- (1.) These appeals from judgments of the Calcutta High court in. Income Tax Reference involve a common question. We shall refer to the facts in the batch of appeals of Jaipuria Samla Amalgamated Collieries Ltd.
(2.) The assessee is a public limited company incorporated under the Indian Companies Act, 1913. It carried on the business of raising coal from coal mines and selling the same to its constituents. It had taken on lease several coal mines from the owners of the coal bearing lands. As lessee of the mines the assessee incurred liability for payment of (i) Road and Public Worlds cess under the Bengal Cess Act of 1880; (ii) Education Cess levied under the Bengal (Rural) Primary Education Act, 1930. The amounts payable by the assessee on account of the aforesaid cesses were claimed by itas deduction under S. 10 of the Income Tax Act, 1922. hereinafter referred to as the "act", in the computation of its profits. The income-tax authorities disallowed that claim relying on S. 10 (4) of the Act. The assessee went up in appeal to the Appellate tribunal which agreed with the orders of the departmental authorities. The questions which were submitted by the tribunal with the statement of the case relating to the assessment years, 1954-55, 1955-56 were as follows: "(1) Whether, on the facts and in the circumstances of the case, the Road, the Public Works and the Education Cesses were levied either on the profits or gains of the business or were assessed at a proportion of or otherwise on the basis of any such profits within the meaning of S. 10 (4) of the Income Tax Act, 1922 (2) Whether, on the facts and in the circumstances of the case, the amounts provided for or paid by the assessee-company, as Road and Public Works Cess and the Education Cess was allowable as a deduction under S. 10 (2) (ix) or 10 (2) (xv) of the Indian Income Tax Act, 1922, read with S. 10 (4) of the said Act" The High court answered the questions against the assessee. The assessee filed appeals to this court after obtaining a certificate of fitness but the same was found defective owing to want of any reasons or grounds in the order granting the certificate. Instead of getting the matters remitted to the High court for giving reasons petitions for special leave were filed before us and leave was granted. We have heard the appeals by special leave on the printed record of the appeals by certificate. It may be mentioned that this position obtains in all the appeals by certificate before us.
(3.) S. 10 (1) of the Act provides that tax shall be payable by an assessee under the head "profits and gains of business, profession or vocation" in respect of the profits and gains of any business, profession or vocation carried on by him. Ss. (2) says that such profits or gains shall be computed after making the allowances set out therein. Clauses (ix) and (xv) of this Ss. are as follows : "(Ix) any sums paid on account of land revenue, local rates or municipal taxes in respect of such part of the premises as is used for the purpose of the business, profession or vocation. (Xv) any expenditure not being an allowance of the nature described in any of the clauses (i) to (xiv) inclusive, and not being in the nature of capital expenditure or personal expenses of the assessee laid out or expanded wholly and exclusively for the purpose of such business, profession or vocation. " Sub-section (4) of S. 10 to the extent it is material is in the following terms : "(4) Nothing in clause (ix) or clause (xv) of Ss. (2) shall be deemed to authorise the allowance of any sum paid on account of any cess, rate or tax levied on the profits or gains of any business, profession or vocation or assessed at a proportion of or otherwise on the basis of any such profits or gains. . . . . . " The essential question that has to be determined is whether the cesses levied under the aforesaid Bengal Acts fell within the mischief of S. 10 (4) of 320 the Act. It is common ground that these cesses are not levied on the profits or gains of any business, profession or vocation but it has been claimed on behalf of the Revenue and that contention was accepted throughout that the cesses are assessed on the basis of such profits or gains and' therefore they would be covered by the said provision.;