1950 (5) TMI 1 - SC - Income Tax

Whether in respect of such oil a portion of the profits earned by them is attributable to their business of manufacturing oil at Raichur and that portion of the profits should not be assessed to tax under the Excess Profits Tax Act?

Held that:- The expression " part of a business " must in my opinion be read with the same meaning and implication in provisos (2) and (3) to Section 5 of the Excess Profits Tax Act. Unable to accept the contention of the Attorney-General that under our Act there is no scheme of apportionment. That overlooks, as pointed out above, the provisions of Section 21 of the Act, which incorporates by reference amongst others Section 42(3) of the Indian Income-tax Act. Therefore, proceeding on the footing that there can arise or accrue profits of the manufacturing activity of the assessee, profits have accrued to the assessee of a part of the business in an Indian State and they having accrued out of such business carried on in such State are exempted under the third proviso to Section 5 of the Excess Profits Tax Act. For these reasons the conclusion of the High Court is correct and the appeal is dismissed with costs.