Partnership income assessment: non-resident partner could not exclude foreign-accruing firm profits from total income.

A partner in a registered firm who was non-resident or not ordinarily resident in British India could not exclude from individual total income the proportion of the firm's profits accruing outside British India. The Indian Income-tax Act, 1922 applied a special machinery for registered firms: the firm's total income was computed first, and the partner's share was then brought into assessment. Section 4, being subject to the Act, did not override that scheme, and the second proviso to Section 23(5)(a) contained no express exclusion for such foreign-accruing profits. The partner's full share was therefore assessable.

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Issues: Whether a partner of a registered firm, who is non-resident or not ordinarily resident in British India, can exclude from his individual total income the proportion of the firm's profits that accrued or arose outside British India.

Analysis: The scheme of assessment under Section 23 of the Indian Income-tax Act, 1922 treats the registered firm as an entity whose total income is first computed, after which each partner's share is included in the partner's individual assessment. Section 4, which defines total income, is expressly subject to the provisions of the Act and cannot be read as overriding the special machinery laid down for partnership income. The second proviso to Section 23(5)(a) makes specific provision for partners in registered firms but contains no allowance for excluding any part of the share on the footing that the firm earned it outside British India. Accepting the appellants' construction would require adding words to the section, create practical difficulties in assessment, and conflict with other provisions such as Section 16(1).

Conclusion: The partner is not entitled to exclude that proportionate share from his total income; the assessment made on the full share was correct, and the answer is against the appellants.

Ratio Decidendi: Where the Act provides a special method for assessing partnership income, the general residence-based limitation in the definition of total income cannot be used to cut down the partner's assessable share unless the Act expressly so provides.

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