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TMI Blog1961 (3) TMI 1X X X X Extracts X X X X X X X X Extracts X X X X ..... were entitled to get the benefit of section 25(4) of the Act and the amount was not liable to taxation. Appeal allowed. - - - - - Dated:- 1-3-1961 - Judge(s) : J. L. KAPUR., M. HIDAYATULLAH., J. C. SHAH JUDGMENT The judgment of the court was delivered by KAPUR, J.--These are three appeals pursuant to a certificate under section 66A(2) of the Indian Income-tax Act (hereinafter called the " Act ") against the judgment and order of the High Court of Bombay in Income-tax Reference No. 36 of 1957. The appeals though directed against the same order are three in number because each partner of the firm has brought a separate appeal. The firm was carrying on the business of wine merchants at Bombay and came into existence prior t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and super-tax and the balance after deducting the same he repaid to each of the partners but he computed the rate applicable to the tax by including the appellants' total business income which was exempt under section 25(4) of the Act. On appeal this assessment was confirmed but on further appeal the Income-tax Appellate Tribunal held that the sum which was refunded was income from business and was therefore exempt from income-tax under section 25(4) of the Act. At the instance of the Commissioner of Income-tax, the Tribunal referred the following question of law for the opinion of the High Court : " Whether the repayment of excess profits tax made by the Central Government in pursuance of section 10 of the Indian Finance Act, 1942, or s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rovided : " Any sum being excess profits tax repaid in respect of any chargeable accounting period under the provisions of section 10 of the Indian Finance Act, 1942, or of, section 2 of the Excess Profits Tax Ordinance, 1943 (XVI of 1943), shall be deemed to be income for the purposes of the Indian Income-tax Act, 1922, and shall, notwithstanding the provisions of section 34 of that Act, be treated as income of the previous year which constitutes or includes the chargeable accounting period in respect of which the said sum is repayable : Provided that any such sum repaid in respect of any profits which are also assessable to excess profits tax under the law in force in the United Kingdom shall be treated, for the purpose of assessmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me-tax, the amount received as a refund by the assessee was held to be income for the purpose of the Act and for assessment it was treated as income of the previous year. After reference in that case to rule 4(1) of the Rules applicable to Cases I and II of Schedule " D " of the English Income Tax Act, 1918 (8 9 Geo. V, c. 40), it was observed : " The object and purpose of the legislation in each case is the same, and though the two provisions are not ipsissima verba, they are substantially in the same words and also in pari materia....there can be no doubt that the intention underlying the two provisions is the same and the language is substantially similar. " Thus this court was of the opinion that the intention of the Legislature ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax imposed on profits arising out of certain businesses. An argument was raised on behalf of the Commissioner that the tax was not paid out of the profits of the business, but in respect of the profits. That is immaterial ; it was charged, levied and paid on the amount by which the profits during any chargeable accounting period exceeded the standard profits. It would be mere quibbling with words if one were to say that it was not a slice taken out of the profits of a business. In the case of McGregor Balfour Ltd. v. Commissioner of Income-tax this court quoted with approval the observation of the Master of the Rolls in A. W. Nesbitt Ltd. v Mitchell where it was said : " But in respect of what is that payment made ? It is not a l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e under Case VI of Schedule " D ". Lord Shaw of Dunfermline at page 332 said that the repayment was to be treated as trading profits for the year of repayment and, therefore, assessable as such under Schedule " D ". He was also of the opinion that the charge was to be one under Case VI. Lord Sumner said that it became a minor matter to decide whether the charge was to be made under Case I or Case VI but this is little consolation to the respondent (the Commissioner of Income-tax) because Case VI was also dealing with taxes in respect of annual profits and gains which do not fall in one of the other cases. In our opinion the amount refunded did not lose its character which it had before the deposit and, therefore, it is an erroneous view ..... X X X X Extracts X X X X X X X X Extracts X X X X
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