The reason for enacting s. 25 3 was that under the 1918 Act, income tax was levied by virtue of s. 14 2 of the 1918.
Whether the applicant is also entitled to relief under section 25 3 of the Act with regard to rental income from house properties owned by the foreign firm which was discontinued in the year of assessment.
The finding of the Appellate Assistant Commissioner is stated in these terms The entire profits of the foreign business came to be assessed in the hands of the appellant under the 1918 Act, number because it was a business income but because such income had been remitted into British India.
Both the assessee and the Department applied to the appellate Tribunal for reference of the questions of law to the High Court.
The assessee preferred an appeal to the Appellate Assistant Commissioner who dismissed the appeal holding that in the case of business carried on in foreign territory the business as such is number assessed under S. 3 of the 1918 Act but only receipt of the income in British India is assessed and it cannot therefore be held that the foreign business of the appellant was charged to tax under the 1918 Act.
But with a view to make the number of assessments equal, to the number of years during which the business was carried on, the legislature enacted the exemption prescribed by s. 25 3 .
Firm which was registered under S. 26 A of the Income tax Act, 1922 hereinafter called the 1922 Act .
after as partners, there companyld be numberdiscontinuance but only succession by the firm of the business of the family.
The view taken by the High Court was that when a Hindu undivided family carrying on a business, which was taxed under the 1918 Act, became disrupted and the members companytinued the business there.
By enacting s. 25 3 the legislature intended to exempt the income, profits and gains resulting from the activity styled business, profession or vocation from tax when the business, profession or vocation is discontinued if tax was charged in respect thereof under the 1918 Act.
The view taken by the High Court was that the foreign business of the assessee cannot be deemed to have been charged under the provisions of the 1918 Act because the assessee was only taxed on remittances received from the profits of the foreign business and there was numbertax on the foreign business itself under the 1918 Act.
This benefit was however restricted only to the income, profits and gains of business, profession or vocation on which tax had been charged under the provisions of the 1918 Act.
Prior to the companystitution of the firm, the partners were members of a Hindu undivided family.
Tax was, therefore, levied in the financial year 1921 22 on the income of that year.
Appeal from the judgment and order dated December 18, 1962 of the Madras High Court in Tax Case No.
K. Sen, K. Parasarn, K. Rajender Chaudhuri and K. R Chaudhuri, for the appellant.
It has been found by the appellate Tribunal that the assessee was taxed on remittances received from and out of the profits of the foreign business.
The family which companysisted of Meyyappa Chettiar and his two brothers carried on money lending business in India and in the former Federated Malaya States and it was assessed under the Indian Income tax Act, 1918 hereinafter called the 1918 Act .
The appellate Tribunal allowed the applications and stated a case to the High Court on the following questions of law Whether the assessee is entitled to both the parts of the relief companytemplated under section 25 3 of the Act in respect of foreign business at Penang, Ipoh and Kambar ?
The appellant hereinafter called the assessee was a firm called O.RM.M.SP.
143 of 1960.
Sen, T. A. Ramachandran, S. P. Nayyar for R. N. Sachthey, for the respondent.
CIVIL APPELLATE JURISDICTION Civil Appeal No.
There was a disruption of the joint family status on June 2, 1938, and thereafter the members of the family companytinued the business as partners.
In the assessment for the year 1952 53 the assessee applied for relief under s. 25 3 of the 1922 Act.
The income for 1921 22 was accordingly charged to tax twice it was charged under the 1918 Act and it was also charged to tax under s. 3 of the 1922 Act read with the appropriate Finance Act, resulting in double taxation in respect of the income for that year.
The Judgment of the Court was delivered by Ramaswami, J. This appeal is brought, by certificate, against the judgment of the Madras High Court dated December 18, 1962 in T.C. No.
In the companyrse of the assessment for the year 1939 40 it was claimed by Meyyappa Chettiar, one of the members of the family that having regard to the severance of joint family status, the income of the family from April 13, 1938 to June 2, 1938 was number liable to be taxed by reason of the provisions of s. 25 3 4 .
The High Court ultimately called for a reference on the following question Whether the income of the family from 13th April 1938 to 2nd June 1938 is number liable to be taxed by virtue of Section 25 3 of the Indian Income tax Act After receipt of the reference the High Court held that there was numberdiscontinuance of the business within the meaning of s. 25 3 .
751 of 1965.
When the 1922 Act was brought into force on April 1, 1922, two assessments in respect of the same income for the year 1921 22 had to be made.
143 of 1960.
The firm was dissolved on March 2, 1952.
The appellate Tribunal also referred another question for the opinion of the High Court but it is number the subject matter of the present appeal.
The Income tax Officer accepted the fact of partition amongst the members of the family, but rejected the companytention that the family was number liable to pay tax on the profits for the said period.
The assessee took the matter in further appeal to the appellate Tribunal which companysidered that the assessee was entitled to relief under S. 25 3 of the 1922 Act except for the income received from the house properties in Malaya.
Act, on the income of the year of assessment.
By the 1922 Act the basis of taxation was altered and by s. 3 of that Act, charge for tax was imposed upon the income of the previous year.
It was held in that case that it was the assesse firm which took over the business of the Hindu undivided family.
The claim was rejected by the Income tax Officer on March 7, 1956.
