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TMI Blog1951 (8) TMI 24X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee is entitled to the same relief for the purposes of the excess profits tax for the chargeable accounting period 1943. The Tribunal took the view that he was entitled to that relief, and in coming to that conclusion the Tribunal relied on a decision of this Court in Commissioner of Income-tax, Bombay City v. Murlidhar Mathurawalla Mahajan Association [1948] 16 1TR 146. In that case, the facts were that the assessee was carrying on two distinct and separate businesses, one in Bombay and the other at Indore. During the year of account, there was a profit in Bombay and a loss at Indore, and the Income-tax authorities held that the assessee could not set off the loss at Indore against the profit in Bombay in view of the first proviso to Sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the chargeable accounting period is chargeable to income-tax by virtue of the provisions of sub-clause (i) or sub-clause (ii) of clause (b) of sub-section (1) of Section 4 of the Indian Income-tax Act, 1922, or of clause (c) of that sub-section. Therefore, as the section itself stands, every business of which the profits accrued or arose outside British India would also come within the ambit of the Act. Therefore, the business carried on by the assessee at Wadhwan, which was outside British India, would come within the scope of this Act. But there is an important proviso which has got to be considered in this connection, and that is the third proviso to the section. And that proviso lays down as follows:- "Provided further that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... show either his profits and gains or losses, the position under the Excess Profits Tax Act is entirely different; that, under Section 5 of the Excess Profits Tax Act, he has got to exclude the business referred to in the third proviso, and for the purposes of the Excess Profits Tax Act such a business does not exist at all. Now as against this, Mr. Kolah's contention is that the proviso applies only to the profits of the business and not to the losses. In other words Mr. Kolah argues that, when there are profits of a business carried on outside British India, those profits must not be taken into consideration for the purposes of the excess profits tax; but if there are losses, then Section 10 of the Indian Income-tax Act would continue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Schedule I to the Excess Profits Tax Act. Now, that schedule lays down the rules for the computation of profits for the purposes of the excess profits tax, and it provides that the profits of a business during the standard period, or during any chargeable accounting period, shall be separately computed, and shall, subject to the provisions of this schedule, be computed on the principles on which the profits of a business are computed for the purposes of income-tax under Section 10 of the Indian Income-tax Act, 1922. It is, therefore, suggested that, unless we find something in Schedule I which provides for the profits of a business being calculated otherwise than as laid down in the Indian Income-tax Act, we must apply the same principles ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de from the operation of the Excess Profits Tax Act. There is another consideration which should also weigh with us in giving this interpretation to the third proviso to Section 5. It is clear that the whole object of the Excess Profits Tax Act was to take a standard period and to ascertain the profits of that standard period, to compare those profits with the profits made by the assessee during the chargeable accounting period, and if, after such a comparison, it was found as laid down under the Act that the profits during the chargeable accounting period were in excess of the profits made during the standard period, then the excess profits were liable to tax. Now, in order to determine whether there were excess profits or not, the same st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Act. Now, that is obviously not the scheme of the third proviso. The scheme of the third provison according to me is totally and for all purposes to exclude the business of the nature described in that proviso, and, as I said before, that business is a business in which, if it made profits, such profits would accrue or arise in an Indian State. Therefore, in my opinion, the Tribunal was not right in coming to the conclusion that the principle which is deducible from our decision in Murlidhar Mathurawalla Mahajan Association' s case (supra ) was applicable to a case that fell under the Excess Profits Tax Act. The two Acts, although in a sense they are complementary to each other, are based on different principles. And Vjjuiew of t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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