TaxTMI 
TaxTMI 
1934 (6) TMI 31
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....erious when the section has to be applied to a case in which the "part" of the assessee's income brought into charge for the purpose of Dominion income tax is in its amount, greater than that brought into charge in the United Kingdom. The extent of the relief from United Kingdom income tax given by the section is in each of these cases not doubtful. The assessee in respect of the whole of the sum representing the "part" of his income which has been brought into charge in the United Kingdom is entitled to the relief given by the section, and that relief will operate to discharge him to the prescribed extent from the burden of a double taxation, one in the Domonion and the other in the United Kingdom. So far, the relief granted is relief from a double taxation, and nothing more. The real difficulty of the section arises when it has to be ascertained, as in this instance it has, whether that still remains its purpose and result when its provisions have to be applied to a case in which the "part" of the assessee's income brought into charge for the purpose of Dominion income tax is in amount less than that brought into charge in the United Kingdom. Is the section, in this ca....
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....ved by these considerations, which seem to me to have weight. But they are not to my mind final, nor do they, I think, outweigh the reasoning which leads to the conclusion that the section in every case where it has to be applied is really directed against a charge pro tanto of double income tax upon any portion of any "compartment" of the assessee's total income, and that there is no sufficient indication in the language employed necessitating the conclusion that any further relief is contemplated or provided for. Accordingly, while conscious of difficulty, I am ready to accept the construction in that sense placed upon the section by my noble and learned friends Lord Warrington of Clyffe and Lord Wright in their judgments, which I have had the advantage of reading and which I accept. With them I agree that this appeal should be dismissed, and I move your Lordships accordingly. Lord Warrington of Clyffe (read by Lord Atkin).This is an appeal from an order of the Court of Appeal (Lord Hanworth, M.R., Lawrence L.J., and Slesser, L.J.,) dated July 11, 1933, dismissing an appeal by the present appellants from an order of the King's Bench Division (Finlay, J.) dated Fe....
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.... was allowed as a deduction from the gross profits, and the profits from certain tea gardens were excluded from the account. This course was not allowed in England. There were other divergencies in the two systems of taxation which combined to make up a further excess of GBP 6,542 in the United Kingdom profits, which when also so excluded reduced the amount of GBP 186,750 to GBP 129,365, the amount assessed to Indian income tax. The Court of Appeal has held that on the true construction of the section relief from United Kingdom income tax can be allowed on GBP 129,365 only, that being in their opinion that part of the appellants' income in respect of which they have paid Dominion income-tax. The question depends on the true construction of the section in question, read, of course, in connection with, and as part of the Income Tax Act as a whole, and in accordance with the usual rules of construction. Counsel for the appellants, indeed, insisted that he was entitled to support his argument on construction by referring to the report of the Royal Commission on Income Tax published in 1920. On this point I have read and considered the opinion about to be delivered by my noble an....
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.... bearing on the present case. I may add, however, that I can detect in them no divergence between my own view and those of my learned brethren in the Court of Appeal. The present case is a simple one. Others may arise in which further complications will have to be dealt with. That is no reason why the simple solution in the present case should not be the right one. On the whole I agree with the conclusion of the Court of Appeal, and am of opinion that this appeal should be dismissed. LORD ATKIN.-I have had the opportunity of reading the opinion about to be delivered by my noble and learned friend LORD WRIGHT, and I agree with that opinion and the opinion I have just read. LORD WRIGHT.-I am authorised to say that my noble and learned friend Lord Thankerton agrees with the opinion I am about to read. The question to be decided in this appeal is what is the extent of relief in respect of income tax to which the appellants are entitled under Section 27, sub-Section 1 of the Finance Act, 1920, as amended by Section 46 and the Fifth Schedule, Part II 2(1) of the Finance Act, 1927. The facts are simple: the appellants are a joint stock company incorporated and registered in Engla....
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.... the profits under the United Kingdom assessment. As already indicated, there were other similar, but minor differences in the assessments which it is not necessary here to consider. The rival contentions may be thus summarised. The appellants claim that though the Indian assessment is only at the figure of GBP 129,365 it is an assessment on the whole amount of the profits of GBP 186,750; in other words, it exhausts the taxable capacity in India of the whole of those profits, so that the appellants have paid Indian income tax on the whole of that sum, and hence are on that footing entitled to income tax relief under Section 27 of the Act of 1920 on the whole of that sum. The respondents, on the other hand, contend that double income tax has only been paid on GBP 129,365, and no more within the meaning of the section, and hence that it is only on that sum that relief is claimable. The question, which is by no means free from difficulty, depends on the true construction of the words of the section, read in connection with the Income Tax Act as a whole and in accordance with the usual rules of construction. Counsel for the appellants sought to introduce into his argument certain....
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....hich had been superseded by the Act actually being construed by the House; but Lord Halsbury refers to the report not directly to ascertain the intention of the words used in the Act, but because, as he says, "no more accurate source of information as to what was the evil or defect which the Act of Parliament now under construction was intended to remedy could be imagined than the report of the Commission." Lord Halsbury, it is clear, was treating the report as extraneous matter to show what were the surrounding circumstances with reference to which the words were used, and which came within the principle stated by Lord Langdale. The rule is in principle analogous to the rules laid down in the four resolutions of the Barons of the Exchequer recorded in Heydon's case [3 Co. Rep. 7(a)]. On the facts of the present case I am of opinion that the appellants fail in their contention. The section requires that the taxpayer should prove (1) that he has paid tax in the United Kingdom for any year on a certain sum which is part of his income; in this connection I do not think that the word "part" is used to exclude the whole, but merely to point to an ascertainable sum of income which....
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....ia, the foundation of a claim under Section 27 failed because the company had not paid or become liable to pay tax on those profits in the United Kingdom. Certain observations in that case are to be read in reference to its special facts. But there is no such discrepancy in the present case; the appellants, having paid tax in the United Kingdom on GBP 186,750, have not paid tax at all in India on two definite and separable amounts, parts of that sum of GBP 186,750, namely, GBP 42,500, the debenture interest and the sum representing the profits of the tea garden. On the words of the section it seems that appellants can only show double taxation in regard to GBP 129,365 which is a part of the GBP 186,750. In other words, I think that in such a case as this, where definite amounts are in question, the word "paid" in the sub-section means paid in fact, and cannot be applied in truth to these definite amounts, which are simply in India deducted from the profits assessable, as not being liable to tax at all. Accordingly, on the facts of this case, I do not think it is correct to say that the appellants have paid in India tax on the whole sum of GBP 186,750 so as to be able to claim relie....