TMI Blog1951 (2) TMI 21X X X X Extracts X X X X X X X X Extracts X X X X ..... l covering five chargeable accounting periods, viz., ended 31st March, 1940, to 31st March, 1944, respectively, which were disposed of by one order as the point involved in all the appeals was the same. Five applications were made to the Tribunal for reference to the High Court questions of law arising out of the order. The applications were consolidated and one reference has been made. In that reference the question has been asked as stated above. The assessee (respondent before us) is a limited company and has its head office in London. It has three branches in India. The control and management of the business is in London. The assessee filed its return under Section 13(1) of the Act. In the chargeable accounting periods in qu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ss Profits Tax Officer to the Assistant Commissioner of Income-tax who confirmed the assessment order and dismissed the appeal. Against the dismissal, the assessee appealed to the Tribunal and it was contended on behalf of the assessee before the Tribunal that the standard profits should have been taken as the total of (a), (b ), (c) and (d). Counsel contended before the Tribunal that the standard period was one unit and the Indian profits of the two years, namely, (a) and (c ) should be totaled up and be compared with the foreign profits namely the total of (b) and (d). He added that according to this method of computation the Indian profits were higher than the foreign profits and the assessee must be treated as a resident company and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ears, Indian as well as foreign. The marginal note of Section 3 is 'Charge of Income-tax: that of Section 4 is Application of Act . Section 3 defines who has to pay; i.e , every individual, company etc., on what he is to pay, viz., total income of the previous year; and at what rates, viz., the rates imposed by the Finance Act every year. Section 4 limits the scope of Section 3 by defining and limiting the nature of the income that may be included in total income of the previous year. Section 4 contemplates three classes of assessees, viz., (1) resident in British India, (2) resident but not ordinarily so resident, and (3) not resident in British India. Section 4A defines when an individual, or a firm or a company is resident in Br ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hargeable accounting period, shall be separately computed, and shall, subject to the provisions of this schedule, be computed on the principles on which the profits of a business are computed for the purposes of income-tax under Section 10 of the Indian Income-tax Act, 1922: Provided that any sums (other than any interest paid by a firm to a partner of the firm) excluded under the proviso to clause (iii) of subsection (2) or clause (a) of sub-section (4) of that section from the allowances made in computing the profits of the business for the purposes of income-tax shall, if paid, be included in those allowances when computing the profits of the business for the purposes of excess profits tax: Provided (further) that where the pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her provisions of the schedule. On behalf of the applicant before us the several provisos to that rule were referred but in our view they do not in any way contravene Rule 1 in so far as it says that the assessee's standard profits have to be determined under Section 10 of the Income-tax Act. As I have already said Section 10 provides as to how the profits of a business are to be determined, what allowances are to be made in order to arrive at the taxable income. It seems to us that first we have to determine the profits of a person under various heads, such as salaries, property, income from Government securities and business. After that is done the total income is determined under Section 4, excluding certain kinds of income. Se ..... X X X X Extracts X X X X X X X X Extracts X X X X
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