T.L. Venkatarama Aiyyar JUDGMENT
Sudhi Ranjan Das, J.
1. This appeal is directed against the judgment pronounced on the 7th September, 1951, by the High Court of Judicature at Bombay on a reference made at the instance of the appellant under section 66(1) of the Indian Income-tax Act, 1922. By an assessment order dated the 31st March, 1948, the appellant was assessed by the Income-tax Officer, Bombay, for the assessment year 1947-1948 on a total income of Rs. 19,66,782 including a sum of Rs. 9,38,011 representing capital gains assessed in the hands of the appellant under section 12-B of the Act. The said amount of capital gains was earned by the appellant in the following circumstances. The assessee had a half share in certain immovable properties situate in Bombay which were sold by the assessee and his co-owners during the relevant accounting year which was the calendar year ending on the 31st December, 1946, to a private limited company known as Mafatlal Gagalbhai & Company Ltd. The profits on the sale of the said properties amounted to Rs. 18,76,023 and the appellant's half share therein came to the sum of Rs. 9,38,011 which was included in the assessment under section 12-B.
2. In April, 1948, the appellant appealed from the said order to the Appellate Assistant Commissioner contending that section 12-B of the Act authorising the levy of tax on capital gains was ultra vires the Central Legislature. The Appellate Assistant Commissioner by his order dated the 5th April, 1949, dismissed the appeal. A further appeal to the Income-tax Appellate Tribunal was dismissed by its order dated the 30th June 1950.
3. Being aggrieved by the order of the Appellate Tribunal the appellant applied to it under section 66(1) of the Act for raising certain questions of law. The Appellate Tribunal agreeing that certain questions of law did arise out of its order drew up a statement of the case which was agreed to by the parties and referred to the High Court the following questions :-
(1) Whether the imposition of a tax under the head "capital gains" by the Central Legislature was ultra vires ?
(2) Whether the imposition was in any way invalid on the ground that it was done by amending the Indian Income-tax Act ?
4. After hearing the reference the High Court following its judgment in Income-tax Reference No. 18 of 1950, Sir J. N. Duggan and Lady Jeena J. Duggan v. The Commissioner of Income-tax, Bombay City, answered the first question in the negative and expressed the opinion that it was not necessary to answer the second question. In that reference the........