Case: O.A.P. Andiappan Vs. Commissioner of Income Tax, Madras &amp; Others

2. The appellant is a resident in this country. But he is carrying on business in Ceylon. During the assessment year 1959-60 he earned a gross income of Rs. 39,473/- and in the assessment year 1960-61 he earned a gross income of Rs. 39,067/-. He had only a house in India whose annual rental value was Rs. 38/-. The entire assessable income of his was that what he earned in Ceylon. On his income in Ceylon, he was taxed in a sum of Rs. 5,919/- for the assessment year 1959-60 and in a sum of Rs. 6,036/- for the assessment year 1960-61. For the same income in India under the Indian Law his tax was computed for the assessment year 1959-60 at Rupees 10,282.62 P and for the assessment year 1960-61 at Rs. 9,521.35 P. The tax payable by him in Ceylon was given as abatement and he was called upon to pay only the balance. The tax payable by him in Ceylon as a non-resident would have been Rs. 9,889/- in the assessment year 1959-60 and Rs. 9,983/- in the assessment year 1960-61. But in view of section 45(2) of the Ceylon Income Tax Ordinance, 1932 and also in view of the Agreement he was taxed as if he was a resident in Ceylon.

Reasoning: 6. The first portion of article 3 says that each country shall make an assessment in the ordinary way under its own laws. This means to begin with both India and Ceylon were required to assess the assessee in accordance with law prevailing in each of these countries. Thus far it is plain. From this it is clear that first contention advanced on behalf of the assessee has no basis. Hence it must fail. Now we come to the second part of that article to the extent necessary for determining the second contentionThe language employed in this part of the article is quite confusing. That part of the article has to be read with the schedule. On a proper reading of that provision along with the schedule which means in the present case, item 8 of the schedule, it appears to us that what it says is :-7. The agreement that was entered into between India and Pakistan is similar in terms with the agreement, with which we are concerned n these appeals, except that in article 4 therein which corresponds to article 3 in the agreement before us in the place of the word attributable the word payable is used. But this change does not make any difference in substance8. We also do not see any reason, for treating the appellant in a manner different from other assessees, who are resident in this country.