In Section one hundred and thirty-four of the Government of Burma Act, 1935 (which relates to the financial settlement as between India and Burma) for the words "the distribution of property and liabilities effected by this Act and the Government of India Act, 1935" there shall be substituted the words "the distribution of property, rights and liabilities effected by and under this Act and the Government of India Act, 1935."—[Sir H. O' Neill.]

Brought up, and read the First and Second times, and added to the Bill.

Clauses 16, 17, and 18 ordered to stand part of the Bill.

Schedule agreed to.

Bill reported, with Amendments; as amended, considered.

Motion made and Question proposed, "That the Bill be now read the Third time."

5.45 P.m.

Very briefly I would like to say that I must register my deep disappointment at the failure of the Government to appreciate exactly the significance of the Bill in regard to India and the impression which will be made on all classes of the Indian peoples who are most anxious to secure cordial cooperation with this country. I feel that this Bill may be tightening up the Government of India Act in technical fashion but with regard to Clauses 2, 4 and certain others I feel they will do infinitely more harm than good. I much regret that my own party in this respect has not sufficiently exercised its responsibility to the people of India by going into the Lobby against Clause 2. I want to put it on record that the party which I represent in a humble capacity and some other Members of it do look with great apprehension on Clause 2, and further I desire to express deep regret that the Government has not seen its way to suspend this matter, withdraw those contentious Clauses, or, at least, suspend them in view of the grave difficulties which are confronting India at the present time.

5.48 p.m.

The hon. Member who has just spoken has, in effect, said what I was going to say. The responsibility for this matter is not ours but that of the right hon. Gentleman opposite. Although in some respects it is a small matter in other respects it is a large matter. What is involved is no less than the implication that what we gave to India in the Government of India Act—that great charter, every line and word of which was so carefully considered between us and our Indian colleagues—was not a rock, not something which we offered to India as something by which we should stand, but something which we could amend whenever the shoe pinched, without consulting them and without any consideration of what their wishes might or might not be. It is that aspect of the matter which strikes me as very serious. If it is believed in India that this is the attitude we desire to adopt with regard to the Government of India Act and that we are going to exercise our legal right to amend it without full and adequate consultation with Indian opinion, it does seem to me that the chance of getting everything on a better understanding has been seriously prejudiced.

The excuse in this matter, namely, that income tax must be, and must remain, simply and solely the right and concern of the central body, seems altogether inadequate for this particular course. If that is what you have been doing all you need have said was that you could have passed this Act and made it plain that no tax on employment might impose, under that guise, a tax on income. However, we have made our protest about this; we have made plain the view we hold and we have no desire to put any further difficulties in the way. The responsibility is the Government's and the right hon. Gentleman's opposite and I sincerely hope that the steps which he has taken to-day will not, as I fear they may, prejudice to any degree the happy relations we all desire to see exist between this country and India.

Question, "That the Bill be now read the Third time," put, and agreed to.

Bill read the Third time and passed, with Amendments.