COMMISSIONER OF INCOME-TAX, DELHI AND RAJASTHAN vs. M/S. BHARAT CARBON AND RIBBON MANUFACTURING CO.

CIVIL APPEAL No. 106/1965Supreme Court[1966] 3 S.C.R. 17017 December 1965Bench: 3 JudgesAuthor: K. SUBBA RAO, J.C. SHAH, S.M. SIKRI COMMISSIONER6 pages
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What did the Supreme Court hold?

The Supreme Court held that Section 18(3) of the Indian Independence Act, 1947, altered the incidence of advance tax paid. Previously, it was adjusted against a single regular assessment by British India. Post-Independence, it was liable to be adjusted against two regular assessments, one by India and one by Pakistan. Under Section 18A(11), the Pakistan Government was entitled to adjust the advance tax paid against its demand. Similarly, the Indian Government was also entitled to adjust the amount against its demand. Therefore, if the assessee had already received credit for the advance tax from the Pakistan Government, they could not claim the same credit from the Indian income-tax authorities. The Court allowed the appeal, overturning the High Court's decision.

What were the facts?

The assessee, M/s. Bharat Carbon and Ribbon Manufacturing Co., had its head office in Lahore. Between June 1946 and March 1947, it paid advance tax to the Income-tax Officer, Lahore, under Section 18-A of the Indian Income-tax Act, 1922. For the assessment year 1947-48, the Pakistan Income-tax Officer completed the assessment on January 28, 1948, adjusting the advance tax paid. Subsequently, the Income-tax Officer, New Delhi, assessed the tax for the same year in 1952. The assessee claimed credit for the advance tax paid in Lahore under Section 18-A(11). This claim was rejected by the Appellate Assistant Commissioner but upheld by the Appellate Tribunal and the High Court. The Revenue appealed to the Supreme Court.

What were the issues?

1. Whether, in light of Section 18(3) of the Indian Independence Act, 1947, advance tax paid by the assessee in Lahore could be adjusted against assessments in both Pakistan and India, and if Pakistan had already made such an adjustment, whether any amount remained for adjustment in India? Assessee's contentions: - Relied on the High Court's reasoning and the case of Dwarka Das v. Income-tax Officer, Kanpur. - Argued that under Section 9 of the Indian Independence (Rights, Property and Liabilities) Order, 1947, the Government of India was obligated to either refund the advance tax or provide credit in the Indian assessment. Revenue's contentions: - Contended that Section 18(3) of the Indian Independence Act meant the Income Tax Act applied to both Dominions, resulting in the advance tax being adjustable against assessments in both Pakistan and India. - Argued that since Pakistan had already made the adjustment, no money was left for adjustment against the Indian assessment.

Which sections of the Income-tax Act were involved?

Section 18A(11),Section 18(3),Section 9

AI-generated summary — verify with the full judgment below

• COMMISSIONER .OF INCOME-TAX; DELHI Ac"ID A RAJASTHAN v. M/S. BHARAT CARBON AND RIBBON MANUFACTURING CO.

December 17, 1965 [K. SUBBA RAO, J. C. SHAH AND S. M. SIKRI, JJ.J Indian Independence Act (10 & 11 Geo Vic. 30), 18(3) and Income Tax Act ( l l of 1922), s. I 8A ( l l )-Advance tax-Adjusted by Pakistan Oovenunent~lf could also be adiust.ed by Indian Govf!rnment.

Between June 1946 and March 1947 the assessee,.company1 which then C l1ad its head office at Lahore, paid advance tax to the Income.tax Officer, Lahor.e,, under s. ,l 8-A of the Indian Income-tax Act, 1922. For the :assessn1ent year J 947-48, the assessment was completed by 'the Pa)cistan Jncome4ax Officer on 28th January 1948 after adjus!ing the advance in- come-tax paid.

The Income-tax Officer, New Delhi, assessed the tax for the same year 1947-48 in 1952. The assessee contended that credit '.3hOuld be given to him .. of the'""a~ance tax paid by him in Lahore under ) s. 18-A(ll). The. claim was disaflmved_by the Appellate Assistant Com- missioner but the Appellate Tribunal, <1nd-the High Court on a reference, D' I held in favour of the p.ssessee.

In app_eal to this Court, 'HELD: The

The order continues below.

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