TMI Blog1986 (9) TMI 2X X X X Extracts X X X X X X X X Extracts X X X X ..... f other tea companies in different parts of the world, and has a hundred percent shareholding in an Indian subsidiary, Brooke Bond (India) Ltd. The appellant is assessed under the Indian Income-tax Act and the relevant financial year is the previous year in relation to the corresponding assessment year. For the assessment year 1955-56, the appellant was assessed on its total world income by an assessment order dated July 16, 1957, on the basis of provisional figures of its business loss including depreciation and its income from dividends. On the basis of those provisional figures, it was assessed to a net loss of Rs. 31,33,647. As its Indian income exceeded its income outside India, it was assessed as a resident. Meanwhile, on March 28, 1957 the appellant had already been assessed for the subsequent assessment year 1956-57 in the status of non-resident, and its income of Rs. 53,11,958 from dividends was assessed under the head " Income from other sources ". It is obvious that the loss determined for the assessment year 1955-56 could not be carried forward and set off against the income for the assessment year 1956-57, as the latter assessment was made subsequent to the former. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt Commissioner and directed the Appellate Assistant Commissioner to dispose of the appeal afresh after determining whether the appellant was entitled to set off a business loss arising outside the taxable territories for the assessment year 1955-56 against the dividend income arising in the taxable territories for the assessment year 1957-58. The Commissioner of Income-tax applied for a reference to the High Court but the Appellate Tribunal rejected the application on December 1, 1966. On December 5, 1966, the Commissioner of Income-tax disposed of the revision applications filed by the appellant. The revision application pertaining to the assessment year 1955-56 was allowed subject to the claim being verified in regard to the figures and calculation of depreciation by the Income-tax Officer. The revision application pertaining to the assessment year 1956-57, however, was rejected with the observation that the dividend earned by the appellant from investments in shares of companies carrying on tea business could not be said to be a part of the appellant's business because the investments were not incidental to the appellant's business activities and were not held as trading asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed in the appeal relating to the assessment year 1957-58 pending before him without being influenced by the observations of the Commissioner of Income-tax and the High Court in the case relating to the assessment year 1956-57 on the aspect of carry forward of loss under sub-section (2) of section 24 and that if such clarification is not possible, then, we should, in this appeal, confine ourselves to the case relating to the assessment year 1956-57. There was considerable debate on the question whether the dividend income received by the appellant from its shareholdings in different companies engaged in tea business could be regarded as business income. It is a cardinal principle of the law relating to income-tax that income-tax is a single charge on the total income of an assessee. For the purpose of computation, the statute recognises different classes of income which it classifies under different heads of income. For each head of income, the statute has provided the mode of computing the quantum of such income. The mode of computation varies with the nature of the class of such income, for the deductions permissible under the law in computing the income under each head bear a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee formed part of the trading assets of his business, and income therefrom could be described as income from business, and the court reaffirmed that section 6 of the Indian Income-tax Act, 1922, which classified the taxable income under different heads made such classification only for the purpose of computation of the net income of the assessee as under (p. 310) : " Though for the purpose of computation of the income, interest on securities is separately classified, income by way of interest from securities does not cease to be part of the income from business if the securities are part of the trading assets. Whether a particular income is part of the income from a business falls to be decided not on the basis of the provisions of section 6 but on commercial principles ... If it was the income of the business, section 24(2) of the Act was immediately attracted. If the income from the securities was the income, from its business, the loss could, in terms of that section, be set off against that income." Accordingly, the mere circumstance that the appellant showed the dividend income under the head " Income from other sources " in its returns cannot in law decide the nat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t was made by learned counsel for the appellant to show that the Commissioner of Income-tax bad conceded in an earlier proceeding that the dividend income was income from business. Our attention has been invited to a recital in the order of the Appellate Tribunal relating to the assessment year 1957-58 and to what, has been stated by the Commissioner in his reference application against that order. We are not satisfied from the material placed before us that the Revenue can be said to have admitted that the dividend income received by the appellant from its shareholdings in other companies can be regarded as part of the appellant's income from business. Consequently, we are unable to sustain the appellant's challenge to the view expressed by the Division Bench of the High Court in regard to the appellant's claim that the dividend income must be regarded as income from business. The next point raised by the appellant is that the loss should be carried forward under sub-section (2) of section 24 from the assessment year 1955-56 to the assessment year 1956-57 and it is not necessary that the business carried on in the assessment year 1956-57 should be the same as that carried on i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tentative only and was not its final opinion. Indeed, no submission was made on behalf of the Revenue before us on the point. We shall concern ourselves merely with the correctness of the Division Bench refusing to grant relief after it reached the tentative finding that there was merit in the appellant's claim to the carry forward of unabsorbed depreciation. In our opinion', the order of the Commissioner disposing of the revision application for the assessment year 1956-57 should have been set aside by the Division Bench and the Commissioner should have been directed to consider the claim on its merits. We make that direction now. At the same time, we make it clear that it will be open to the Revenue to contend on the merits that the appellant is not entitled to the carry forward of unabsorbed depreciation. The appeal is allowed in so far only that the order of the Division Bench and of the learned single judge as well as the order of the Commissioner of Income-tax on the revision application for the assessment year 1956-57 are set aside in regard to the claim of the appellant to the carry forward of unabsorbed depreciation and the Commissioner is directed to dispose of the revi ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
