TaxTMI 
TaxTMI 
1962 (2) TMI 105
X X X X Extracts X X X X
X X X X Extracts X X X X
....f the accounting year ending December 31, 1947. In adding the profits of the Rangoon branch to the taxable income, the Income-tax Officer disallowed an item of Rs. 50,157 deducted by the assessee as business profits tax paid in Burma under the Burma Business Profits Tax Act. An appeal was filed before the Appellate Assistant Commissioner. The assessee contended that the Burma business profits tax, namely, Rs. 50,157, ought to have been allowed as a deduction under section 10(2)(xv) of the Indian Income-tax Act. The assessee's contention was not accepted. The assessee preferred an appeal before the Appellate Tribunal and contended that the Burma business profits tax should have been deducted before adding Burma income to the Indian incom....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... of the real profits of the assessee, inasmuch as profits and gains are ordinarily those sums which are received less expenditure. Counsel for the assessee submitted that in Burma the tax which is payable on business profits is neither received nor receivable by the assessee as a receipt because of the overriding provisions of the Burma statute and the amount paid by way of tax in Burma was diverted in the beginning at the source. Counsel for the assessee, secondly, contended that income-tax has all along been treated as an application of the income after the income is received, whereas the business profits tax is allowed under the Business Profits Tax Act in India as a proper deduction for income-tax purposes. Therefore, counsel for the as....
X X X X Extracts X X X X
X X X X Extracts X X X X
....between the sub-sections of section 10. It is indisputable that business profits tax paid under the Business Profits Tax Act in India is deductible as an expense only under the provisions of the Business Profits Tax Act. The Burma Excess Profits Tax Act is a foreign law. Counsel for the Commissioner rightly contended that foreign law had to be proved as a fact and there is nothing on record as to what the provisions of the Burma Excess Profits Tax Act are. It is manifest that the assessee can claim deduction only under the provisions of the Indian Income-tax Act and the Indian Business Profits Tax Act does not apply to business profits tax paid in Burma. In the case of Commissioners of Inland Revenue v. Dowdall O'Mahoney & Co. Ltd....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ht under the principles applicable...to deduct income-tax or excess profits tax, British or foreign, in computing trading profits. Lord Radcliffe at page 285 of the report said that, once it is accepted that the criterion is the purpose for which the expenditure is made in relation to the trade of which the profits are being computed, no material distinction could be found between a payment to meet such taxes abroad and a payment to meet a similar tax at home. Counsel for the assessee relied on the decision in Ratilal B. Daftari v. Commissioner of Income-tax [1959] 36 I.T.R. 18 in support of the proposition that in ascertaining real income every part of that income which may seem to be income is not income if that part has been diverted ....