- (1.) THIS is a reference under Section 66 (1) of the Income-Tax Act, 1922. The facts material for the purpose of the present reference may be indicated. 0the assessee is a Hindu Undivided family governed by the Dayabhaga school of Hindu Law and resident in the taxable territory and is named in the Style of Messrs. Amarendranath mukherjee and Brothers. The relevant assessment years are 1951-52, 1954-55, and 1955-56 for which the relevant previous years are the calendar years 1950, 1953 and 1954 respectively. The assessee had a tea garden named Parkul Tea estate situated in East Pakistan. In the original assessments for the aforesaid years only 40% of the income from the said tea garden was included in the assessee's total income and the balance of 60% was treated as the assessee's agricultural income. This treatment was in conformity with the assessee's claim in returns filed. Later on, the Income-Tax Officer was of the opinion that since the Tea Estate was situated in a foreign territory the assessee should have shown the entire income from the tea Estate as the same was liable to inclusion in its total income. Since that had not been done, the Income-Tax officer initiated proceedings under Section 34 (1) (a) of the Indian Income tax Act, 1922 and brought to assessment 100% of the income from Tea Estate in East Pakistan for the aforesaid years. The order of the Income-Tax officer upon reassessment indicates that the Income Tax Officer had in view at the time of the reassessments the provisions of Indo-Pakistan Agreement for Avoidance of Double Taxation and had directed that the Tax in respect of the income from the Tea Estate in pakistan should be kept in abeyance for one and had allowed the statutory deduction of Rs. 4,500/- as no part of the income arising in Pakistan was remitted to India, in accordance with the provisions of the said agreement between India and Pakistan.
(2.) AGAINST the said order of the I. T. R. the assessee preferred an appeal before the Appellate Assistant Commissioner. The assessee in the said appeal challenged the validity of the proceedings u/s. 34 (1) (a) and also questioned the quantum of Pakistan income which had been assessed. The appellate Assistant commissioner held that the Assessments had been validly made under s, 34 and with regard to Pakistan income he directed the Income-Tax Officer to adopt the figures returned by the assessee subject to rectification on receipt of Assessment orders of the assessments made in Pakistan Regarding the contention of the assessee with regard to Pakistan income, the Appellate Assistant Commr. in his order has recorded "the next contention is that the Pakistan income can be included in the assessment only for rate purpose. This position is further shifted by the assessee when his Advocate filed a claim stating that it cannot be included ah all even for rate purpose. The assessee has given his arguments in the statement filed on 21. 2. 1962. In support of these contentions the appellant relies on the provisions of Indo-Pakistan agreement for avoidance of double taxation. In my opinion, the appellant's reliant on the provision is not correct, nor his interpretation of the same is sound under Art 4 each dominion is to make assessment in the ordinary way this is the first step Thus under the art full income had to be brought under assessment. The next stage is that if Indian subjects to assessment an amount of pakistan income in excess of what it should assess, in respect of the tax on such excess of what should assess, in respect of the tax on such excess it should by way of abatement the lower amount of tax excess resulting from the assessment other dominion. Arts 5 and 6 deal with the question of abatement and how it is to be calculated. Hence, it is not correct for the appellant to say that the income from Pakistan should not be included the assessment. In result, the assessment of Pakistan income of Rs. is confirmed". The assessee appealed to the Income Tax appellate Tribunal from the order of the Appellate Assistant Commr. Before the Tribunal the contention of the assessee about the validity of the reassessment proceeding u/s. 34 was given up and the assessee had raised only the two following contentions : (i) computation of taxable income from Parkul Tea Estate now lying in foreign territory of Pakistan. (ii ). deposits made in the Bank in india and repayment of loan treated from undisclosed source of income, the second contention was decided in favour of the assessee. There is dispute with regard to the same and the said question does not from any part of the reference. On the first question the assessee had submitted that u/s. 49d (3) of the Act, the assessee's Tax liability under the Indian Income Tax act on its' Pakistan income should have been reduced by the amount of agricultural income tax and such other tax that had been paid on such income in pakistan. The Departmental representative contended before the Tribunal that there was no evidence given by the assessee as to the amoun of agricultural income Tax suffered by it in Pakistan. on income from Parkul Tea Estate. The departmental representative had also submitted that in the original assessments, the inclusion of the total income from Parkul Tea Estate had not been challenged and the said assessment became final and the assesses was estopped from agitating the said issue again. It was also submitted on behalf of the Department that S. 49d (3) came into operation in the year 1956 and the benefits conferred under the said Section could be availed of only prospectively, i. e. , for the assessment year 1958-57 onwards. The Tribunal in its order held "we do not find any difficulty in answering the contentions raised on behalf of the Department. So far as the sufferance of agricultural Income tax by the assessee in concerned, it can be verified by the Income Tax Officer even now. The act grants a particular relief to the assessee, which must lie given effect to by the Income Tax officer at the time when he is computing the income arising to the assessee in Pakistan. The said having not been done by Income Tax Officer, it must be done now.
(3.) WITH regard to the question regarding the prospective applicability of the provisions of Sec. 49d (3) the answer is to be found in the provisions of s. 49d (4) which clearly gives retrospective effect to the provisions of sec. 49d (3 ).;