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TMI Blog1973 (5) TMI 25X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Indian Income-tax Act, 1922, the Tribunal was right in holding that the Income-tax Officer was not justified in deducting the amount of abatement allowable under the Agreement for Avoidance of Double Taxation with Pakistan from the amount of the Indian income-tax for the purpose of determination of the Indian rate of tax mentioned in clause (b) of section 49D(3) of the said Act ? " The assessee is a tea company. It, in the relevant years, had tea gardens in what was then known as East Pakistan, in respect of which agricultural income-tax was payable in Pakistan. The assessee's head office had been, however, located in Calcutta and as such the business was controlled and maintained wholly from the taxable territories under the Indian Income-tax Act, 1922. Consequently its income as arising from manufacture and sale of tea had to be assessed under the Indian Income-tax Act, 1922, and in the assessments for the tax years 1957-58, 1958-59 and 1959-60 it was treated as a resident company. The assessee was, therefore, entitled to deduction from the Indian income-tax payable by it in respect of the above assessment years certain sums to be calculated in accordance with the provis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... spite of the contention of the assessee that abatement granted under the agreement would not be considered as " relief due under the other provisions of the Act " within the meaning of Explanation (ii) to section 49D. The assessee, thereafter, preferred an appeal before the Appellate Assistant Commissioner, who dismissed the appeal by his consolidated order dataed 2nd July, 1963. The Appellate Assistant Commissioner agreed with the Income-tax Officer that section 49A of the Act authorised the relief to which the company was entitled under the Agreement for the Avoidance of Double Taxation and such relief should be considered to be the relief under section 49A of the Act and, therefore, was a relief under " the other provisions of the Act ". The assessee, thereafter, preferred an appeal before the Income-tax Appellate Tribunal which following its consolidated order dated 9th November, 1965, in respect of this case relating to the assessment years 1951-52, 1955-56 and 1956-57 held that in computing the " Indian rate of tax " within the meaning of Explanation (ii) to section 49D(3), the abatement granted under the agreement with Pakistan should not be deducted from the income asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the Finance Act, 1953, in place of the original section 49A and section 49AA. Clause (a) of the present section 49A, it is necessary to mention, corresponded to section 49A before the amendment by the Finance Act, 1953. Clause (b) of the present section 49A corresponded to section 49AA before the amendment by the Finance Act, 1953. Section 49A provided as follows: " 49A. Agreement for granting relief in respect of double taxation or for avoidance thereof. The Central Government may enter into an agreement (a) with the Government of any country outside India for the granting of relief in respect of income on which have been paid both incometax under this Act and income-tax in that country, or (b) with the Government of any country outside India for the avoidance of double taxation of income, profits and gains under this Act and under the corresponding law in force in that country ; and may, by notification in the Official Gazette, make such provisions as may be necessary for implementing the agreement. It is to be mentioned that at that time the said clauses were contained in a chapter dealing with refund, which was Chapter VII. The heading of the clause, as would be appa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n. In the former case the tax had to be paid first and then only arose the right to apply for refund of the excess amount. In the latter case the provision had been made for avoiding double taxation before its imposition. One of the questions referred to this court was, inter alia, whether in respect of refund not granted for the tax which had been paid in breach of the Agreement for Avoidance of Double Taxation, the assessee had any right of appeal under sections 30 and 33 of the Indian Income-tax Act, 1922, against the refusal of the Income-tax Officer to grant an abatement under the Agreement. Dealing with the scheme of the Agreement and the relevant section the court observed, at page 679, of the decision as follows : " It is clear, therefore, that if an assessee desires to avoid double taxation under the A. A. D. T., he must take steps to obtain an abatement at the time of the assessment or see that the Income-tax Officer makes an estimate of the abatement and keeps the same in abeyance. If, however, the assessee has fully paid the tax which has been assessed and has not appealed against the order of assessment, which has become binding, he cannot obtain any advantage under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Act. In support of the contention that the benefit the assessee is entitled to under the Agreement for the Avoidance of Double Taxation which was permitted by the provisions of the Act is a relief due under the provisions of the Act, counsel for the revenue relied on the decision in the case of Thompson Sons v. North Eastern Marine Engineering Company Ltd. It would be appropriate to deal with the second contention by the revenue in support of this argument. It has to be noted that in order to be entitled to deduction it should be "a relief due under the provisions of the Act ". Therefore, it must be : (i) a relief, (ii) that relief must be due, and (iii)any such right to get a relief under the other provisions of the Act (sic). The question, therefore, is whether any benefit which is permitted to an assessee by virtue of an agreement by which action is permitted by the statute can be said to be a benefit due under the Act. It has to be mentioned that the Act does not deal with the question of relief or benefit by way of deduction or abatement in case of double taxation. The Act merely authorises the Central Government to enter into certain kinds of agreement but the au ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sunderland and on December 5, 1901, were engaged in repairing the steamship, Lindisfarne, in the River Wear Dock. The defendants who are builders of marine engines were engaged at the same time and place in repairing the boilers of the steamship. One of the defendant's servants allowed a bag of coke to fall into the hold of the vessel where it struck and injured Archbold who was a workman employed by the plaintiffs. The workman gave notice of the accident to the plaintiffs and on the 23rd December he claimed compensation from the plaintiffs in respect thereof. Thereafter, on the 28th December, the plaintiffs agreed verbally with Archbold to pay him a sum of 19s. 2d. per week as compensation under the Workmen's Compensation Act and a memorandum of this agreement was duly sent to the Registrar of the County Court and recorded by him in accordance with the eighth provision of the 2nd Schedule to the Act. The plaintiffs had continued to pay the said workman Archbold the stipulated sum of 19s. 2d. a week under the agreement and had taken receipts from him as for compensation paid under the Act. They in that action sought to be indemnified by the defendants under section 6 of the Act whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... workman concerned does certainly create a legal liability. Section 6 authorises an action whenever there was a legal liability in the contingency contemplated. In the instant case the Act, as mentioned hereinbefore, did not stipulate for any relief. It only authorises the Central Government for making any agreement for avoidance of double taxation. Therefore, in view of the aforesaid matter and clear pronouncement by the Division Bench of this court in the case of Shell Co. of India Ltd. v. Commissioner of Income-tax, it must be held that relief is not due under "the other provisions of the Act ". The other aspect of the matter is whether the expression "relief" should be construed in terms of relief against double taxation as contemplated under clause (a) of section 49A or should be construed in a broad liberal sense to include all kinds of benefits given to a taxpayer. Where there has been no imposition of tax, there could not be question of granting any relief and that "imposition of tax" contemplates cases where taxes have already been paid or imposed while clause (b) of section 49A envisages a situation where tax had not been imposed. It is true that relief is a word which i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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