TaxTMI 
TaxTMI 
1969 (3) TMI 5
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.... computation by the Income-tax Officer for the year 1953-54: Kr. Kr. "Total gross earnings in Indian Trade Kr. 10,024,996 Deduct:-- (1) Total expenses in Indian Trade (2) Depreciation allowance Net profit Indian Trade Gross earnings from Indian ports -- Kr. 7,705,474 Kr. 733,671 Kr. 8,439,145 Kr. 1,585,851 Kr. 5,440,042 Proportionate Indian profits5,440,042 ----------------- X 1,585,851 10,024,996 Kr. 860,559 (Rs. 100: Kr. 79.80) Rs. 10,78,395" In computing the profits of the assesssee in India in each year the Income-tax Officer allowed normal depreciation and other trade allowances admissible under the Indian Income-tax Act, 1922, and the relevant rules made thereunder. He, however, did not allow initial depreciation and additional depreciation in respect of the ships of the assessee in any of the assessment years, because the ships acquired by the assessee were not introduced into the Indian business in the years in which they were newly acquired. The orders of assessment were confirmed by the Appellate Assistant Commissioner. In Appeal to the Income-tax Appellate Tribunal th....
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....machinery, plants and such other things like steamers brought into business after March 31, 1948, additional depreciation must also be granted". The Tribunal then observed that the ships brought into the Indian trade were not new in the years of account relevant to the five years of assessment, but the assessee was still qualified under section 10(2)(via) to additional depreciation for the continuous period of five years, and "the fact that in the first of these years the now ships did not call at the Indian ports in one assessment year did not disentitle the assessee to the benefit not only for that year but also for the succeeding four years." Accordingly, the Tribunal held that in respect of all the four ships of the assessee, additional depreciation was admissible as claimed. At the instance of the Commissioner of Income-tax, the following question was referred by the Tribunal to the High Court of Calcutta for opinion in respect of each of the five years: "Whether, on the facts and circumstances of the case, the assessee-company is entitled to additional depreciation in respect of the four ships mentioned above ?" The High Court answered the question in the negative. Cl....
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....esident received or deemed to be received in the taxable territories by or on behalf of the assessee are taxable under the Indian Income-tax Act, 1922, profits and gains of business which accrue or arise or are deemed to accrue or arise to him in the taxable territories are also taxable under that Act; but profits and gains which accrue or arise or are deemed to accrue or arise to a non-resident without the taxable territories are not taxable under the Act. Section 4 is one of the pivotal sections in the scheme of the Income-tax Act. Thereby within the total income of a non-resident is included income received, arising or accruing, or deemed to be received, or to have arisen or accrued, within the taxable territories. The Act, however, gives no clear guidance for determining when income may be said to have arisen or accrued within the taxable territories. But rule 33 framed under the Act purports to give some direction to the Income-tax Officer for determining income, profits or gains accruing or arising to a non-resident for the purpose of assessment to income-tax. There is no dispute that the profits of the business taxable under the Indian Income-tax Act, 1922, are a fraction ....
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....otal receipts of the business; and the third step is to determine the income, profits or gains by the application of the proportion for the purpose of assessment to income-tax. This method ordains that the fraction which the total profits bear to the total world receipts is to be applied to the Indian receipts for determining the taxable profits. The income so determined will be the taxable income without any further allowances, because the permissible allowance will all enter the computation of the world income and income taxable under the Income-tax Act is also a fraction thereof. Apparently the Income-tax Officer did not apply the second method under rule 33 in computing the taxable income of the assessee, for, under that method, in determining the taxable income, the receipts accrued or arising in India had to be multiplied by the proportion between the total prohts of the business and the total receipts of the world business. Counsel for the assessee asked us to assume that the profits computed by the Income-tax Officer according to the formula adopted by him are profits determined by the second method in rule 33, and claimed on that footing that, besides normal depreciati....