The assessee claimed that the entire loss sustained by it in India in each year should be carried forward and set off against its business profits in India in future years.
1350 51 NT of 1974 From the Judgment and order dated 19th October.
1973 of the Delhi High Court in Income Tax Reference Nos 46 and 52 of 1970 Dr. V. Gauri Shankar and Miss A. Subhashini for the Appellant.
Thereafter, at the instance of the assessee the Appellate Tribunal referred the following questions in the two cases to the Delhi High Court for its opinion Whether on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the net dividend income of Rs.2,30,832 received from a Pakistan Company and the capital gains of Rs.5,120 were number deductible in arriving at the total world loss under section 24 1 ?
It companytended that the dividend income derived by it from the Pakistan companypany was number liable to tax in India as it was wholly taxed in Pakistan, and therefore, it companyld number be set off against the business loss in India.
In second appeal the Income tax Appellate Tribunal companyfirmed the orders of the Appellate Assistant Commissioner.
It is necessary to mention at the outset that the Dominion of India and the Dominion of Pakistan companycluded an Agreement for the Avoidance of Double Taxation of Income chargeable in the two Dominions in accordance with their respective laws, and in exercise of the powers companyferred by s. 49AA of the Indian Income tax Act 1922 and the companyresponding provisions of the Excess Profits Tax Act, 1940 and the Business Profits Act, 1947 the Government of India directed by Notification No.
CIVIL APPELLATE JURISDICTION Civil Appeal Nos.
During the relevant period it also held some shares in the Premier Sugar Mills Distillery Co. Ltd Mardan, West Pakistan.
The Income tax officer rejected the companytention and deducted the dividend income received from the Pakistan companypany from the business loss in India disclosed by the assessee and after making certain other adjustments he determined the total loss of the assessee for the assessment year 1956 57 at p Rs.16,51,129 and for the assessment year 1957 58 at Rs.3,78,661.
The assessee appealed to the Appellate Assistant Commissioner of Income tax in respect of each assessment year, but the appeals failed, except that in the case for the assessment year 1957 58 the Appellate Assistant Commissioner determined the dividend income from the Pakistan companypany at Rs.2,27,472 and reduced the net loss accordingly.
Likewise, in the previous year relevant to the assessment year 1957 58 the asses see received a dividend income of Rs.3,30,868 from the holdings in the Pakistan companypany, but sustained a loss of Rs.9,11,728 from the business in India.
The Pakistan companypany also carried on the business of manufacturing and selling sugar.
In the previous year relevant to the assessment year 1956 57 the assessee earned a dividend income of Rs.2,30,832 from its holdings in the Pakistan companypany.
It sustained a loss of Rs.20,30,006 from the business in India.
The Judgment of the Court was delivered by PATHAK, J. These appeals by certificate granted by the Delhi High Court are directed against a companymon judgment of that High Court disposing of two income tax references relating to the assessment years 1956 57 and 1957 58 on the question whether the assessees dividend income from a Pakistan companypany was deductible against its business loss in India.
The assessee is a public limited companypany carrying on the business of manufacturing and selling sugar.
Bishambar Lal, R.P. Gupta, S.K. Gupta and V.K. Jain for the Respondent.
