COMMISSIONER OF INCOME-TAX, DELHI AND RAJASTHAN versus M/S. BHARAT CARBON AND RIBBON MANUFACTURING CO.

Citation: [1966] 3 S.C.R. 170 · Decided: 17-12-1965 · Supreme Court of India · Bench: K. SUBBA RAO · Disposal: Appeal(s) allowed

Judgment (excerpt)

• 
COMMISSIONER .OF INCOME-TAX; DELHI Ac"ID 
A 
RAJASTHAN 
v. 
M/S. 
BHARAT 
CARBON 
AND 
RIBBON 
MANUFACTURING CO. 
December 17, 1965 
[K. SUBBA RAO, J. C. SHAH AND S. M. SIKRI, JJ.J 
Indian Independence Act (10 & 11 Geo Vic. 30), 18(3) and Income 
Tax Act ( l l of 1922), s. I 8A ( l l )-Advance tax-Adjusted by Pakistan 
Oovenunent~lf could also be adiust.ed by Indian Govf!rnment. 
Between June 1946 and March 1947 the assessee,.company1 which then 
C 
l1ad its head office at Lahore, paid advance tax to the Income.tax Officer, 
Lahor.e,, under s. 
,l 8-A of the Indian Income-tax Act, 1922. 
For the 
:assessn1ent year J 947-48, the assessment was completed by 'the Pa)cistan 
Jncome4ax Officer on 28th January 1948 after adjus!ing the advance in-
come-tax paid. 
The Income-tax Officer, New Delhi, assessed the tax for 
the 
same year 1947-48 in 1952. The assessee 
contended that credit 
'.3hOuld be given to him .. of the'""a~ance tax paid by him in Lahore under 
)
s. 18-A(ll). The. claim was disaflmved_by the Appellate Assistant Com-
missioner but the Appellate Tribunal, <1nd-the High Court on a reference, 
D' 
I 
held in favour of the p.ssessee. 
In app_eal to this Court, 
'HELD: The effect of s. 18(3) of the Indian In"dependence Act was 
to change the incidents of the advance tax paid. 
Previously it was to be 
--=:; d 
adjusted to\vards a single regular assessment to be made. by British India ..... ~ 
After the Independence Act, the advance tax was ,liable to be adjusted 
E 
.against t\vo regular aS<Se6sments, one by India and one by Pakistan. Jn 
· 
Pakistan, under s. 1SA(11). the Pakistan Government was enti11ed to 
adjust the advance tax paid by the assessee against its demand. Similary, 
the Government of India was entitled to 
adjust 
the amount against 
its demand. It follows that if --the assessee had' been given cred:t for the 
_. 
advance tax, by the Pakistan Government, he cannot claim that credit 
'8hould be given to him by the Indian income-tax authorities. [174 B-D] 
D•varka Das v. Income-t~x Officer, 'Kanpur, 29 I.T.R. 60 refCrred to. 
F 
CIVIL APPELLATE JURISDICTION : Cjvi! Appeal No. 106 of 
1965. 
Appeal by special leave frollf the judgment and order, dated 
November 13, 1962 of the Punjab High Court (Circuit Bench) 
at Delhi in Income-tax Reference Case No. 3 of 1959. 
A. V. Viswanatha Sastri, Gopal Singh and R. N. Sachthey, 
for the appellant. 
B. L. Khanna and K. K.- Jain, for the respondent. 
The. Judgment of the Court was de~ivered by 
Sikri, .T. 
This appeal by special leave is directed against the 
judgment of the High Court of Punjab, at Chancligarh in· a 
reference made to it under s. 66 ( 1) of the-Income Tax Act, 1922, 
G 
172 
SUPllEME COUllT REPOllf5 
[1966} 3 S.C.ll. 
turing Co., hereinafter referred to as the assessee, at Rs. 38,916 
and directed that demand notice and chalan be issued. Before the 
Appellate Assistant Commissioner one of the points taken up by the 
as!CSsee was that credit should be given to him of the advance tax 
paid by him in Lahore, under s. 18A( 11) which reads as follows: 
"Any sum other than a penalty or interest paid by 
or recovered from an assessee in pursuance of the provi-
sions of this section shall be treated as a payment of tax 
in respect of the income of the period which would be 
the previous year for an assessment for the financial year 
next following the year in which it was payable, and 
credit therefor shall be given to the assessee in the regular 
assessment." 
The Appellate Assistant Commissioner disallowed the claim. 
He observed : 
"I, however, find that the amount under Section 18-A 
was paid by the assessee to Income-tax Officer, Lahore. 
The same Income-tax Ollicer made an assessment for 
this very year on 28th January, 1948 on a total income 
of Rs. 1,22,014 for Income tax and Rs. 
52,780 for 
capital gains. He worked out the total tax payable by 
the assessee at Rs. 76,472/6. 
As a result of this 
assessment, even after setting off the tax paid under 
Section 18-A of Rs. 4 7,513 an amount of Rs. 20,000 
was still due from this assessee. 
The amount under 
Section 18-A, has, therefore, been adjusted by the 
Pakistan authorities towards the payment of tax and the 
assessee cannot take credit for this amount again. Under 
these circumstances, it must bo held that there was no 
balance of tax paid under Section 18-A left to be adjusted 
by the Income-tax Officer for the Indian assessment." 
The assessee filed an appeal before the Appellate T

Excerpt shown. Read the full judgment & AI analysis in Lexace.