TMI Blog1961 (5) TMI 4X X X X Extracts X X X X X X X X Extracts X X X X ..... urred at Bhatinda could not be taken into account. We are of the view that, on the facts found, the answer to the question must be in favour of the appellant and against the assessee. Civil Appeal be allowed. - - - - - Dated:- 5-5-1961 - Judge(s) : S. K. DAS., M. HIDAYATULLAH., J. C. SHAH JUDGMENT The judgment of the court was delivered by S. K. DAS J.---These two appeals have been brought to this Court on a certificate of fitness granted by the High Court of Punjab under section 66A(2) of the Indian Income-tax Act, 1922. The relevant facts are these. Messrs. Chunilal Moonga Ram, a firm of Delhi, carried on a speculative business in bullion, mostly in gold and silver, in Chandni Chowk at Delhi. For the assessment year 1946-47 it was charged to income-tax on its income from the business in the relevant accounting period. Similarly, it was charged to excess profits tax for the chargeable accounting period ending on February 6, 1946. One of the appeals, Civil Appeal No. 39 of 1960, arises out of the assessment of income-tax and the other appeal, Civil Appeal No. 40 of 1960, arises out of the assessment of excess profits tax. During the relevant accounting periods ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ated in the taxable territories into transactions in the taxable territories and transactions without the taxable territories. Even if that treatment were permitted and the profits or losses resulting from transactions outside the taxable territories can be described as income, profits and gains, such income, profits and gains are deemed under section 42 to have accrued or arisen in British India. The results of transactions of the nature under review are, therefore, not exempt from tax by virtue of section 14(2)(c). The proviso to section 24(1) does not in any case come into play. The income-tax authorities have in this view that we have taken wrongly disallowed the assessee's claim for adjustment of losses amounting to Rs. 6,366 and Rs. 16,615. We allow these losses." The Tribunal accordingly allowed the two appeals. We may here state that the income-tax authorities as also the Tribunal considered the claim for deduction in relation to the assessment for income-tax only. As to the excess profits tax there was no separate discussion of the provisions of section 5 of the Excess Profits Tax Act, 1940, and they dealt with the assessment of excess profits tax as a mere consequentia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ision of the Bombay High Court in Karamchand Premchand Ltd. v. Commissioner of Income-tax and said : " It would seem that in spite of the slightly different language of the Excess Profits Tax Act from that of the Income-tax Act, no distinction has ever been drawn in this matter between the principles governing assessment to income-tax and the principles governing assessment to excess profits tax and in fact it would appear to have been the universal practice that decisions of the income-tax authorities and High Courts have been followed by consequential orders relating to the same assessee's taxable income for the purpose of the Excess Profits Tax Act, and the learned counsel for the Commissioner has not been able to cite any decision in which different principles have been applied on this particular matter. Admittedly one of the reasons given in his judgment by Chagla C.J. for coming to the decision mentioned above was that the third proviso had been changed in the Business Profits Tax Act as compared with the Excess Profits Tax Act, but this is only one of a number of reasons, and the question has not been considered at all whether under the proviso in the Excess Profits Tax A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... usiness. We may here read section 5 and the third proviso thereto : " 5. This Act shall apply to every business of which any part of the profits made during the chargeable accounting period is chargeable to income-tax by virtue of the provisions of sub-clause (i) or sub-clause (ii) of clause (b) of sub-section (1) of section 4 of the Indian Income-tax Act, 1922, or of clause (c) of that sub-section :.. Provided further that this Act shall not apply to any business the whole of the profits of which accrue or arise in an Indian State ; and where the profits of a part of a business accrue or arise in an Indian State such part shall, for the purposes of this provision, be deemed to be a separate business the whole of the profits of which accrue or arise in an Indian State, and the other part of the business shall, for all the purposes of this Act, hp deemed to be a separate business." In Commissioner of Income-tax v. Karamchand Premchand Ltd. this court considered section 5 of the Business Profits Tax Act, 1947, and pointed out the distinction between the third proviso thereto and the third proviso to section 5 of the Excess Profits Tax Act, 1940. This court quoted with approv ..... X X X X Extracts X X X X X X X X Extracts X X X X
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