TaxTMI 
TaxTMI 
1943 (7) TMI 2
X X X X Extracts X X X X
X X X X Extracts X X X X
....n British India. But in the year ending 31st March, 1935, the bank collected and received in British India through the hands of its agents sums representing the interest on certain Government of India securities that it had acquired in the course and for the purposes of its business. In the same year, it also received in British India, through its agents there, a substantial sum of money representing the profits accruing to it in respect of the sale at a profit of various investments similarly acquired. It is not and it cannot be disputed that all these sums of money represented profits or gains of the appellant's banking business for the year in question. In these circumstances the Senior Income-tax Officer, Non-Resident Refund Circle,....
X X X X Extracts X X X X
X X X X Extracts X X X X
....le; (b) to all other taxation for the time being in force in British India in the same manner as in the like case any other person would be liable. (2) For the purposes of the levy and collection of income-tax under the Indian Income-tax Act, 1922, in accordance with the provisions of sub-section (1), any Government to which that sub-section applies shall be deemed to be a company within the meaning of that Act, and the provisions of that Act shall apply accordingly. (3) In this section the expression 'His Majesty's Dominions' includes any territory which is under His Majesty's protection or in respect of which a mandate is being exercised by the Government of any part of His Majesty's Dominion....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... provided, this Act shall apply to all income, profits or gains, as described or comprised in Section 6, from whatever source derived, accruing or arising, or received in British India, or deemed under the provisions of this Act to accrue, or arise, or to be received in British India. Section 6.-Save as otherwise provided by this Act, the following heads of income, profits and gains, shall be chargeable to income-tax in the manner hereinafter appearing, namely:- ***** (iv) Business. Section 10.-(1) The tax shall be payable by an assessee under the head 'Business' in respect of the profits or gains of any business carried on by him." In the month of October, 1937, the bank appealed against the a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....constitutes income arising in connection with a trade or business carried on in British India within the meaning of Section 2 of the Government Trading Taxation Act and is therefore liable to assessment to income-tax? (7) Whether the assessment to income-tax and super-tax for the year 1935-36 on the Patiala State Bank is a legal and valid assessment?" Of these questions, No. (3) requires a word of explanation. The property in question produced no income in the year ending on the 31st March, 1935, and was not, therefore, referred to in the assessment for the year 1935-36, that is alone the subject matter of these proceedings. The question, however, would or might arise in subsequent years of assessment, and accordingly by a conse....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ore their Lordships, as it was before the High Court, that the Act of 1926 only applies to a trade or business carried on in British India. The contention had been advanced successfully before the High Court of Allahabad in the case In the matter of Ram Prasad [1929] I.L.R. 52 All. 419. It was, however, rejected by the High Court in the present case. "I can see," said Beaumont, C.J.: "no justification for the view.....that the Act is confined to business carried on in British India. It seems to me that the title, the preamble and the operative part of Section 2 make it perfectly clear that it applies to every case in which the Dominion Government is carrying on a business, and when that happens, the Dominion Government is liable to....
X X X X Extracts X X X X
X X X X Extracts X X X X
....was drawn up embodying the answers given by the Court upon the reference. It is from that order that the bank, having obtained the necessary certificate from the High Court under Section 66-A(2), now appeals to His Majesty in Council. In their Lordships' opinion the answers which the High Court gave to the questions referred to them are plainly right, as is the reasoning upon which these answers were based. There are no words to be found in the Act of 1926 confining the operation of Section 2 to trades or businesses carried on in British India. The words of the section are quite general in their terms, and their Lordships are quite unable to find any reason whatever for introducing into the section by implication the qualification fo....