TaxTMI 
TaxTMI 
1951 (1) TMI 41
X X X X Extracts X X X X
X X X X Extracts X X X X
....foreign firm and the family was assessed in respect of that share under the Act of 1918, the firm not having been assessed, is the family entitled to relief under Section 25(4) of the Income-tax Act as amended by the Amendment Act of 1939 ?" The facts are not in dispute. The assessee was an undivided Hindu family and as a partner carried on money-lending business at Muor in the Federated Malay States. The profits of the money-lending business received by the joint family in British India were assessed to income-tax under the Act of 1918 and subsequently. There was a partition in the family and at that partition, the share of the family in the said business at Muor was allotted to two of the members of the family. It was claimed that a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....applied as provided by Section 3 to the income of an assessee from whatever source it is derived if it accrued or arose or was received in British India. The definition of assessee in Section 2(2) of that Act included a firm and the firm as such was treated as a unit for assessment of its business provided its income accrued or arose in British India. A foreign firm could not be assessed in respect of its business to any extent under that Act. Section 5 of the Act of 1918 which defined the classes of income chargeable to income-tax analogous to the present Section 6 included among the classes income derived from business and also income derived from other sources. Section 9 of the same Act enumerated the permissible allowances in computing ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....uld not have been charged under the head "income derived from business" but only as a receipt under Section 3. The argument, however, on behalf of the assessee by his learned Advocate Mr. Rajah Iyer was that the words on which tax was at any time charged" should be construed as meaning "with reference to which tax was at any time charged." In other words, the contention is that the income derived by the assessee was in relation to a business and therefore the assessment of the income must be treated as an assessment of the business. No doubt, under the provisions of the Income-tax Act, the tax is payable by an assessee but the assessment of the tax is on the basis of various heads of income derived by the assessee o....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ssed to another by succession within the meaning of the Income-tax Act and as such he is entitled to claim by virtue of Section 25(4) that the business carried on by him of which he was the owner on the 1st April, 1939, has been discontinued by him because of the disruption and in the ownership of the business another person has succeeded to the family. The requirements of Section 25(4) are fully met and he is entitled to this relief." This argument, in my opinion, proceeds on an erroneous assumption that the profits when received by the assessee in British India were assessed as if it was a business carried on by him. This is obviously wrong as under the Act of 1918, the business as such which is carried on in a foreign territory cou....
X X X X Extracts X X X X
X X X X Extracts X X X X
....-partnership with strangers. On the bare language of the relevant enactment, let it be assumed too that it is immaterial that the business is a foreign business in which this family had only a right to a share of the profits. The trouble in the way of learned counsel, however, is that in order to succeed he has still to show, and that he has failed to do, that on the business as such tax was at one time or another charged under the provisions of the Indian Income-tax Act, 1918. It may be a question whether the word used here means only "in purported accordance with" or something more, viz., "in actual accordance with". It may, therefore, be a question whether the assessment of the foreign business in British India, if a ....