9911796707
TMI Blog1970 (10) TMI 21X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment year 1957-58 ? (ii) Whether, on the facts and in the circumstances of the case, the assessee continued to be the owner of the property for the purposes of computation of income under section 9 of the Indian Income-tax Act, 1922 ? " We would first take up the second question abovesaid and briefly the relevant facts in this context are that the assessee, in the year 1946, acquired the property known as Nedous Hotel in Lahore for a sum of Rs. 46 lakhs. To arrange the requisite finance, Rs. 30 lakhs were raised on loan from Messrs. Bharat Bank Ltd., and about Rs. 18 lakhs from Raja Rana Sir Bakat Chandra of Jubbal. Whilst the loan of Messrs. Bharat Bank Ltd. was partly repaid, the assessee came to an agreement with the Raja aboves ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and had paid excess profits tax under the relevant Act. The assessments in regard to the excess profits tax were set aside by the appellate orders of the Tribunal and as a result thereof fresh assessments were made. Consequently, the assessee not only received back the excess profits tax paid under section 14A(7) of the Excess Profits Tax Act but under the same provision an amount of interest aggregating to Rs. 68,267 was also paid to the assessee. This amount was received in pursuance of the order passed by the Excess Profits Tax Officer on the 1st of December, 1956. The Income-tax Officer sought to tax the said amounts in the assessment for the year 1957-58 as the interest had been ordered to be paid on the date above-said. It appears, h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the assessee and when it comes back by way of refund in the same hands it would continue to retain its original identity. Primarily reliance was placed on Donald Miranda v. Commissioner of Income-tax. Mr. Awasthy has primarily relied on the contentions which were raised for the revenue and accepted by Chief Justice Chagla and Desai J. in Commissioner of Income-tax v. Donald Miranda. However, at this very stage, it may be mentioned that, despite its contended plausibility, the view expressed by the Division Bench was reversed on appeal by the Supreme Court. To appreciate the rival contentions it is necessary to set down the relevant portion of section 14A of the Excess Profits Tax Act : " 14A. (7) If, when a regular assessment is made i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he rate of compensation provided by law for an excessive tax exaction with interest earned on a voluntary loan, deposit or investment. These payments under sections 14 and 14A of the Excess Profits Tax Act, therefore, were exacted under the compulsive taxing power given under the statute to the State and are refunded under the same power. The issue, therefore, is as to what is the character of the payment originally made and also of the amounts refunded subsequently under section 14A(7). In determining this issue, the origin and the ancestry of the principal amount to which statutory accretions are made under sub-section (7) cannot possibly be lost sight of. Undoubtedly, when the amount is originally paid as excess profits tax under a prov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uch, it is true--but a sum taken out of the profits which were made by the company in the course of its trading, profits which at the time they were made were subject to income-tax and subject to excess profits duty, and that is the character of the repayment that has been made. " The above-said view has received repeated acceptance by the Supreme Court and was noticed with approval in McGregor and Balfour Ltd. v. Commissioner of Income-tax. In Donald Miranda v. Commissioner of Income-tax, the assessee-firm had become entitled to repayment of a portion of the excess profits tax which was duly apportioned to its three partners. The issue was whether the amount refunded was business profits and consequently would be exempt from tax under se ..... X X X X Extracts X X X X X X X X Extracts X X X X
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