court for execution and on 13th August, 1956, the respondent filed an execution application, for attainment of certain properties which fell to the appellant 's share.
High Court of Madras in Letters Patent Appeal held that the execution application was in time.
On the question whether the execution application dated 13th August, 1956, was in time, or barred by limitation, HELD : (i) The respondent bonafide pursued execution against the mill and since his good faith was not questioned before the Appellate Court it was not open to the appellant to do so in this Court.
[370 A, C] (ii) It was not possible to spell out any order of partial stay on the facts and circumstances of the present case.
The facts that the Receivers were not finally discharged in 1949 when the final decree by the High Court was passed in the partition suit, and the understanding of the parties and the executing court that execution was stayed by the High Court, indicate that the stay was in unqualified terms.
Therefore, the respondent could not have applied earlier 'for execution with respect to other property of the joint family either at Allahabad or at Madras.
[369 A C, D G] (iii) Further, when the execution proceedings were revived in May 1950 the executing court held that execution proceedings had been stayed till December 1949 and the appellant did not challenge the order of attachment and sale of mill on the ground that the proceedings were barred by limitation.
Therefore, the appellant was barred by the principle of res judicata from questioning the order of May 1950 on the ground of limitation.
[371 D E] 365 (iv) Section 15 of the Limitation Act states that in computing the period of limitation prescribed the time of the continuance of the injunction staying execution shall be excluded.
The word "prescribed" would apply not only to Limitation Act but also to the limitation prescribed in general statutes like the Civil Procedure Code.
Section 48 of the Code, as it then stood, laid down 12 years as the maximum limit of the period of execution but it did not prescribe the period within which each application for execution was to be made.
Such an application was to be made within three years from the dates mentioned in third column of Article 182 of the Limitation Act, 1908.
Therefore, an application for execution of a decree must first satisfy Article 182 and it would then have to be found out as to whether section 48 of the Civil Procedure Code operated as a further bar.
[370 C H; 371 A B] (v) Since the execution proceedings were stayed in the present case, the 'respondent was entitled to claim its benefit of section 15 of the Limitation Act in respect of the period of stay of the execution of his decree, from June 194.1 till end of 1949; and since the execution application of 1950 was finally disposed of in 1955, the present application filed in 1956 was within time.
[372 E]


judgement:
l Appeals No. 1760 of 1967.
Appeals from the judgment and order dated February 1, 2, 1966 of the Bombay High Court in Income tax Reference No. 60 of 1961.
B. Sen, section K. Aiyar and B. D. Sharma, for the appellant.
M. C. Chagla and A. K. Verma, for the respondent.
The Judgment of the Court was delivered by Grover, J.
This is an appeal by certificate from a judgment of the Bombay High Court in an Income tax reference.
The respondent Company which is the assessee carries on business of the manufacture and sale of yam and cloth in Bangalore.
In 1914 it started a Provident Fund for the benefit of the monthly rated employees and this fund was called "The Staff Provident Fund".
Subsequently another fund was started known as the "Work men Provident Funds".
These funds were, not recognised under the provisions of Chapter IXA of the Income tax Act, 1922 (hereinafter called the Act).
The employees,and the assessee made contributions to the two funds from time to time.
The Employees ' Provident Funds Act (to be referred to as the Provident Funds Act) came into force on 31st October, 1952.
The amounts standing to the credit of the two funds on that date so far as they are referable to the contributions by the Company stood as follows : (1) Staff Provident Fund: Company 's contributions upto 31 10 1952 89,605 9 2 Proportionate interest thereon 19,596 8 7 1,09,202 1 9 (2) Workmen 's Provident Fund : Company 's contribution upto 31 10 1952.
1,83,190 13 2 Proportionate interest thereon9,379 2 5 1,92,569 15 10 3,01,772 1 7 The assessee came within the first schedule to the Provident Fund Act and therefore it applied under section 17 for exemption from the operation of the provisions of that Act.
A provisional exemption was given on 1st July, 1953.
The assessee was, however, informed that pending the grant of exemption it need not make any payment of the accumulations to the Regional Provident Fund Commissioner, as was enjoined under the Provident 470 Fund Act.
Following some correspondence between the Com missioner and the assessee the latter sought cancellation of the exemption by, means of a letter dated 11th July, 1955.
The Provident Fund Commissioner cancelled the exemption granted under section 17, of the Provident Funds Act and required the assessee to comply with all its provisions and the Scheme framed thereunder and further to transfer all the provident fund 's accumulations to the Employees Provident Fund immediately.
In accordance with the communication from the Commissioner, the assessee transferred an amount which included a sum of Rs. 3,01,772 1 7 which represented the assessee 's contribution to the two funds upto 31st October, 1952.
The assessee claimed deduction in the assessment for the assessment year 1957 58 on account of the transfer of the amount of Rs. 3,01,772 1 7 to the Provident Fund Com missioner.
The Income Tax Officer disallowed this claim on the ground that the amount in question was allowable to be treated ,as capital expenditure ' under the provisions of section 58K of the Act.
An appeal was taken to the Appellant Assistant Commissioner but it failed.
The assessee appealed to the Appellate Tribunal.
The Tribunal held that there was a transfer of the fund to Trustees which came within the scope of Section 58K of the Act and therefore the amount was not deductible nor could the deductions be allowed under section 10(1) or Section 10(2 (xv).
The assessee sought reference and the following two questions were referred : (1) Whether the provisions of Section 58K of the Income tax Act apply to the transf er of the sum of Rs. 3,01,772 1 7 to the Regional Provident Fund Commissioner ? (2) If the answer to the above question is in the negative , whether the sum of Rs. 3,01,772 1 7 is allowable as a deduction in arriving at the commercial profits under section 10(1) or is an allowable deduction under section 10(2) (xv) of the Income tax Act in the computation of the assessable "business" profits.
The High Court examined in detail the provisions contained in Chapter IXA of the Act.
It was observed that the scheme of section 58K in that Chapter was that though an employer could not claim any allowance at the time he transferred his own accumulated contributions to the Provident Fund to the trustees,, he could claim exemption ' in respect thereof at the time his share of contributions was paid to the employee provided arrangements were made to deduct from those amounts the income tax payable by his employee.
The transfer of the fund contemplated under section 58K was a voluntary transfer by an employer of the Provident Fund maintained by him to the trustees to hold it in trust for 471 the benefit of his employees.
The High Court, however, proceeded to consider the matter even on the assumption that the transfer of the fund contemplated by section 58K(1) Would also include involuntary transfer.
According to the High Court the position that emerged on a consideration of the materials provisions of the Provident Funds Act and the Scheme framed thereunder was as follows : For the administration of the statutory Provident Fund which came into existence and stood constituted on the framing of the Scheme, a Board of trustees called the Central Board of Trustees was constituted.
On the framing of the Scheme and the constitution of the statutory Provident Fund the employers in the industries to which the Provident Funds Act applied were required to transfer the accumulated balances of the Provident Fund, if any, which had been maintained by them.
Similarly, trustees of the private Provident Fund constituted by an employer were also required to transfer the accumulated balances to the statutory Provident Fund.
Such employers were further required to make their own annual contributions according to the prescribed limit to that fund.
The Board of trustees and the Officers administering the fund were required to open a Provident Fund account and in that account a separate account was maintained of each member showing the balance to his credit containing the contributions of the employer.
The High Court was of the view that a trust in its true sense had not been constituted by the Provident Funds Act or the Scheme and that the transfer was not to the trustees but to the fund The first question was answered in the negative and in favour of the assessee.
The answer to the second question was given in the affirmative, it being held that the deduction claimed was allowable under section 10 (2) (xv) and that the provisions of section 10 (4) (c) did not 'operate as a bar to the claim made by the assessee for deduction of the amount in question.
Section 58K of the Act was in those terms "58K. TREATMENT OF FUND TRANSFERRED BY EMPLOYER TO TRUSTEE: (1) Where an employer who maintains a provident fund (whether recognised or not) for the benefit of his employees and has not transferred the fund or any portion of it, transfers such fund or portion to trustees in trust for the employees participating in the fund, the amount so transferred shall be deemed to be of the nature of capital expenditure; (2) When an employee participating in such fund is paid the accumulated balance due to him therefrom, any portion of such balance as repre 472 sents his share in the amount so transferred to the trustee (without addition of interest, and exclusive of the employee 's contributions and interest thereon) shall, (if the employer has made effective arrangements to secure that tax shall be deducted at source from the amount of such share when paid to the employee,) be deemed to be an expenditure by the employer within the meaning of [clause (xv)] of sub section (2) of section 10, incurred in the year in which the accumulated balance due, to the employee is paid.
For the application of sub section (1) the following conditions must be satisfied : (1) The employer should have maintained a Provident Fund for the benefit of his employees; (2) There should have been a transfer of such fund or portion thereof to trustees; (3) Such transfer should have been in trust for the employees participating in the fund.
It has not been shown that the view taken by the High Court that the transfer in the present case was not made to any trustees is unfounded.
But we need express no opinion on the point because in our judgment the third condition could not be regarded as having been satisfied.
The transfer was not made to trustees in trust for the employees participating in the fund.
The common statutory fund created under the Provident Funds Act is meant not for the employees of the assessee only but it is meant for employees of hundreds of other employers who are covered by that Act.
In other words the employees of the assessee alone did not participate in that fund.
It is very doubtful whether the Provident Funds Act and the Scheme thereunder can be said to create a trust in the sense in which that word is used in section 58K (1) merely because the Board managing the Scheme was called the Board of Trustees.
The members of the Board did not become trustees in the legal sense.
They were appointed to administer the fund which vested in them only for the purpose of administration.
It could well be said that the essential ingredient of a trust, namely, reposing of confidence by the author of the trust in the trustees for the purpose of carrying out his desires, wishes and directions and the acceptance of those obligations by the trustees was absent in the present case.
It is, however, not necessary to examine in detail this aspect of the matter because as observed before the fund under the Provident Funds Act, was not restricted to the employees of the assessee only and it could never 4 73 be said that they alone participated in that fund.
In such a situation section 58K could not be made applicable.
Hardly any argument was addressed on the decision of the High Court on the second question. ' The expenditure was in curred in the relevant accounting year.
It was something which had gone irretrievably.
The amount in question had been spent and paid out in the relevant year of 'accounting, and was therefore allowable as expenditure incurred exclusively for the purpose of the business.
It is not suggested that is was incurred for any other purpose.
The conditions, of section 10(2) (xv) had been fully satisfied in the present case.
In the result we concur in the answers given by the High Court.
The appeal fails and is dismissed with costs.
G.C. Appeal dismissed.

summary/full:
The assessee company respondent herein carried on the business of ,manufacture and sale of yarn and cloth.
It started in 1914 a Provident Fund for the benefit of its monthly rated employees.
Subsequently, another fund was started.
These funds were not recognised under the pro visions of Chapter IXA of the Income tax Act, 1922.
The employees and the company made contributions to the two funds from time to time.
The Employees Provident Funds Act 19 of 1952 came into force on 31st October, 1952.
Under directions given by the Provident Fund Commissioner the assessee company transferred to the statutory Employees Pro vidend Fund all the accumulations in the two private funds maintained by it including its own contributions thereto made upto October 31, 1952.
The said contributions amounted to Rs. 3,01,772 1 7.
In income tax proceedings for the assessment year 1957 58, the company claimed deduction of the above amount of Rs. 3,01,772 1 7 from its income.
The Income tax Officer, the Appellate Assistant Commissioner as well as Income tax Appellate Tribunal disallowed the claim.
In reference how ever the High Court decided in favour of the Company.
The Commissioner of Income tax appealed to this Court.
The questions that fell for considerations were : (i) whether the payment in question by the assessee company was capital expenditure within the meaning of section 58K(1) of Income tax Act and (ii) whether the said payment could be allowed as a deduction under section 10(2) (xv) of the Income tax Act? HELD : (i) For the application of sub section
(1) of section 58K the following conditions must be satisfied : '(1) The employer should have maintained a Provident Fund for the benefit of his employees; (2) There should have been a transfer of such fund or operation thereof to trustees; (3) Such transfer should have been in trust for the employees participating in the fund.
[472 C D] In the present case the third condition was not satisfied.
The common statutory fund created under the Provident Funds Act was meant not for the employees of the assessee only but also for employees of hundreds of other employers who were covered by the Act.
It was not restricted to the employees of the assessee and it could never be said that they alone participated in that fund.
In such a situation section 58K was not applicable.
[412 E; H 473 A] (ii)The expenditure was incurred in the relevant accounting year.
It was something which had gone irretrievably.
The amount in question had been spent and paid out in the year of accounting, and was, therefore, 469 allowable as expenditure incurred exclusively for the purpose of, the business.
The conditions of section 10(2)(xv) had, therefore, been fully satisfied in the present case.
[473 B C]


judgement:
iminal Appeal No. 31 of 1953.
Under article 132(1) of the Constitution of India from the Judgment and Order dated 20 1 1953 of the High Court of Judicature at Bombay in Criminal Revision Application No. 642 of 1952, 800 1.
C. Dalal and P. K. Chatterjee for the appellant.
M. C. Setalvad, Attorney General of India (P. A. Mehta and P. G. Gokhale, with him) for the respondent.
October 8.
The Judgment of the Court was delivered by VENKATARAMA AYYAR J.
This is an appeal against the judgment of the High Court of Bombay dismissing a revision petition filed by the appellant against his conviction under section 7 of the Essential Supplies (Temporary Powers) Act No. XXIV of 1946.
The charge against the appellant was that on 6th April, 1951, he had transported 15 maunds of juwar from his village of Khanjroli to Mandvi without a permit, and had thereby contravened section 5(1) of the Bombay Food Grains (Regulation of Movement and Sale) Order, 1949.
The Resident First Class Magistrate of Bardoli who tried the case found him guilty, and sentenced him to imprisonment till the rising of the Court and a fine of Rs. 500.
The conviction and sentence were both affirmed by the Sessions Judge, Surat, on appeal.
The appellant thereafter took up the matter in revision to the High Court of Bombay, and there for the first time, took the objection that the Resident First Class Magistrate had no jurisdiction to try the case, because under section 2 of the Bombay Act No. XXXVI of 1947 the offence was punishable with imprisonment, which might extend to seven years, and under the Second Schedule to the Criminal Procedure Code, it was only the Sessions Court that had jurisdiction to try such offence.
The answer of the State to this contention was that subsequent to the enactment of the Bombay Act No. XXXVI of 1947, the Essential Supplies (Temporary Powers) Act bad undergone substantial alterations, and was finally recast by the Central Act No. LII of 1950; that the effect of these amendments was that Act No. XXXVI of 1947 had become inoperative, that the governing Act was Act No. LII of 1950, and that as under that Act the maximum sentence for the offence in question was three years, the Resident First Class Magistrate had jurisdiction over the offence.
801 The revision petition was heard by a Bench consisting of Bavdekar and Chainani JJ.
Bavdekar J. was of the opinion that the amendments to the Essential Supplies (Temporary Powers) Act including the re enactment of section 7 in Act No. LII of 1950 did not trench on the field covered by the Bombay Act No. XXXVI of 1947, which accordingly remained unaffected by them.
Chainani J., on the other hand, held that both Act No. XXXVI of 1947 and Act No. LII of 1950 related to the same subject matter, and that as Act No. LII of 1950 was a Central legislation of a later date, it prevailed over the Bombay Act No. XXXVI of 1947.
On this difference of opinion, the matter came up under section 429, Criminal Procedure Code, for hearing before Chagla C. J., who agreed with Chainani J, that there was repugnancy between section 7 of Act No. LII of 1950 and section 2 of the Bombay Act No. XXXVI of 1947, and that under article 254(2), the former prevailed ; and the revision petition was accordingly dismissed.
Against this judgment, the present appeal has been preferred on a certificate under article 132 (1), and the point for determination is whether contravention of section 5(1) of the Bombay Food Grains (Regulation of Movement and Sale) Order, 1949, is punishable under section 2 of the Bombay Act No. XXXVI of 1947, in which case the trial by the Resident First Class Magistrate would be without jurisdiction ; or whether it is punishable under section 7 of the Essential Supplies (Temporary Powers) Act, as amended by Act No. LII of 1950, in which case, the trial and conviction of the appellant by that Magistrate would be perfectly legal.
It is now necessary to refer in chronological sequence to the statutes bearing on the question.
We start with the Essential Supplies (Temporary Powers) Act No. XXIV of 1946 enacted by the Central Legislature by virtue of the powers conferred on it by 9 and 10, George VI, Chapter 39.
It applied to the whole of British India.
Section 3 of the Act conferred power on the Central Government to issue orders for regulating the production, supply and distribution of essential commodities, and under section 4, this power could be 802 delegated to the Provincial Government.
Section 7(1) provided for punishment for contravention of orders issued under the Act, and ran as follows: "If any person contravenes any order made under section 3, he shall be punishable with imprisonment for a term which may extend to three years or with fine or with both, and if the order so provides any Court trying such contravention may direct that any property in respect of which the Court is satisfied that the order has been contravened shall be forfeited to His Majesty: Provided that where the contravention is of an order relating to foodstuffs which contains an express provision in this behalf, the Court shall make such direction, unless for reasons to be recorded in writing it is of opinion that the direction should not be made in respect of the whole or as the case may be, a part of the property.
" The State of Bombay considered that the maximum punishment of three years ' imprisonment provided in the above section was not adequate for offences under the Act, and with the object of enhancing the punishment provided therein, enacted Act No. XXXVI of 1947.
Section 2 of the said Act provided (omitting what is not material for the present purpose) that "Notwithstanding anything contained in the Essential Supplies (Temporary Powers) Act, 1946, whoever contravenes an order made or deemed to be made under section 3 of the said Act shall be punished with imprisonment which may extend to seven years, but shall not, except for reasons to be recorded in writing, be less than six months, and shall also be liable to fine." This section is avowedly repugnant to section 7(1) of the Essential Supplies (Temporary Powers) Act.
Section 107 (2) of the Government of India Act, which was the Constitution Act then in force, enacted that, "Where a Provincial law with respect to one of the matters enumerated in the Concurrent Legislative List contains any provision repugnant to the provisions of an earlier Dominion law or an existing law with respect to that matter, then, if the Provincial law having been reserved for the consideration of the Governor General has received the assent of the Governor General, 803 the Provincial law shall in that Province prevail, but nevertheless the Dominion Legislature may at any time enact further legislation with respect to the same matter.
" On the footing that the subject matter of Act No. XXXVI of 1947 fell within the Concurrent List, the Bombay Government obtained the assent of the Governor General therefor, and thereafter it came into force on 25th November, 1947.
The position therefore was that by reason of section 107(2) of the Government of India Act, Act No. XXXVI of 1947 prevailed in Bombay over section 7 of the Essential Supplies (Temporary Powers) Act; but at the same time, it was subject under that section to all and any "further legislation with respect to the same matter", that might be enacted by the Central Legislature.
The contention of the State is that there was such further legislation by the Central Legislature in 1948, in 1949 and again in 1950, and that as a result of such legislation, section 2 of the Bombay Act No. XXXVI of 1947 had become inoperative.
In 1948 there was an amendment of the Essential Supplies (Temporary Powers) Act, whereby the proviso to section 7(1) was repealed and a new proviso substituted, which provided inter alia that, " Where the contravention is of an order relating to foodstuffs which contains an express provision in this behalf, the Court shall direct that any property in respect of which the order has been contravened shall be forfeited to His Majesty, unless for reasons to be recorded in writing it is of opinion that the direction should be made not in respect of the whole, or as the case may be, a part of the property.
" The Essential Supplies (Temporary Powers) Act was again amended in 1949.
Under this amendment, the proviso to section 7(i) was repealed, and a new clause substituted in the following terms: " (b) Where the contravention is of an order relating to foodstuffs, the Court shall (i) sentence any person convicted of such contravention to imprisonment for a term which may extend to three years and may, in addition, impose a sentence of fine, unless for 804 reasons to be recorded, it is of opinion that a sentence of fine only will meet the ends of justice; and (ii)direct that any property in respect of which the order has been contravened or a part thereof shall be forfeited to His Majesty, unless for reasons to be recorded it is of opinion that such direction is not necessary to be made in respect of the whole, or, as the case may be, a part of the property.
" Then came Central Act No. LII of 1950, under which the old section 7 was repealed and a new section enacted in the following terms: " (1) If any person contravenes any order under section 3 relating to cotton textiles he shall be punishable with imprisonment for a term which may extend to three years and shall also be liable to fine; and any property in respect of which the order has been contravened or such part thereof as to the Court may seem fit shall be forfeited to the Government.
(2)If any person contravenes any order under section 3 relating to foodstuffs, (a)he shall be punishable with imprisonment for a term which may extend to three years and shall also be liable to fine, unless for reasons to be recorded the Court is of opinion that a sentence of fine only will meet the ends of justice ; and (b)any property in respect of which the order has been contravened or such part thereof as to the Court may seem fit shall be forfeited to the Government, unless for reasons to be recorded the Court is of opinion that it is not necessary to direct forfeiture in respect of the whole or, as the case may be, any part of the property: Provided that where the contravention is of an order prescribing the maximum quantity of any foodgrain that may lawfully be possessed by any person or class of persons, and the person contravening the order is found to have been in possession of foodgrains exceeding twice the maximum quantity so prescribed, the Court shall (a)sentence him to imprisonment for a term which may extend to seven years and to a fine not less than 805 twenty times the value of the foodgrain found in his possession, and (b)direct that the whole of such foodgrain in excess of the prescribed quantity shall be forfeited to the Government.
Explanation: A person in possession of foodgrain which does not exceed by more than five maunds the maximum quantity so prescribed shall not be deemed to be guilty of an offence punishable under the proviso to this sub section.
(3)If any person contravenes any order under section 3 relating to any essential commodity other than cotton textiles and food stuffs, he shall be punishable with imprisonment for a term which may extend to three years, or with fine or with both, and if the order so provides, any property in respect of which the Court is satisfied that the order has been contravened may be forfeited to the Government.
(4)If any person to whom a direction is given under sub section (4) of section 3 fails to comply with the direction, he shall be punishable with imprisonment for a term which may extend to three years, or with fine, or with both.
" It must be mentioned that while the amendments of 1948 and 1949 were made when section 107(2) of the Government of India Act was in force, the Constitution of India Act had come into operation, when Act No. LII of 1950 was enacted.
Article 254(2) of the Constitution is as follows: " Where a law made by the Legislature of a State specified in Part A or Part B of the First Schedule with respect to one of the matters enumerated in the Concurrent List contains any provision repugnant to the provisions of an earlier law made by Parliament or an existing law with respect to that matter, then, the law so made by the Legislature of such State shall,, if it has been reserved for the consideration of the President and has received his assent, prevail in that State : Provided that nothing in this clause shall prevent Parliament from enacting at any time any law with 806 respect to the same matter including a law adding to, amending, varying or repealing the law so made by the Legislature of the State.
" This is, in substance, a reproduction of section 107(2) of the Government of India Act, the concluding portion thereof being incorporated in a proviso with further additions.
Discussing the nature of the power of the Dominion Legislature, Canada, in relation to that of the Provincial Legislature, in a situation similar to that under section 107(2) of the Government of India Act, it was observed by Lord Was on in Attorney General for Ontario vs Attornery General for the Dominion(1), that though a law enacted by the Parliament of Canada and within its competence would override Provincial legislation covering the same field, the Dominion Parliament bad no authority conferred upon it under the Constitution to enact a statute repealing directly any Provincial statute.
That would appear to have been the position under section 107(2) of the Government of India Act with reference to the subjects mentioned in the Concurrent List.
Now, by the proviso to article 254(2) the Constitution has enlarged the powers of Parliament, and under that proviso, Parliament can do what the Central Legislature could not under section 107(2) of the Government of India Act, and enact a law adding to, amending, varying or repealing a law of the State, when it relates to a matter mentioned in the Concurrent List.
The position then is that under the Constitution Parliament can, acting under the proviso to article 254(2), repeal a State law.
But where it does not expressly do so, even then, the State law will be void under that provision if it conflicts with a later "law with respect to the same matter" that may be enacted by Parliament.
In the present case, there was no express repeal of the Bombay Act by Act No. LII of 1950 in terms of the proviso to article 254(2).
Then the only question to be decided is whether the amendments made to the Essential Supplies (Temporary Powers) Act by the Central Legislature in 1948, 1949 and 1950 are "furthers (1) 807 legislation" falling within section 107(2) of the Government of India Act or "law with respect to the same matter" falling within article 254(2).
The important thing to consider with reference to this provision is whether the legislation is "in respect of the same matter.
" If the later legislation deals not with the matters which formed the subject of the earlier legislation but with other and distinct matters though of a cognate and allied character, then article 254(2) will have no application.
The principle embodied in section 107(2) and article 254(2) is that when there is legislation covering the same ground both by the Centre and by the Province, both of them being competent to enact the same, the law of the Centre should prevail over that of the State.
Considering the matter from this standpoint, the first question to be asked is, what is the subject matter of the Bombay Act No. XXXVI of 1947? The preamble recites that it was "to provide for the enhancement of penalties for contravention of orders made under the Essential Supplies (Temporary Powers) Act, 1946.
" Then the next question is, what is the scope of the subsequent legislation in 1948, 1949 and 1950 ? As the offence for which the appellant has been convicted was committed on 6th April, 1951, it would be sufficient for the purpose of the present appeal to consider the effect of Act No. LII of 1950, which was in force on that date.
By that Act, section 7(1) of the Essential Supplies (Temporary Powers) Act as passed in 1946 and as amended in 1948 and 1949 was repealed, and in its place, a new section was substituted.
The scheme of that section is that for purposes of punishment, offences under the Act are grouped under three categories ,those relating to cotton textiles, those relating to foodstuffs, and those relating to essential commodities other than textiles or foodstuffs.
The punishments ' to be imposed in the several categories are separately specified.
With reference to foodstuffs, the punishment that could be awarded when the offence consists in possession of foodgrains exceeding twice the maximum prescribed is imprisonment for a term 808 which may extend to seven years, with further provisions for fine and forfeiture of the commodities.
In other cases, there is the lesser punishment of imprisonment, which may extend to three years.
Section 7 is thus a comprehensive code covering the entire field of punishment for offences under the Act, graded according to the commodities and to the character of the offence.
The subject of enhanced punishment that is dealt with in Act No. XXXVI of 1947 is also comprised in Act No. LII of 1950, the same being limited to the case of hoarding of foodgrains.
We are, therefore, entirely in agreement with the opinion of Chagla C.J. and Chainani J. that Act No. LII of 1950 is a legislation in respect of the same matter as Act No. XXXVI of 1947.
Bavdekar J. who came to the contrary conclusion observed, a .id quite correctly, that to establish repugnancy under section 107(2) of the Government of India Act, it was not necessary that one legislation should say "do" what the other legislation says "don 't", and that repugnancy might result when both the legislations covered the same field.
But he took the view that the question of enhanced penalty under Act No. XXXVI of 1947 was a matter different from that of punishment under the Essential Supplies (Temporary Powers) Act, and as there was legislation in respect of enhanced penalty only when the offence was possession of foodstuffs in excess of twice the prescribed quantity, the subject matter of Act No. XXXVI of 1947 remained untouched by Act No. LII of 1950 in respect of other matters.
In other words, he considered that the question of enhanced punishment under Act No. XXXVI of 1947 was a matter different from that of mere punishment under the Essential Supplies (Temporary Powers) Act and its amendments; and in this, with respect, he fell into an error.
The question of punishment for contravention of orders under the Essential Supplies (Temporary Powers) Act both under Act No. XXXVI of 1947 and under Act No. LII of 1950 constitutes a single subject.
matter and cannot be split up in the manner suggested by the learned Judge.
On this principle rests the rule 809 of construction relating to statutes that "when the punishment or penalty is altered in degree but not in kind, the later provision would be considered as superseding the earlier one." (Maxwell on Interpretation of Statutes, 10th Edition, pages 187 and 188).
"It is a well settled rule of construction", observed Goddard J. in Smith vs Benabo(1), "that if a later statute again describes an offence created by a previous one, and imposes a different punishment, or varies the procedure, the earlier statute is repealed by the later statute: see Michell vs
Brown(2), per Lord Campbell.
" It is true, as already pointed out, that on a question under article 254(1) whether an Act of Parliament prevails against a law of the State, no question of repeal arises; but the principle on which the rule of implied repeal rests, namely, that if the subject matter of the later legislation is identical with that of the earlier, so that they cannot both stand together, then the earlier is repealed by the later enactment, will be equally applicable to a question under article 254(2) whether the further legislation by Parliament is in respect of the same matter as that of the State law.
We must accordingly hold that section 2 of Bombay Act No. XXXVI of 1947 cannot prevail as against section 7 of the Essential Supplies (Temporary Powers) Act No. XXIV of 1946 as amended by Act No. LII of 1950.
The appellant also sought to argue that the subjectmatter of the legislation in Act No. XXXVI of 1947 was exclusively in the Provincial List, and that section 107(2) of the Government of India Act and article 254(2) of the Constitution which apply only with reference to legislation on subjects which are in the Concurrent List, have no application.
The very legislation on which the appellant relies, viz., Act No. XXXVI of 1947, proceeds, as already stated, on the basis that the subject matter is in the Concurrent List.
The appellant raised this question before the learned Judges of the Bombay High Court, and they rejected it.
In the application for, leave to appeal to (1) [1937]1 K.B. 5I8.
(2) 1 El.
and El.
267,274.
810 this Court which was presented under article 132(1), the only ground that was put forward as involving a substantial question as to the interpretation of the Constitution was, whether the Bombay Act No. XXXVI of 1947 was repugnant and void under article 254 of the Constitution.
No other question having been raised in the petition, we must decline to permit the appellant to raise this point.
In the result, the appeal fails and is dismissed.
Appeal dismissed.

summary/full:
Article 254(2) of the Constitution is, in substance, a reproduction of section 107(2) of the Government of India Act, 1935, the concluding portion whereof is incorporated in a proviso with further additions.
The principle embodied therein is that when there is legislation covering the same ground both by the Centre and by the State, both of them being competent to enact the same, the law of the Centre should prevail over that of the State.
Section 7 of the Essential Supplies (Temporary Powers) Act, 1946, was amended in 1948 and 1949 and thereafter by Act LII of 1950.
Held, that Act LII of 1950 is a legislation in respect of the same matter as Bombay Act (XXX VI of 1947) within the meaning of article 254(2) of the Constitution and therefore section 2 of Bombay Act XXXVI of 1947 cannot prevail as against section 7 of the Essential Supplies (Temporary Powers) Act as amended by Act LII of 1950.
It is a well settled rule of construction that if a later statute again describes an off once created by a previous one and imposes a different punishment or varies the procedure, the earlier statute is repealed by the later statute.
Attorniey Geneeral for Ontario vs Attorney General for the Dominion , Smith vs Benabo [1937] 1.
K.B. 518, and Michell vs Brown (I El. & El. 267, 274) referred to.