Double tax relief under the India-Ceylon agreement must be based on actual tax amounts, not comparative tax rates.

Double tax relief under the India-Ceylon agreement had to be computed by reference to the actual amounts of tax attributable to the excess in each country, because Article III used the phrase "amounts of tax" and not tax rates. Relief could not be recalculated by comparing only the prevailing rates in the two countries, so the original allowance of double tax relief was upheld. The challenge to proceedings under section 147 was not examined on merits because the reference on that question was incompetent for want of the prescribed application.

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Issues: Whether the assessee was entitled to double tax relief of Rs. 8,269.11 under the agreement between India and Ceylon.

Analysis: Article III required each country to grant an abatement equal to the lower of the amounts of tax attributable to the excess in either country. The expression used was "amounts of tax", which pointed to the actual tax attributable and not to the respective rates of tax. The relief could not, therefore, be recalculated by comparing only the rates prevailing in the two countries. On that interpretation, the original computation granting relief of Rs. 8,269.11 was correct. The challenge to the validity of the proceedings under section 147 was not examined on merits, as the reference on that question was held incompetent for want of the prescribed application.

Conclusion: The assessee was entitled to double tax relief of Rs. 8,269.11.

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