TaxTMI 
TaxTMI 
1951 (2) TMI 21
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....Tribunal ?" There were five appeals to the Tribunal covering five chargeable accounting periods, viz., ended 31st March, 1940, to 31st March, 1944, respectively, which were disposed of by one order as the point involved in all the appeals was the same. Five applications were made to the Tribunal for reference to the High Court questions of law arising out of the order. The applications were consolidated and one reference has been made. In that reference the question has been asked as stated above. The assessee (respondent before us) is a limited company and has its head office in London. It has three branches in India. The control and management of the business is in London. The assessee filed its return under Section 13(1) of the ....
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....ed to the Tribunal and it was contended on behalf of the assessee before the Tribunal that the standard profits should have been taken as the total of (a), (b ), (c) and (d). Counsel contended before the Tribunal that the standard period was one unit and the Indian profits of the two years, namely, (a) and (c ) should be totaled up and be compared with the foreign profits namely the total of (b) and (d). He added that according to this method of computation the Indian profits were higher than the foreign profits and the assessee must be treated as a resident company and the standard profits must be taken as the total of (a), (b), (c ) and (d). Counsel further said that although the standard period extended over two years, they should not be....
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....s who has to pay; i.e , every individual, company etc., on what he is to pay, viz., total income of the previous year; and at what rates, viz., the rates imposed by the Finance Act every year. Section 4 limits the scope of Section 3 by defining and limiting the nature of the income that may be included in total income of the previous year. Section 4 contemplates three classes of assessees, viz., (1) resident in British India, (2) resident but not ordinarily so resident, and (3) not resident in British India. Section 4A defines when an individual, or a firm or a company is resident in British India. The portion of the section material to the judgement is sub-section (c) which is as follows:- "(c) a company is resident in British India....
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....es on which the profits of a business are computed for the purposes of income-tax under Section 10 of the Indian Income-tax Act, 1922: Provided that any sums (other than any interest paid by a firm to a partner of the firm) excluded under the proviso to clause (iii) of subsection (2) or clause (a) of sub-section (4) of that section from the allowances made in computing the profits of the business for the purposes of income-tax shall, if paid, be included in those allowances when computing the profits of the business for the purposes of excess profits tax: Provided (further) that where the profits during any standard period have already been determined for the purpose of an assessment under the Indian Income-tax Act, 1922, such profits a....
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.... any way contravene Rule 1 in so far as it says that the assessee's standard profits have to be determined under Section 10 of the Income-tax Act. As I have already said Section 10 provides as to how the profits of a business are to be determined, what allowances are to be made in order to arrive at the taxable income. It seems to us that first we have to determine the profits of a person under various heads, such as salaries, property, income from Government securities and business. After that is done the total income is determined under Section 4, excluding certain kinds of income. Section 4A deals with the status of the assessee. Rule 1 provides for the computation of profits for the standard period under Section 10 of the Indian In....