TMI Blog1948 (12) TMI 10X X X X Extracts X X X X X X X X Extracts X X X X ..... nd appellant was not resident in British India within the meaning of that Act. A considerable part of the firm's income arose or accrued outside British India and was not brought into or received in British India. The qnestion in the present case shortly stated is whether the appellants are bound to include in their total incomes for the purpose of Indian In? come-tax the whole of their shares of the firm's income or whether they are entitled to exclude a proportion of those shares corresponding to the proportion of the firm's income which arose or accrued outside British India. The appellants were assessed to income-tax for the year 1939-40 by the Income-tax Officer, Nagpur, in amounts which included the whole of their share ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... out British India in accordance with the provisions of Section 4 (1) (b) of the Indian Income-tax (Amendment) Act, 1939, and is thereafter appor? tioned among its partners for inclusion in their individual assessments under Section 23 (5) (a) of the Act, whether Seth Ramnath Daga, who is a non-resident partner of the resident firm, is entitled to exclude from his total income such proportionate share of the profits of the said firm which accrue or arise to it without British India, under Sec- tion4 (1) (c) of the Act? On 11th February, 1944, the High Court at Nagpur made an order answering both these questions in the negative. The present appeal is against that order leave to appeal having been granted by order of the High Court date ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . It draws a distinction between registered and unregistered firms. In the case of a registered firm the firm does not itself pay income-tax and therefore the sub-section directs that the sum payable by the firm shall not be determined, but that each partners share of the firm's income shall be included in the assessment or computation of the total income of the partner. Thereupon the sum payable by that partners as tax is to be determined on the basis of that assessment which includes his share of the firm's income. It is now necessary to turn to Section 4(1) of the Act, which defines total income. The parts of that sub-section relevant to the decision of this case are:- Subject to the provisions of this Act, the total incom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome of partners not resident or not ordinarily resident in British India a part of their share of the firm income in respect of income accruing to the firm from outside British India. The second proviso to Section 23(5)(a) deals with partners not resident in British India. It provides that the share of such a partner shall be assessed on the firm at the rates which would be applicable if it were assessed on him personally, and it make no provision for any deduction from that share in respect of any part of the partnership profits having arises outside British India. It is difficult to understand why no reference was made to any such deductions if it was intended that any such deduction should be made. If no deductions is intended to be a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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