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Issues Involved:
1. Exemption of dividend income under Section 4(3)(viii) of the Income-tax Act. 2. Validity of gross income assessment from investment in shares before deduction of Ceylon income-tax. 3. Material for Tribunal to hold separate and independent businesses for relief under Section 25(4) of the Act. 4. Entitlement to an order under Section 25A(1) of the Act. 5. Status of Ceylon immovable properties and shares in Avra Ltd. post-partition. 6. Deductibility of rates paid to Colombo Municipality in computing rental income. Detailed Analysis: 1. Exemption of Dividend Income: The fifth question addressed whether the dividend of Rs. 7,500 received in the previous year for the 1945-46 assessment from Beverley Estates Ltd., Madras, was exempt under Section 4(3)(viii) of the Income-tax Act. The court concluded that this question was resolved by the Supreme Court decision in Bacha F. Guzdar v. Commissioner of Income-tax [1955] 27 I.T.R. 1, answering it in the negative and against the assessee. 2. Validity of Gross Income Assessment: The sixth question concerned the validity of the assessment of gross income from shares in Avra Ltd. before deduction of Ceylon income-tax for the year 1947-48. Referring to Ramaswami Naidu v. Commissioner of Income-tax [1959] 35 I.T.R. 33, the court concluded that the sum of Rs. 9,562 deducted by the company before paying dividends was never the income of the assessee. Thus, the question was answered in the negative and in favor of the assessee. 3. Separate and Independent Businesses: The first question examined whether there was material for the Tribunal to hold that the business of stores and/or mills were separate and independent from the main shop, affecting relief under Section 25(4) of the Act. The court found ample material supporting the Tribunal's conclusion that the stores, mills, and main shop each constituted a distinct line of business, justifying the restriction of relief to the profits from the main shop. The question was answered in the affirmative and against the assessee. 4. Entitlement to an Order under Section 25A(1): The second question was whether the assessee was entitled to an order under Section 25A(1) of the Act. The court found that the partition arrangements made effective from February 10, 1947, did not allocate individual items of immovable properties in Ceylon to each sharer, thus failing to satisfy Section 25A requirements. The question was answered in the negative and against the assessee. 5. Status of Ceylon Properties and Shares Post-Partition: The third question examined whether Ceylon immovable properties and/or shares in Avra Ltd. ceased to be assets of the joint family after February 10, 1947. The court noted that the shares in Avra Ltd. were divided among the family members, but the immovable properties in Ceylon were not divided by metes and bounds. Thus, the income from these properties was assessable as joint family income, while the income from shares was to be excluded from the family assessment post-partition. The question was answered partially in favor of the assessee. 6. Deductibility of Rates Paid to Colombo Municipality: The fourth question addressed whether rates paid to the Colombo Municipality on Ceylon house properties were deductible in computing rental income for the assessment years 1944-45 to 1947-48. The court analyzed Section 9(1)(iv) of the Income-tax Act and relevant provisions of the Ceylon Municipal Councils Ordinance, concluding that these municipal rates did not constitute an "annual charge" within the meaning of the Act. Therefore, the assessee was not entitled to claim these payments as deductions. The question was answered in the negative and against the assessee. Conclusion: The court answered the questions as follows: - Fifth question: Negative and against the assessee. - Sixth question: Negative and in favor of the assessee. - First question: Affirmative and against the assessee. - Second question: Negative and against the assessee. - Third question: Partially in favor of the assessee. - Fourth question: Negative and against the assessee. As neither side wholly succeeded, there was no order as to costs.
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