9911796707
TMI Blog1971 (5) TMI 27X X X X Extracts X X X X X X X X Extracts X X X X ..... sub-section reads thus : " If any person who is a resident in the taxable territories in any year proves that in respect of his income which accrues of arises to him during that year in Pakistan he has paid in that country, by deduction or otherwise, tax payable to the Government under any law for the time being in force in that country relating to taxation of agricultural income, he shall be entitled to a deduction from the Indian income-tax payable by him-- (a) of the amount of tax paid in Pakistan under any law aforesaid on such income which is liable to tax under this Act also ; or (b) of a sum calculated on that income at the Indian rate of tax ; whichever is less. " In the present case there is no dispute regarding the quantum of agricultural income of each year which had been subjected to tax in Pakistan. It is also common ground that relief is to be calculated in terms of clause (b) of the above sub-section with speaks of deduction of a sum calculated on the agricultural income arising in Pakistan at the " Indian rate of tax. " The expression " Indian rate of tax " has been defined in Explanation (ii) which follows sub-section (4) to section 49D and means : " ....... ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A.A.D.T. is nothing but relief under " other provisions of this Act. " The said relief, therefore, according to him, must be deducted from the total amount of the Indian income-tax in calculating the Indian rate of tax. The Appellate Assistant Commissioner was also of opinion that what the Income-tax Officer had originally done in calculating the relief under section 49D(3) for each of the years was clearly a mistake apparent from the record and, as such, could be rectified under section 154 of the Act of 1961. Before the Tribunal it was argued on behalf of the assessee that in computing the Indian rate of tax, abatement allowable under the A.A.D.T. should not be deducted from the tax payable in India. Secondly, the orders passed under section 154 were beyond the Income-tax Officer's jurisdiction as there were no apparent mistakes on records. With regard to the abatement allowable under the A.A.D.T. the assessee's counsel submitted to the Tribunal that there was a distinction between " relief " and " abatement " of tax. This distinction, it was submitted further, was sought to be maintained in clauses (a) and (b) of section 49A of the Income-tax Act, 1922. It was also pointed out ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... following questions of law have been referred to this court : " (1) Whether, on the facts, and in the circumstances of the case, the Tribunal was right in holding that the Income-tax Officer who had made the original assessment had not committed any glaring and obvious mistake of law while granting relief under section 49D(3) of the Indian Income-tax Act, 1922, and that accordingly the provisions of section 154 of the Income-tax Act, 1961, were not applicable to the case ? (2) If the answer to question No. (1) be in the negative, whether, on the facts and in the circumstances of the case and on a proper construction of section 49A and Explanation (ii) to section 49D of the Indian Income-tax Act, 1922, the Tribunal was right in holding that the Income-tax Officer was not justified in deducting the amount of abatement allowable under the Agreement for Avoidance of Double Taxation with Pakistan from the amount of the Indian income-tax for the purpose of determination of the Indian rate of tax mentioned in clause (b) of section 49D(3) of the said Act ? " At the outset we should state that counsel for both the parties before us have relied on a large number of decisions. These decisi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not be rectifying a mistake apparent from the record. We intend in this connection to refer to two of the comparatively recent judgments of our Supreme Court in Satyanarayan Laxminarayan Hegde v. Mallikarjun Bhavanappa Thirumale, where it is stated: " An error which has to be established by a long-drawn process of reasoning on points where there may conceivably be two opinions can hardly be said to be an error apparent on the face of the record. As the above discussion of the rival contentions show the alleged error in the present case is far from self-evident and if it can be established, it has to be established by lengthy and complicated arguments." The Supreme Court considered the above passage in K. M. Shanmugam v. S. R. V. S. (P.) Ltd. and said: " This test also may break, for what is complex to one judicial mind may be clear and obvious to another : it depends upon the equipment of a particular judge. In the ultimate analysis the said concept is comprised of many imponderables ; it is not capable of precise definition, as no objective criterion can be laid down, the apparent nature of the error, to a large extent, being dependent upon the subjective element. So too, in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eady taken place, but provides for the avoidance of double taxation. In the former case, says this court, tax has first to be paid, and then only arises the right to apply for a refund of the excess payment. In the latter case, this court points out, provision has been made for avoiding double taxation. It is true that in the last paragraph of this judgment, as pointed out by Mr. A. K. Basu, it has been stated " Doubtlessly the assessee was confused as regards its rights to relief against double taxation............... It is also evident that if the assessee was not so prompt in its payment, it might have got some relief. " But, in these sentences, to our mind, the word " relief " has been used in a general and not in a technical sense. It seems to us that this judgment of our court amply supports the assessee's contention before us that there was considerable scope for argument on the scope and effect of clauses (a) and (b) of section 49A of the Indian Income-tax Act, 1922, which were previously numbered as sections 49A and 49AA. And, this is the reason why we are inclined to hold that what the Income-tax Officer sought to rectify was not a clear or obvious mistake of law or a m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cannot be sustained principally for four reasons : Firstly, the Income-tax Officer made his order not under section 35 of the old Act but under section 154 of the Act of 1961. Prima facie, therefore, his order was an appealable order. Secondly, the point that Mr. Basu is trying to raise in his argument in this court as to the maintainability of the appeal was never raised either directly or indirectly or even remotely before the Tribunal and this court in the exercise of its jurisdiction under section 66 of the old Act or section 256 of the Act of 1961 cannot under any circumstances entertain it. Thirdly, since the reference is at the instance of the department, by taking this point, the department is trying to achieve indirectly what it could not achieve directly. Fourthly, as we have already pointed out, it was possible for the Madras High Court to entertain the question of competence of the reference as the assessee had all along before the tax authorities challenged the propriety of rectification. But, such a course is not open to this court in the present reference. On these grounds we overruled this third contention of counsel for the department. As the first question in the ..... 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