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TMI Blog1961 (9) TMI 77X X X X Extracts X X X X X X X X Extracts X X X X ..... x Officer found that the assessee owned in the taxable territories certain other properties also. He, therefore, with the previous approval of the Commissioner, initiated proceedings under section 34(1)(a) of the Income-tax Act (hereafter referred to as the Act). It is to be noticed that this notice was issued against the assessee himself and not against Jeevansingh Grewal, who had been, in the original assessments, treated the assessee's statutory agent within the meaning of section 43 of the Act. After receiving the notice, the assessee, in due course, filed returns of his income and we are here concerned with the three contentions raised by the assessee. The first contentions raised by the assessee was that he was entitled to have deductions of the allowances permissible under section 9 of the Act in respect of his income from all his properties situate within the taxable territories. In the first assessment, which was made against the statutory agent, this permissible deduction was not given in respect of the Bombay properties. He, therefore, claimed that he should be allowed those deductions in respect of the Bombay properties also. This claim of the assessee was resisted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee's foreign income, the assessee should have been given the benefit under section 15 of the Act. This contention prevailed with the Tribunal. It took the view that to accept the department's contention would amount to read in the section that "the tax shall not be payable in respect of any sums paid out of his total income by an assessee to effect an insurance". In the opinion of the Tribunal, there was no warrant for reading the words "out of his total income" in sub-section (1) of section 15. The Tribunal, therefore, held that, even though the assessee had paid the premia out of his foreign income, he was entitled to get the benefit under section 15 of the Act. In support of the aforesaid conclusion, the Tribunal has given also other reasons besides the one stated above. But it is not necessary to refer to those reasons inasmuch as learned counsel for the assessee did not support the order of the Tribunal on the strength of those reasons. The assessee also contended that the tax paid by him to the Uganda Government on his foreign income should be deducted in determining the assessee's foreign income and in including it in his total world income. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at manner. In the alternative, it is his argument that the assessee had been assessed as a nonresident. That being the case, his foreign income also gets included in the assessment and in this view of the matter also he is entitled to exemption under sub-section (1) of the section 15 of the Act. In our opinion, the contention raised on behalf of the revenue is well founded. Sub-section (1) of section 15 is in the following terms: "15. (1) The tax shall not be payable in respect of any sums paid by an assessee to effect an insurance on the life of the assessee or on the life of a wife or husband of the assessee or in respect of a contract for a deferred annuity on the life of the assessee or on the life of a wife or husband of the assessee, or as a contribution to any provident fund to which the Provident Funds Act, 1925 (19 of 1925), applies." It is true that the sub-section in terms does not say that the tax shall not be payable in respect of any sums paid by an assessee out of his total income to effect an insurance on the life of the assessee. But, in our view, the language in which the sub-section is couched postulates that the sums exempted under sub-section (1) o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m in the taxable territories as well accruing to him outside the taxable territories is included in his total income. Such, however, is not the case of a non-resident. In addition to the income received in the taxable territories, the other income added to his total income is only is only income accruing or arising or deemed to accrue or arise to him in the taxable territories during the previous year. The difference thus in short is that practically all his world income enters the total income of a resident assessee. In the case of a nonresident assessee, however, his entire world income does not enter his total income. His total income is confined only to the income received by him in the taxable territories and the income accruing to him or deemed to be accruing to him in the taxable territories. Apart from the exclusions and exemptions provided in the Act, there are the two respective fields of taxation in their widest amplitude. Sub-section (3) of section 4 provides that any income, profits or gains falling within the following classes shall not be included in the total income of the person receiving them. It then enumerates 22 classes of income, profits, and gains, which, acc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cter and quality of being included in the total income of the assessee, with reference to which the tax is levied. Foreign income of a non-resident assessee does not enter his total income. In Commissioner of Income-tax v. Samnugger Jute Factory Co. Ltd. [1953] 24 I.T.R. 265 the assessee had made contributions to the Gandhi National Memorial Fund out of his income other than his income of the previous year, in respect of which he was assessed. He claimed exemption under section 15B of the Act. The claim was opposed by the department on the ground that the contributions to the charities were not made by the assessee out of his total income of the relevant year and, therefore, the assessee was not entitled to the exemption. The assessee's contention prevailed with the Tribunal. The findings of the Tribunal were that amounts were really paid by the assessee and that it was not necessary that the amounts should have been paid out of the income of the previous year relevant to the assessment. The Tribunal, however, referred the matter to the High Court under section 66(1) of the Act. The conclusions of the Tribunal were not accepted. In overrunning the view taken by the Tribunal, C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uch assessee who pays life insurance premia out of the income excluded under section 4(3) we do not propose to decide that the sums exempted from tax under sub-section (1) of section 15 are and must be parts of the assessable income of the assessee. It is sufficient to say that the assessee must at least establish that the sums in respect of which he claims exemption from tax under sub-section (1) of section 15 have or bear the quality of entering the field of taxation, in its widest amplitude, apart from the exclusions and exemptions provided in the various sections of the Act. Mr. Kolah referred us to a decision in Raja Shri. Sailendra Narayan Bhanja Deo v. Commission of Income-tax [1959] 36 I.T.R. 94. That decision is hardly of any assistance to the assessee. In that case, the assessee claimed exemption under section 15B of the Act in respect of certain donations of ₹ 10,000 made by him to charitable institutions. It was found that the assessee's agricultural income amounted to ₹ 5,00,000 and non-agricultural income amounted to ₹ 91,000. The account books maintained, however, in respect of both these incomes were composite accounts and the said sum of S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . We have not come across any provision of law nor was any pointed out to us which would go to show that the foreign income of a non-resident assessee enters the assessment for the purposes of determination of the amount of Income-tax, unless he opts to throw it in his total income. It is an admitted position that the assessee had not exercised the said option offered to non-resident assessee under section 17 of the Act. It is true that as a result of the legal fiction enacted in that section foreign income of non-resident assesses has relevance in the matter of determination of the amount of super-tax payable by him and, in that sense, it may be said to have entered his assessment, but that is altogether a different matter. The said legal fiction cannot be carried any further and can have no relevance in construing section 15(1) of the Act. In our opinion, therefore, in the circumstances of the case, the assessee was not entitled to the benefit under sub-section (1) of section 15 of the Act in regard to the life insurance premia paid by him. As regards the second question, Mr. Kolah contends that under section 9 of the Act, the assessee was entitled to exclusions of certain amoun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as been computed. The scope of this section was considered by a Full Bench of the Calcutta High court in Satyendra Mohen Roy Choudhury v. Commissioner of Income-tax [1930] 4 ITC 447. At page 451 of the report, Rankin C.J., who delivered the judgment of the court, observed: "On this footing I am unable to say that the language of section 34 points to an intention to give to the assessee a right to reopen the whole assessment before being rendered liable to further tax. It is not for the court to determine whether the administrative inconvenience entailed by such a right would be much or little, or whether it would afford any sufficient reason for refusing to the assessee a right to reopen the whole matter. Nor is it for the court to consider whether there is any real injustice or inconvenience in refusing this right to an assessee who has fails to make a return. Such considerations are questions of policy and debatable as such. As a matter of the true construction of this section it appears to me that if the legislature had meant to say that if in any case it appears to the Income-tax Officer that an assessee has been assessed upon too low a figure or at too low a rate, the I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r made in the first assessment. It cannot be disputed that the first assessment was made in respect of the income S. Inder Singh Gill, which could be brought to tax under the Indian Income-tax Act. It is an admitted position that S. Inder Singh Gill is a non-resident within the meaning of the Act. In these circumstances, it was open to the income-tax authorities, under sections 42 and 43 of the Act, to serve a notice on Jeevansingh Grewal of their intention of treating him as the agent of S. Inder Singh Gill and treating him as an assessee. The regularity of this action has at no time been challenged. The assessment made against Jeevansingh Grewal, therefore, was an assessment in respect of the income of S. Inder Singh Gill. Sub-section (2) of section 2, which defines an assessee, reads: "'Assessee' means a person by whom income-tax or any other sum of money is payable under this Act, and includes every person in respect of whom any proceeding under this Act has been taken for the assessment of his income or of the loss sustained by him or of the amount of refund due to him." In the definition, thus, two categories of persons are included in the term "asse ..... X X X X Extracts X X X X X X X X Extracts X X X X
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