Double taxation relief under India-Ceylon treaty applies to net tax after deductions, not gross assessed tax.

Under Article III of the India-Ceylon double taxation agreement, abatement was confined to the tax actually payable after statutory deductions and reliefs, not the gross tax initially assessed in Ceylon. The clause required each State to assess income under its own laws and granted relief only to the extent the same income was charged in both countries beyond the treaty percentage. The phrase "tax attributable to such excess" was therefore construed as referring to net tax after deductions, because a broader reading would extend relief beyond the treaty's purpose of preventing double taxation on identical income. The claim for abatement on gross tax was rejected.

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Issues: Whether, under Article III of the double taxation agreement between India and Ceylon, abatement had to be calculated on the gross tax assessed in Ceylon or on the tax payable after statutory deductions.

Analysis: Article III permitted each country to assess income under its own laws and required abatement only where the same income was brought to charge in both countries in excess of the treaty percentage. The expression "tax attributable to such excess" was held to mean the tax actually payable after the applicable statutory deductions and reliefs, not the gross tax assessed before such deductions. Construing the clause otherwise would give relief beyond the object of the agreement, which was only to prevent double burden on identical income.

Conclusion: The claimed abatement on the basis of gross tax was rejected and the petitioners' contention failed.

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