Hidayatullah, J. - (1.) M/s. McGregor and Balfour, Ltd., Calcutta (hereinafter called the Company) is a Company incorporated in the United Kingdom. Its head office is also there. It, however, does business in India also. In some of the previous years, the Company was required to pay excess profits tax both in England and in India. When it did so, it obtained deduction of the amounts from its profits and gains for purposes of the Indian Income-tax Act, under S. 12(2) of the Indian Excess Profits Tax Act.
(2.) In the assessment year 1947-1948 which corresponded to the accounting year of the Company ending on October 31, 1946, it obtained a repayment of Rs. 2,31,009 out of the excess profits tax paid in England. This was under S. 28(1) of 4 and 5, Geo. VI, Ch. 30. For purposes of the levy of the Indian income-tax, this sum was included in the taxable profits of the Company by the Income-tax Officer. He purported to act under S. 11(14) of the Indian Finance Act, 1946 (hereinafter called the Act). The income of the Company in India was held to be Rs. 6,34,937 including the sum of Rs. 2,31,009) while the income outside the taxable territory was held to be Rs. 4,29,620. Applying S. 4A (c) (b) of the Indian Income-tax Act, the Income-tax Officer assessed the Company on its total world income.
(3.) The appeals of the Company made successively to the Appellate Assistant Commissioner and the Income-tax Appellate Tribunal were dismissed. The Tribunal, however, referred the following questions of law to the High Court at Calcutta under S. 66 of the Indian Income-tax Act: "(1) Whether on the above facts and circumstances of this case the Tribunal was right in holding that the sum of Rs. 2,31,009 was income of the assessee during the assessment year under consideration and was liable to be assessed under the Indian Income-tax Act and (2) If so, whether this amount could not be taken into consideration for determining the residence of the assessee under S. 4A(c) (b) of the Indian Income-tax Act -;