Case: C.I.T., West Bengal Iii, Calcutta Vs. Carew &amp; Co. Ltd

the same income under an identical head of income under the Act. The income from each head under section 6 is not under the Act subjected to tax separately, unless the legislature has used words to indicate a comparison of similar incomes but it is the total income which is computed and assessed as such, in respect of which tax relief is given for the inclusion of the foreign income on which tax had been paid according to the law in force in that country. The scheme of the Act is that although income is classified under different heads and the income under each head is separately computed in accordance with the provisions dealing with that particular head of income, the income which is the subject-matter of tax under the Act is one income which is the total income. The income-tax is only one tax levied on the aggregate of the income classified and chargeable under the different heads; it is not a collection of distinct taxes levied separately on each head of income. In other words, assessment to income-tax is one whole and not group of assessments for different heads or items of income. "8. Learned counsel for the revenue heavily relied upon this decision to assail the correctness of the High Court judgment [1973] 87 ITR 459 under appeal. In Ramanathan Chettiars case [1973] 88 ITR 169 , the assessee, a resident in India, was doing money-lending business in Malaya as well as in India. For the assessment year, 1953-54, the assessees income in Malaya was Rs. 2, 22, 532, the assessee had incurred a business loss in India of Rs. 68, 858. In India he had income from other sources to the extent of Rs. 39, 142. The ITO added the income from other sources to the foreign income and, deducting from the total thus computed the loss in India of Rs. 68, 858, he granted double taxation relief, under s. 49D of the Indian I.T. Act, 1922, on the balance of Rs. 1, 92, 816. The Commissioner in revision took the view that the entire business loss of Rs. 68, 858 was to be adjusted against the assessees business income in Malaya which was to the tune of Rs. 2, 22, 532 and only the balance of this being Rs. 1, 53, 674 could be held to have suffered double taxation. The High Court affirmed this view. This court differed and held that the assessee was entitled to double taxation relief in respect of the sum of Rs. 1, 92, 816 as granted by the ITO. It is to be noticed that in s. 49D, as it stood prior to amendment in 1953, the expression used was " the same income " while after the amendment the wordings of sub-s. (1) were " such doubly taxed income ". And that made all the difference in the interpretation, and the total income of the assessee determined by computation in India was Rs. 1, 92, 816 and the whole of it, although coming from different sources, was held to have been subjected to tax in Malaya irrespective of the fact that the income of the assessee in that country was only from businessIn the judgment under appeal the High Court has said at page 467 ([1973] 87 ITR 459 )" Thus, for purposes of abatement, income from each source or category to transactions specified in the Schedule has to be separately considered and dealt with. If a particular item of income comes from a source or category which is not specified in the Schedule it cannot be the subject-matter of the Agreement and no abatement in respect thereof can be allowed. In our view, the agricultural income in Pakistan is one of such excepted sources or categories. "9. If there were no differences in the phraseology of s. 49D(1) of the Act and art. IV of the Agreement the view expressed by the High Court could have been successfully challenged. But the view of the High Court oil interpretation of arts. IV and VI of the Agreement is quite correct and I approve of the same. I have already said that the question of giving double taxation relief in case of agricultural income in Pakistan could only be dealt with under sub-s. (3) of s. 49D of the Act and not under the Agreement. It is significant to note that in art. IV the wordings are " where either Dominion under the operation of its laws charges any income from sources or categories of transactions specified in col. 1 of the Schedule to this Agreement ". (Emphasis supplied).10. It would be seen further that the various items in the Schedule clearly indicate that if the sources or categories of transactions are to be clubbed together and not treated separately, then it will be difficult, almost impossible, to give effect to the Agreement with reference to the Schedule. To illustrate my view point, I may take cl. (g) of item 7 providing that in the case of metal ores, minerals, etc., extracted in one Dominion and sold in the other without any further manufacturing process and without selling establishment or a regular agency 75 per cent. of the profits is to be charged by the Dominion in which minerals are extracted and 25% by the Dominion in which goods are sold. Although in the Dominion in which the goods are sold it would be the assessees income from business; under the Agreement the profit chargeable to tax in a particular Dominion has to fit in by a separate calculation under item 7 (g)On a careful consideration of the matter, I have come to the conclusion that the assessee was entitled to the relief against double taxation in accordance with the Agreement leaving out of consideration the figure of loss of Rs. 3, 20, 839 incurred in its agricultural activities in Pakistan albeit the said loss had to be taken into account and adjusted against the assessees profit in India.

Decision (1 = appeal accepted, 0 = rejected): 0

Explanation:
0[ds]If there were no differences in the phraseology of s. 49D(1) of the Act and art. IV of the Agreement the view expressed by the High Court could have been successfully challenged. But the view of the High Court oil interpretation of arts. IV and VI of the Agreement is quite correct and I approve of the same. I have already said that the question of giving double taxation relief in case of agricultural income in Pakistan could only be dealt with under sub-s. (3) of s. 49D of the Act and not under the Agreement. It is significant to note that in art. IV the wordings are " where either Dominion under the operation of its laws charges any income from sources or categories of transactions specified in col. 1 of the Schedule to this Agreement ". (Emphasis supplied).It would be seen further that the various items in the Schedule clearly indicate that if the sources or categories of transactions are to be clubbed together and not treated separately, then it will be difficult, almost impossible, to give effect to the Agreement with reference to the Schedule. To illustrate my view point, I may take cl. (g) of item 7 providing that in the case of metal ores, minerals, etc., extracted in one Dominion and sold in the other without any further manufacturing process and without selling establishment or a regular agency 75 per cent. of the profits is to be charged by the Dominion in which minerals are extracted and 25% by the Dominion in which goods are sold. Although in the Dominion in which the goods are sold it would be the assessees income from business; under the Agreement the profit chargeable to tax in a particular Dominion has to fit in by a separate calculation under item 7 (g)On a careful consideration of the matter, I have come to the conclusion that the assessee was entitled to the relief against double taxation in accordance with the Agreement leaving out of consideration the figure of loss of Rs. 3, 20, 839 incurred in its agricultural activities in Pakistan albeit the said loss had to be taken into account and adjusted against the assessees profit in India.scheme of the Agreement, it would be noticed, is quite different and distinct from what is provided for in sub-s. (1) of s.could not be and was not disputed that while computing the total income of the assessee, the income or the loss, as the case may be, from agricultural property in a foreign country had to be added to or adjusted in the assessees total income. Obviously it will be an income from other sources within the meaning of cl. (v) of s. 6 of the Act. So also the assessees income from business in Pakistan had to be added to the figure of his profits and gains of business in India. The statutory deduction of Rs. 4, 500 had to be granted under the third proviso to s. 4(1) of the Act. The exclusion of agricultural income as mentioned in cl. (viii) of sub.s. (3) was to be granted only if it was an agricultural income as defined in s. 2(1). Otherwise not The Calcutta High Court in the case of Kumar Jagadish Chandra Sinha v. CIT [1955] 28 ITR 732     had rightly held that income from agricultural lands situated in Pakistan was not agricultural income within the meaning of the Indian I.T. Act. Income-tax was, therefore, chargeable on the said income. This view of the law is beyond any dispute or pale of attack.