LexCOMMISSIONER OF INCOME-TAX, AHMEDABAD· versus KARAMCHAND PREMCHAND LTD., AHMEDABAD
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3 S.C.R.
SUPREME COURT REPORTS
727
arbitration they did not anticipate the complications
which have subsequently arisen.
That is why
an
arbitration agreement may have been introduced
in
the contract in question.
All these facts have been
considered by both the courts, and though it is true that
in their
approach and final decisions in respect
of
these facts the two courts have differed in
material
particula1:s, they have in the result agreed with the
conclusion that the discretion vested in them should
be exercised in not granting stay as claimed by the
appellant.
Under these circumstances we do not think
we would be justified in
substituting our discretion
for that of the courts below.
It may be that if we
were trying the appellant's application under s. 34 we
might have come to a different conclusion; and also
that we may have hesitated
to confirm the order of
the tnal court if we had been dealing with the matter
as a court of first appeal; but the
matter has now'
come to us under Art.
136, and so we can justly inter-
fere with the concurrent exercise of the discretion by
the .courts below only if we feel that the said exercise of
discretion is patently and manifestly
unreasonable,
capricious or perverse and that it may defeat the ends
of justice. Having regard to all the circumstances and
facts of this case we are not disposed to hold that a
case for our interference has been made out by the
appellant.
That is why we dismiss this
appeal but
make no order as to costs throughout.
Appeal dismissed.
COMMISSIONER OF INCOME-TAX,
AHMEDABAD·
v.
K:ARAMCHAND PREMCHAND LTD.,
AHMEDABAD.
(S. K. DAS, J. L. KAPUR and
M. HIDAYADULLAH, JJ.)
Income-tax-Set-off-Business loss in Indian State-Profits in
British India-Applicability of the Act to business in Indian State-
Business Profits Tax Act, 1947 (21 of 1947), ss. 2(3), 4, 5.
The assessee held the managing agency of a limited company
in what was then called "British India" and had also a pharma-
1960
Printers (Mysore)
Privale Ltd.
v ..
Pothan Joseph
Gajendragailkar J.
1960
April 28.
1960
Commissior.tr of
Incomt·tax
v.
Karamchand
Prtmchand Ltd.
SX. Das J,
728
SUPREME COURT REP<;JRTS
[ lYuQJ
ceutical business in the Baroda State which was at the relevant
time an Indian State.
The business in British India showed pro-
fits asessable under the provisions of the Business Profits Tax
Act, 1947, but the business carried on in Baroda resulted in .2
loss, ·in the relevant chargeable accounting 'periods between 1946
and 1949.
Before the Income-tax authorities the assessee claimed
that the loss suffered by it in its business in Baroda should be
deducted in computing ·its ,bus,iness in~ome liable .~o business pro-
fits tax, but this claim was rejected on the· ground that though
under s. 'S of the Act, if it stood by itself without any of the pro-
visoes, the Act wound be applicable to the Baroda business, tile
third proviso had the effect of extluding that 'business from tl\e
purvie\\,. of the Act, except in so far as the income, profits or _gains
of the business were received or deemed to 1 be received in or
brought into British India:
'
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Held, th.at the citecr of the third proviso to s. 5 of ,the. Busi-
ness Profits Tax Act, 1947,
was merely to exempt the income,
profits and gains of the Baroda business except whet\ they were
reteived or brought into British India, but the. business itself v{as
one to which the Act was applicable under \he substantive part
of s. 5.
Consequently, the losses of the business could. be set off
against the profits of the business in. British India.
,The relevant provisions of .the Act _are set o.\lt ,in the judg-
~ent.
·
C1v1L {\PPELLATE
JURISDICTTQN: Civil
Appe_al
No. 304. of 1958'. ·
·
· '
Appeal from the j1ulgment and order dated Sep-
tember 7, 19.56, qf, the. Bombay: High Court. in Income-
tax Reference No. 19 qf 1956. ·
C. K.
Daph.tary,
Solicitor-General
of
1l·11di11,
K. N. Ri1jagofial Sasti;i and D. (Guf1ta, for. the appel-
. Jant.
· N. A. Palkhivala and S. N. Andley, for the res-
pondent.
1960, ,April 28.
The Judgment.of the Court was
delivered by
S. K. DAs, J.-This is an appeal on· a certificate
of fitness granted by the High Court of Bombay, and
the short question for decision is the true scope and
effect of the third
proviso to s.
5 of the Business
Profits Tax Act,
194-7 (Act No. XXI of 1947), herein-
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