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TMI Blog1967 (5) TMI 16X X X X Extracts X X X X X X X X Extracts X X X X ..... alendar year 1946, which is the accounting year. At a period of time when there had been no partition of India, certain vessels belonging to the assessee were requisitioned by the then Government of India " on charter basis ". It appears from the chart annexed to the statement of case that five vessels belonging to the assessee were requisitioned, in the year 1941, and seven other vessels were requisitioned in the year 1945. The first lot of 5 vessels were requisitioned in Calcutta and were all derequisitioned, also in Calcutta, in the year 1947. The other seven vessels were requisitioned at Narayangunj and were derequisitioned, also at Narayangunj, in the year 1947. We are, however, in this difficult position that we do not have the order of requisition on our records and we do not know under which particular provision of law the requisition had been made although we are inclined to think that such requisition may have been made under the provision of the Defence of India Rules, which were in operation at that time. Also, we do not have the document of charter party on our records and do not know the terms thereof. Normally, for requisition of property compensation is payable. We ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... agree as follows : Article I ............ Article II ........... Article III ......... Article IV.--- Each Dominion shall make assessment in the ordinary way under its own laws ; and, where either Dominion under the operation of its laws charges any income from the sources or categories of transactions specified in column 1 of the Schedule to this Agreement (hereinafter referred to as the Schedule) in excess of the amount calculated according to the percentage specified in columns 2 and 3 thereof, that Dominion shall allow an abatement equal to the lower amount of tax payable on such excess in their Dominion as provided for in Article VI. Article V ............ Article VI.---(a) For the purposes of the abatement to be allowed under Article IV or V, the tax payable in each Dominion on the excess or the doubly taxed income, as the case may be, shall be such proportion of the tax payable in each Dominion as the excess or the doubly taxed income bears to the total income of the assessee in each Dominion. (b) .................. Article VII ............... Article VIII ............ . Article IX ............... The Schedule. (See Article IV) ---------------------------------- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee can adduce no evidence to prove that any expenses were paid by the assessee-company and debited to the profit and loss account. Hence, I find that the allocation made by the Income-tax Officer is quite correct. " Thereupon, the assessee took an appeal before the Income-tax Appellate Tribunal which differed both from the Income-tax Officer and the Appellate Assistant Commissioner, on the following grounds : " During this period, the Government requisitioned boats on the charter basis. The payment on account of charter was upon the tonnage of goods carried. The assessee received Rs. 3,43,138 in the Indian Dominion (since partitioned) and Rs. 7,296 in Pakistan (since partitioned). The Income-tax Officer held that so far as the amount of Rs. 3,43,138 was concerned it was an income exclusively received in India and was not covered by item 5(g) of the Schedule to the Agreement for Avoidance of Double Taxation in India and Pakistan. The Appellate Assistant Commissioner concurred with this view. It was argued before us that there was no material to hold that the chartered boats were hired exclusively from Indian port and the income accrued to India alone. It was stated that this part ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and entirely different business was commenced, or, alternatively, that the payments made by the Admiralty represented compensation for the stoppage of business. This argument was repelled by the Lord President (Strathclyde) with the following observation : " The appellant plausibly contends that his fishing industry was brought to an end by the intervention of the Admiralty and that the hiring by the Admiralty subsequently must be viewed as compensation to him for the stoppage of his business. That is the argument set out in the stated case, but it was more plausibly contended by his counsel that when the charter-party was effected the fishing trade came to an abrupt termination and that, under the hiring, a new and entirely different business was commenced, and hence that there was no pre-war standard available on which to base the charge of excess profits duty. And I did not understand it to be disputed that, if the fishing industry came to an end and an entirely new and distinct industry was commenced by hiring under this charter-party, that the Crown's claim for duty would fail. But I am not disposed to view the case in that light. When the appellant acquired this ship, he a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in Sutherland v. Commissioner of Inland Revenue , that a commercial asset susceptible of being put to a variety of different uses in which gain might be acquired, and whichever of these uses it was put to by the appellant, the profit earned was a user of the asset of the same business. A mere substituted use of the commercial asset does not change or alter the nature of that asset. Whatever the commercial asset produces is income of the business of which it is an asset, the process by which the asset makes the income being immaterial. " We are again unable to find any support to the argument advanced by Mr. Pal from the Supreme Court decision cited by him. It may be that, prior to the requisition of vessels, the assessee used to enter into private contracts with different parties and under such contract transport their goods. The requisition brought about this change in the business that the assessee was no longer able to enter into such private contracts. The vessels, after requisition, had to be used entirely for the purpose of transport, for which the requisitioning assessee became entitled only to such income as the terms of the charter with the Government entitled him. This i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er company, also incorporated in England, making a considerable profit. This later agreement was also made in England. The sole business of the appellant-company was the purchase and development of immovable property in Rhodesia. It was assessed to income tax in respect of the sum of pound 1,46,000 and contested the assessment on the grounds, (i) that the amount of pound 1,46,000 was of a capital nature, and (ii) that it was not received, and did not accrue, from a source within Southern Rhodesia. The assessment was made under the provisions of the ordinance of Southern Rhodesia, which provided, inter alia, that tax payable on " the total amount other than receipts proved by the tax-payer to be of a capital nature, received by or accrued to or in favour of any person in any year.... . from any source within the territory ....... " In that context, the Privy Council held that the amount of pound 1,46,000 was income and not capital ; and further that the amount was received from a source within Southern Rhodesia, namely, the mining claims which the company had acquired and developed there. We are of the opinion that the context in which the aforesaid observation was made by the Privy ..... X X X X Extracts X X X X X X X X Extracts X X X X
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