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Issues:
Assessment of income-tax for a Hindu undivided family based on profits of business branches in different villages; Disallowance of a claim for deduction under Section 10(2) of the Indian Income-tax Act; Interpretation of the Bengal Village Self-Government Act, 1919 in relation to allowable deductions for business profits. Analysis: The case involved an appeal from the High Court of Judicature at Fort William in Bengal regarding the assessment of income-tax for a Hindu undivided family conducting business in multiple villages. The Income-tax Officer assessed the total income, including profits from a specific branch, and disallowed a deduction claimed under Section 10(2) of the Indian Income-tax Act. The Appellate Tribunal allowed the deduction, leading to a reference under Section 66, focusing on the deductibility of a union board rate under the Bengal Village Self-Government Act, 1919. The primary issue revolved around the interpretation of Section 10 of the Income-tax Act. The Crown argued that the union board rate, although not directly on profits, was based on the profits of the business, thus disallowing the deduction. However, the Judges, concurring with the Tribunal, found that the rate was not levied on profits and did not fall under the restrictions of Section 10(4) of the Act. Additionally, the analysis delved into the provisions of the Bengal Village Self-Government Act, 1919. The Act imposed a rate on building owners or occupiers within the union, with a maximum limit per year. The Judges emphasized that the rate was solely related to the premises used for the business, making it an allowable deduction under Section 10(2)(ix) of the Income-tax Act. The judgment highlighted the importance of establishing the portion of the rate attributable to business premises for claiming deductions under the Income-tax Act. The decision affirmed the Tribunal's allowance of the deduction and dismissed the appeal, advising that the High Court's judgment be upheld. The detailed analysis clarified the applicability of deductions under the Income-tax Act concerning local rates imposed under specific statutes.
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