Judgment

HIDAYATULLAH, J. : The High Court of Bombay in a reference under S. 66(1) of the Indian Income-tax Act by the Income-tax Appellate Tribunal, Bombay, was referred the following two questions for decision:

(1) Whether the assessee Company was liable to pay additional income-tax? And

(2) If the answer to question No. 1 is in the affirmative, whether the levy of the additional income-tax is ultra vires:

The High Court answered the first question in the negative and in the circumstances, left the second question unanswered. This appeal is against the judgment and order of the High Court on a certificate granted by it. The Commissioner of Income-tax is the appellant, and the Elophinstone Spinning and Weaving Mills Co. Ltd., Bombay (the assessee Company) is the respondent.

2. The facts may now be stated briefly. For the assessment year 1951-52 (the previous year being the calendar year 1950), the assessee Company was found to have incurred a loss of Rs. 2,19,848 and was thus adjudged to be not liable to income-tax. In that year, the assessee Company had made profits, but the depreciation allowance under the Income-tax Act came to Rs. 7,84,063, thus converting the profits into loss f