Taxability of UK excess profits tax refunds upheld under a charging provision preserved after repeal of the earlier income-tax law.

Section 11(14) of the Finance Act, 1946 treated repayment of United Kingdom excess profits tax as income for Indian income-tax purposes and directed that it be taken as income of the previous year in which repayment was made. The provision operated as a charging rule, not merely a rule of classification, so the refund became assessable without any further fiction of accrual or receipt in India. Repeal of the Indian Income-tax Act, 1922 did not displace the charge, because section 8 of the General Clauses Act, 1897 preserved references to the repealed enactment as references to the re-enacted law unless a different intention appeared. The refund was therefore taxable in the assessee's assessable income.

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Issues: Whether the post-war excess profits tax refund received by a non-resident assessee in the United Kingdom was liable to be included in the assessable income for the assessment year 1963-64 by reference to section 11 of the Finance Act, 1946, or the Income-tax Act, 1961.

Analysis: Section 11(14) of the Finance Act, 1946, treated repayment of United Kingdom excess profits tax as income for the purposes of the Indian income-tax law and directed that it be treated as income of the previous year in which repayment was made. The provision was held to create a charge and not merely a classification of receipt, so that the amount became assessable without the need for any further fiction as to accrual or receipt in India. The repeal of the Indian Income-tax Act, 1922, did not defeat the charge, because section 8 of the General Clauses Act, 1897, preserved references to the repealed enactment as references to the re-enacted law, unless a different intention appeared.

Conclusion: The refund was taxable and includible in the assessee's assessable income.

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