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TMI Blog1938 (2) TMI 10X X X X Extracts X X X X X X X X Extracts X X X X ..... agricultural rents in accordance with Secs. 4(3)(viii) and 2(1)(a) ? " The material facts can be briefly stated. The assessee, N. S. A. R. Chettiar, a Hindu undivided family business, carry on the usual type of Chettyar banking business at various places in Burma. In the course of that business, they have taken over, in satisfaction of otherwise unrealisable debts, considerable areas of agricultural land, and having become the owners of this land, they lease it annually to tenants and receive as part of the profits of their business the rents realised from the tenants in respect thereof. The income-tax return of the business for the 1936-37 assessment showed on the credit side only the " non-agricultural " receipts, the rent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an the gross expenditure incurred in carrying on the whole business, including the expenditure incurred in carrying on that part of the business which is not subject to tax. In our opinion, the answer to this question is clearly in the negative, and that only that portion of the expenditure which is attributable to the " taxable " part of the business may be deducted. The section of the Income-tax Act under which the profits of a business are taxed is Sec. 10, and the part of this section which is relevant for the present purpose reads as follows :- 10. " (1) The tax shall be payable by an assessee under the head ' Business ' in respect of the profits or gains of any business carried on by him. (2) Such profits o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... care must be taken in applying English decisions to cases under the Burma Income-tax Act, because the scheme of the English Income-Tax Act, 1918, and the scheme of the Burma Income-tax Act, 1922, are entirely different. In England a person is assessed to income-tax in respect of his income, while under the Burma Act it is the income which is taxed. Under the English Act no class of income is outside the scope of the Act, whereas by Sec. 4(3) of the Burma Act the Act is made inapplicable to a number of classes of income. The English Act merely confers certain exemptions on a person in respect of his income up to a certain amount or of certain kinds, similar to the exemptions conferred on certain classes of income by the provisos to Secs. 8 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the Act shall not apply to agricultural income. In Commissioner of income-tax, Bihar & Orissa v. Maharaja of Darbhanga (I. L. R. 14 Pat. 623) their Lordships of the Privy Council held that by this clause agricultural income is altogether excluded from the Act, howsoever and by whomsoever it may be received. Sec. 6 of the Act enacts- " 6. Save as otherwise provided by this Act, the following heads of income, profits and gains shall be chargeable to income-tax in the manner hereinafter appearing, namely :- (iv) Business ". Sec. 4, Sub-sec. (1), enacts- " 4. (1) Save as hereinafter provided, this Act shall apply to all income, profits or gains as described or comprised in Sec. 6 ". Their Lordships of the Privy C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cope of the Act, and if Mr. Clark's argument were to be accepted, then agricultural income would be taxable under Sec. 10 if it formed part of a business, a result which would be contrary to the decision in the Maharaja of Darbhanga's Case. In my opinion the case of agricultural income of a business is comparable to that of the profits of a foreign branch of a business (which profits are not brought into Burma) ; both are entirely outside the scope of the Act : M. T. T. R. M. S. M. A. R. Somasundaram Chettiar v. Commissioner of Income-Tax, Madras, and the Provident Investment Co., Ltd. v. The Commissioner of Income-Tax, Bombay. It would never, I imagine, be contended that, where a business in Burma had a branch abroad, the profits ..... X X X X Extracts X X X X X X X X Extracts X X X X
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