9911796707
TMI Blog1971 (8) TMI 20X X X X Extracts X X X X X X X X Extracts X X X X ..... nstituents. It had taken on lease several coal mines from the owners of the coal bearing lands. As lessee of the mines the assessee incurred liability for payment of, (i) Road and Public Works cess under the Bengal Cess Act of 1889 ; (ii) Education cess levied under the Bengal (Rural) Primary Education Act, 1930. The amounts payable by the assessee on account of the aforesaid cesses were claimed by it as deduction under section 10 of the Indian Income-tax Act, 1922, hereinafter referred to as the "Act", in the computation of its profits. The income-tax authorities disallowed that claim relying on section 10(4) of the Act. The assessee went up in appeal to the Appellate Tribunal which agreed with the orders of the departmental authorities. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d "profits and gains of business, profession or vocation" in respect of the profits and gains of any business, profession or vocation carried on by him. Sub-section (2) says that such profits or gains shall be computed after making the allowances set out therein. Clauses (ix) and (xv) of this sub-section are as follows : " (ix) any sums paid on account of land revenue, local rates or municipal taxes in respect of such part of the premises as is used for the purposes of the business, profession or vocation." " (xv) any expenditure (not being an allowance of the nature described in any of the clauses (i) to (xiv) inclusive, and not being in the nature of capital expenditure or personal expenses of the assessee) laid out or expended wholly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the annual net profits from mines, quarries, tramways, railways and other immovable property on such rates as were to be determined in the manner prescribed. Under section 72 the Collector of the district had to serve a notice upon the owner, etc., of every mine, quarry, tramway, railway and immovable property requiring him to lodge a return of the net annual profits of such property calculated on the average of the annual net profits thereof for the last three years for which accounts had been made up. Section 75 provided for a contingency where a return was not furnished within the prescribed period. The Collector in that case or if he found that the return made was untrue or incorrect was to proceed to ascertain and determine by such w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ade at a proportion of the profits of the assessee's business. What has to be determined is whether the assessment of the cesses is made on the basis of any such profits. The words "profits and gains of any business, profession or vocation" which are employed in section 10(4) can, in the context, have reference only to profits or gains as determined under section 10 and cannot cover the net profits or gains arrived at or determined in a manner other than that provided by section 10. The whole purpose of enacting sub-section (4) of section 10 appears to be to exclude from the permissible deductions under Clauses (ix) and (xv) of sub-section (2) such cess, rate or tax which is levied on the profits or gains of any business, profession or voca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll within section 10(4). The Privy Council in Commissioner of Income-tax v. Gurupada Dutta, had to consider whether the rate imposed under the provisions of the Bengal Village Self Government Act, 1919, on a person occupying a building and using the same for the purpose of business was an allowable deduction in computing the profits of the business under section 10 of the Act. Their Lordships laid down the law in the following words : " It will be noted that, in the absence of the necessary powers and machinery, which are not provided by the Act, the estimate of the annual income from business can only proceed on a rough guess, which is in no way comparable with the ascertainment of profits and gains under the Income-tax Act, and, in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gains of business or profession". Section 30(b)(ii) is equivalent to clause (ix) of section 10(2) of the Act. Section 40(a)(ii) corresponds to section 10(4) of the Act. It is significant that in spite of the decision of the Privy Council in Gurupada Dutta's case, Parliament did not make any change in the language of the provisions corresponding to section 10(4). It can, therefore, legitimately be said that the view of the Privy Council with regard to the true scope and ambit of section 10(4) of the Act was accepted. We are unable to concur in the reasoning or the conclusion of the Calcutta High Court in Commissioner of Income-tax v. West Bengal Mining Co., in which it was held that the two cesses being related to profits would attract sect ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
