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TMI Blog1951 (1) TMI 41X X X X Extracts X X X X X X X X Extracts X X X X ..... respect of that share under the Act of 1918, the firm not having been assessed, is the family entitled to relief under Section 25(4) of the Income-tax Act as amended by the Amendment Act of 1939 ? The facts are not in dispute. The assessee was an undivided Hindu family and as a partner carried on money-lending business at Muor in the Federated Malay States. The profits of the money-lending business received by the joint family in British India were assessed to income-tax under the Act of 1918 and subsequently. There was a partition in the family and at that partition, the share of the family in the said business at Muor was allotted to two of the members of the family. It was claimed that as a result of the partition and the allotment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me of an assessee from whatever source it is derived if it accrued or arose or was received in British India. The definition of assessee in Section 2(2) of that Act included a firm and the firm as such was treated as a unit for assessment of its business provided its income accrued or arose in British India. A foreign firm could not be assessed in respect of its business to any extent under that Act. Section 5 of the Act of 1918 which defined the classes of income chargeable to income-tax analogous to the present Section 6 included among the classes income derived from business and also income derived from other sources. Section 9 of the same Act enumerated the permissible allowances in computing the profits of the business under the head ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ived from business but only as a receipt under Section 3. The argument, however, on behalf of the assessee by his learned Advocate Mr. Rajah Iyer was that the words on which tax was at any time charged should be construed as meaning with reference to which tax was at any time charged. In other words, the contention is that the income derived by the assessee was in relation to a business and therefore the assessment of the income must be treated as an assessment of the business. No doubt, under the provisions of the Income-tax Act, the tax is payable by an assessee but the assessment of the tax is on the basis of various heads of income derived by the assessee one of which is business. It cannot, therefore, be said that because tax was p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to claim by virtue of Section 25(4) that the business carried on by him of which he was the owner on the 1st April, 1939, has been discontinued by him because of the disruption and in the ownership of the business another person has succeeded to the family. The requirements of Section 25(4) are fully met and he is entitled to this relief. This argument, in my opinion, proceeds on an erroneous assumption that the profits when received by the assessee in British India were assessed as if it was a business carried on by him. This is obviously wrong as under the Act of 1918, the business as such which is carried on in a foreign territory could not be assessed to income-tax and the profits could be assessed under Section 3 only as a recei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it is immaterial that the business is a foreign business in which this family had only a right to a share of the profits. The trouble in the way of learned counsel, however, is that in order to succeed he has still to show, and that he has failed to do, that on the business as such tax was at one time or another charged under the provisions of the Indian Income-tax Act, 1918. It may be a question whether the word used here means only in purported accordance with or something more, viz., in actual accordance with . It may, therefore, be a question whether the assessment of the foreign business in British India, if a fact, however wrongful, brings into operation Section 25 (4) of the Act. That question however does not arise here. What ari ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... year, the accounting year, necessarily involved. A beneficial enactment must no doubt, as is sometimes said, be liberally interpreted; but as I had occasion to remark in my judgment in A.S. No. 138 of 1948 this rule of liberal interpretation of such an enactment does not sanction a construction founded upon the equity of the statute, as it is sometimes called, in disregard of the actual language employed therein. The golden rule of literal construction, as Lord Wensleydale described it in the House of Lords in an early English case, Grey v. Pearson [1857] 6 HLC 61 affords in my judgment the safest course to adopt, on the whole, in this rather difficult case; and applying that rule I would concur with my learned brother in answering the refe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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