Exemption and reassessment limits applied to foreign income, with deductions for overseas tax and recomputation of assessed income refused.

Life insurance premia paid by a non-resident out of foreign income were held not to qualify for exemption because section 15(1) applies only to sums within the assessable field of income, and foreign income excluded from total income could not attract that relief. Reassessment under section 34 was held to permit reopening only of escaped income, not a fresh challenge to the final computation of Bombay property income already assessed through the statutory agent, so that figure could not be recomputed by the assessee. Tax paid to the Uganda Government on foreign income was also held not deductible in computing total world income. All three issues were decided against the assessee.

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Issues: (i) whether life insurance premia paid by a non-resident assessee out of foreign income were entitled to exemption under section 15(1); (ii) whether, in reassessment proceedings under section 34, the income from Bombay properties originally assessed in the hands of the statutory agent could be recomputed by the assessee; and (iii) whether tax paid to the Uganda Government on foreign income was deductible in computing the assessee's total world income.

Issue (i): whether life insurance premia paid by a non-resident assessee out of foreign income were entitled to exemption under section 15(1).

Analysis: The exemption under section 15(1) was treated as an exemption from tax on sums that must bear the character of amounts capable of entering the field of taxation. Reading section 15 with the charging and computation provisions, the Court held that the exemption could not be claimed unless the sum in question was within the assessable sphere of the assessee's income. Foreign income of a non-resident did not form part of total income for income-tax purposes, and the legal fiction relating to super-tax could not be extended to section 15(1).

Conclusion: The assessee was not entitled to the benefit of section 15(1) in respect of the premia paid by him.

Issue (ii): whether, in reassessment proceedings under section 34, the income from Bombay properties originally assessed in the hands of the statutory agent could be recomputed by the assessee.

Analysis: Section 34 was held to authorise reassessment only of income that had escaped assessment and not to permit reopening of the whole assessment so as to revisit items already finally computed. The earlier assessment, though made through the statutory agent, was an assessment of the assessee's income, and the assessee was a person liable under the Act and entitled to appeal. The finality attaching to the original computation therefore bound the assessee in the reassessment.

Conclusion: The assessee was not entitled to reopen the computation of the income from the Bombay properties.

Issue (iii): whether tax paid to the Uganda Government on foreign income was deductible in computing the assessee's total world income.

Analysis: No principle or provision was shown to require deduction of foreign tax paid on income in determining the assessee's income for Indian tax purposes. The contention was rejected as unsupported by the statutory scheme.

Conclusion: The assessee was not entitled to deduct the Uganda tax in computing his total world income.

Final Conclusion: All three questions were answered against the assessee, and the references were disposed of on that basis with costs to the revenue.

Ratio Decidendi: An exemption from tax can be claimed only in respect of a sum that properly enters the assessable field of the assessee's income, and reassessment under section 34 cannot be used to reopen the final computation of income already assessed, including where the original assessment was made through a statutory agent.

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