TMI Blog1969 (6) TMI 17X X X X Extracts X X X X X X X X Extracts X X X X ..... cember 31, 1948. The assessee is an Indian company which manufactures aluminium ware and utensils. The assessee during the relevant accounting year had a shop at Rangoon in Burma for selling some of its manufactured products. The goods that were sold in Burma were all manufactured in India but were sent to Burma for sale. The invoice prices of these goods corresponded with their prices in India and included the manufacturing profits in India and also part of the merchanting profits. The difference between the invoice price and the sale price in Burma were shown as profit accruing.or arising in Burma. In the assessee's Indian assessment, the Income-tax Officer accepted the assessee's method of accounting. He computed the sum of Rs. 9,688 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at a loss, according to the Appellate Assistant Commissioner the Income-tax Officer was justified in rejecting the assessee's claim under section 49D. Before the Tribunal the assessee contended that the sum of Rs. 91,548 was the assessee's manufacturing profits which arose in India ; but as the Burma authorities assessed this sum as the assessee's Burma income it must be held to have been assessed both in India and in Burma and the assessee was entitled to double taxation relief under section 49D. The Tribunal held that for the purpose of determining the amount of doubly taxed income under section 49D it was the amount of the foreign income as computed for the purposes of the Indian Income-tax Act that had to be considered. The Tribunal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e other hand, contended : (i) that the manufacturing operations carried on at Raichur did not constitute a part of the assessee's business within the meaning of the third proviso to section 5, and (ii) that even if such operations could be regarded as a part of the business the profits derived from sales in Bombay could not be said to have accrued or arisen in that State. The Supreme Court has held that the activity which the assessee carried OD at Raichur was a part of its business within the meaning of the third proviso to section 5, that the profits of a part of the business, viz., the manufacture of oil in their mills at Raichur accrued or arose at Raichur and that such profits were not assessable to excess profits tax under the third p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of sale and apportionment has to be made between the two, though the place of receipts and realization of the profits is the place where the sales are made. The manufacturing profits could not be said to have accrued or arisen at that place because there was nothing done from which they could accrue or arise as natural accrual or as an increase. The increase only took place at the place of manufacture and if there was any arcrual over the production cost, that accrual was at the place of the production itself. At page 515 Mr. Justice Bijan Kumar Mukherjea observes : " .... in proviso (3) to section 5 of the Excess Profits Tax Act, the legislature has deliberately left out the word ' received ' and has spoken only of ' accruing ' or ' a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or accrued, manufacturing profits must be held to have arisen or accrued at the place where the goods were manufactured and not at the place where the goods were sold if they were sold at a place other than that of manufacture. We may also refer to the case of the Anglo-French Textile Co. Ltd. v. Commissioner of Income-tax. This case has been decided by four learned judges of the Supreme Court. The assessee was a company incorporated in the United Kingdom. It had its registered office in London. It manufactured yarn and cloth in its mill at Pondicherry. The assessee had appointed a company in Madras as its agent. The manufactured goods were sold partly in British India and partly outside British India. All the contracts in respect of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r a particular part of the income, profits or gains arose or accrued within the taxable territories or without the taxable territories would have to be decided having regard to the general principles as to where the income, profits or gains could be said, to arise or accrue. " Again, at page 49, Mr. Justice Bhagwati states : " . . . the apportionment of income, profits or gains between those arising from business operations carried on in the taxable territories and those arising from business operations carried on without the taxable territories is based not on the applicability of section 42(3) of the Act but on general principles of apportionment of income, profits or gains. " Applying the above principles to the facts which the tax ..... X X X X Extracts X X X X X X X X Extracts X X X X
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