1981 (2) TMI 51 - HC - Income Tax

Summary

Issues Involved:
1. Operability of the declaration under Section 17(1) of the Indian Income-tax Act, 1922, under Section 113(3) of the Income-tax Act, 1961.
2. Validity of the declaration made by the assessee as a non-resident for the assessment year 1964-65.
3. Liability of the assessee to be charged income-tax on his total income at the rate applicable to his total world income.

Detailed Analysis:

Issue 1: Operability of the Declaration under Section 17(1) of the Indian Income-tax Act, 1922, under Section 113(3) of the Income-tax Act, 1961
The Tribunal held that the declaration made by the assessee under Section 17(1) of the Indian Income-tax Act, 1922, was not operative under Section 113(3) of the Income-tax Act, 1961. The Tribunal noted that with the introduction of the 1961 Act, the corresponding provisions of Section 113(3) were not identical to Section 17(1) of the old Act. This discrepancy rendered the declaration made under the old Act inapplicable under the new Act. The Tribunal's interpretation was based on the legislative changes and the differences in the schemes of the two Acts.

Issue 2: Validity of the Declaration Made by the Assessee as a Non-Resident for the Assessment Year 1964-65
The Tribunal concluded that the declaration made by the assessee on February 16, 1953, as a non-resident was not operative for the assessment year 1964-65 when he was assessed as "resident but not ordinarily resident." The Tribunal observed that the status of the assessee had changed from non-resident to "resident but not ordinarily resident," and the declaration made in a different status could not be applied to the current status. Additionally, the Tribunal noted that the declaration made under the old Act could not be carried forward under the new Act due to the differences in the legal provisions.

Issue 3: Liability of the Assessee to be Charged Income-Tax on His Total Income at the Rate Applicable to His Total World Income
The Tribunal held that the assessee was not liable to be charged income-tax on his total income at the rate applicable to his total world income. The Tribunal's decision was based on the fact that the declaration made by the assessee in 1953 was not applicable under the 1961 Act. The Tribunal emphasized that the change in the legislative framework and the status of the assessee necessitated a different approach to the assessment of income and the applicable tax rates.

Conclusion:
The High Court affirmed the Tribunal's decisions on all three issues. The Court concluded that the declaration made by the assessee under Section 17(1) of the 1922 Act was not operative under Section 113(3) of the 1961 Act. The Court also held that the declaration made by the assessee as a non-resident was not applicable for the assessment year 1964-65 when he was assessed as "resident but not ordinarily resident." Finally, the Court ruled that the assessee was not liable to be charged income-tax on his total income at the rate applicable to his total world income. The questions referred to the Court were answered in the affirmative, in favor of the assessee and against the revenue. The Commissioner was ordered to pay the costs of the reference to the assessee.