LexMCGREGOR & BALFOUR LTD. versus THE COMMISSIONER OF INCOME-TAX, WEST BENGAL
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(2) S.C.R.
SUPREME COURT REPORTS
355
MCGREGOR & BALFOUR LTD.
v.
THE COMMISSIONER OF INCOME-TAX,
WEST BENGAL
(B. P. SINHA, J. L. KAPUR and
M. HIDAYATPLLAH, JJ.)
Income-tax-Company carrying on business in England and
India-Refund of excess profits tax paid in England-If can be
taxed in India-Indian Finance Act, Ig46, s. II(4).
The appellant carried on business in England and in India.
For the previous years it paid excess profits tax in both countries
and it obtained deduction of the amounts so paid from its profits
and gains for the purposes of the Indian Income-tax Act. In the
assessment year 1947-48 it obtained a repayment of Rs. 2,31,009
out of the excess profits tax paid in England. The Income-tax
authorities acting under s. n(14), Indian Finance Act, 1946,
included this amount received in England in the taxable profits
of the appellant. The appellant contended that the repayment
not being within the taxable territory it could not be taxed.
Held, that the amount received as repayment of the excess
profits tax was rightly taxed. Under s. n(14) the amount of re-
payment was deemed to be ' income ' for purposes of the Indian
Income-tax Act and that 'income' was to be treated as the income
for the previous year during which the repayment was made.
Section n(14) created a liability irrespective of the considerations
arising from the general provisions of the income-tax law. The
distinction between incomes within and without taxable territories
was made unnecessary by s. n(14).
Eglinton Silica Brick Co. Ltd. v. Marria:n, (1924) 9 Tax Cas.
92; A. & W. Nesbitt Ltd. v. Mitchell, (1926) II Tax Cas. 217 and
Kirke's Trustees v. The Commissioners of Inland Revenue, (1926) II
Tax Cas. 323, applied.
CIVIL APPELLATE JURISDICTION: Civil Appeal No.
265 of 1956.
Appeal from the judgment and order dated August
26, 1954, of the Calcutta High Court in Income-tax
Reference No. 107 of 1952.
S. Mitra, Dipak Chaudhry and B. N. Ghosh, for the
appellants.
G. K. Daphtary, Solicitor-General o.f India, K. N.
Rajagopala Sastri, R.H. Dhebar and D. Gupta, for the
respondent.
I959
March r6.
356
SUPREME COURT REPORTS [1959] Supp.
1959
1959.
March 16. The Judgment of the Court was
Mcgregor &
delivered by
.
Balfour Ltd.
HIDAYATULLAH, J.-Messrs. Mcgregor & Balfour,
C
. v:
,, Ltd., Calcutta (hereinafter called the Company) is a
ommissioner o, C
.
t d .
th
U 't d K"
d
I
r,,coine-tax,
ompany mcorpora e m
e
m e
mg om.
ts
west Bengal
head office is also there. It, however, does business in
India also. In some of the previous years, the Com-
Hidayatullah J. pany was required to pay excess profits tax both in
England and in India. When it did so, it obtained
deduction of the amounts from its profits and gains
for purposes of the Indian Income-tax Act, under
s. 12(2) of the Indian Excess Profits Tax Act..
In the ·assessment year 1947-1948 which correspond-
ed to the accounting year of the Company ending
on October 31, 1946, it obtained a repayment of
Rs. 2,31,009 out of the excess profits tax paid in Eng-
land. This was under s. 28(1) of 4 & 5, Geo. VI,
Ch. 30. For purposes of the levy of the Indian In-
come-tax, this sum 1was included in the taxable profits
of the Company by the Income-tax Officer.
He pur-
ported to act under s. 11(14) of the Indian Finance
Act, 1946 (hereinafter called the Act).
The income of
the Company in India was held to be Rs. 6,34,937
(including the sum of· Rs. 2,31,009) while the in-
come outside the taxable territory was held to be
Rs. 4,29,620.
Applying s. 4A(c)(b) of the Indian
Income-tax Act, the Income-tax Officer. assessed the
Company on its total world income.
The appeals of the Company made successively to
the Appellate Assistant Commissioner and the Income-
tax Appellate Tribunal were dismissed. The Tribunal,
however, referred the following questions of law to
the High Court at Calcutta under s. 66 of the Indian
Income-tax Act :
"(1) Whether on the above facts and circum-
stances of this case the Tribunal was right in holding
that the sum of Rs. 2,31,009 was income of the asses-
see during the assessment year under consideration
and was liable to be assessed under the Indian In-
come-tax Act? and
{2) If so, whether this amount could not be taken
into consideration for determining the residence of the
(2) S.C.R. SUPREME COURT REPORTS
357
assessee under s. 4A(c)(b) of the Indian Income-tax
I959
Act ?, ,,
Mcgregor &
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