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1954 (10) TMI 9 - SC - Income TaxWhether the Excess Profits Tax Officer was justified in splitting up the standard period as he did in order to arrive at the standard profits of the assessee? Whether the business profits of the assessee had to be determined first under Section 10 of the Income-tax Act? Whether the assessee was a resident or non-resident under Section 4A of the Act was to be considered after the determination of those profits? Held that:- The Excess Profits Tax Officer was in error when he excluded the foreign profits for the assessment year 1936-37 from computation. Rule 1 of Schedule I to the Excess Profits Tax Act provides that business profits during the standard period are to be computed on the principles on which business profits are computed for purposes of income-tax under Section 10 of the Income-tax Act. Business profits under Section 10 may comprise Indian as well as foreign profits. All these profits would come within the computation of business profits and they would be determined as such in the income-tax assessment for the particular assessment year. The question whether Indian or foreign profits are greater would become relevant for determining the status of the assessee, whether he is a resident or non-resident, and would be considered later when the assessable income came to be determined. It is only after the business profits are determined under Section 10 that the question can be considered whether the assessee is a resident or non-resident and that question can certainly not be determined unless and until the Indian and foreign profits of the assessee have been in the first instance determined under Section 10 - The decision of the Excess Profits Tax Officer was therefore wrong and the Tribunal and the High Court were right in the view they took - Appeal allowed.
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