Sabyasachi Mukharji, J. - (1.) The assessee is a limited company. It was a non-resident company in the relevant assessment year. We are concerned in this reference with the assessment year 1963-64, for which the relevant previous year ended on 31st December, 1962. The assessee-company was taxed in India on its United Kingdom income. The ITO invoked the provisions of Section 11 of the Finance Act, 1946, which provided that the excess profits tax refund was to be deemed as income for the purposes of the Indian I.T. Act, 1922. In this connection, it may be appropriate to refer to the relevant provisions of the Indian Finance Act, 1946. Sub-section (11) of Section 11 of the Finance Act, 1946, read as follows: Section 11(11) " Any sum being excess profits tax repaid in respect of any chargeable accounting period under the provision of seetion 10 of the Indian Finance Act, 1942, or of Section 2 of the Excess Profits Tax Ordinance, 1943 (XVI of 1943), shall be deemed to be income for the purposes of the Indian Income-tax Act, 1922, and shall, notwithstanding the provisions of Section 34 of that Act, be treated as income of the previous year which constitutes or includes the chargeable accounting period in respect of which the said sum is repayable : Provided that any such sum repaid in respect of any profits which are also assessable to excess profits tax under the law in force in the United Kingdom shall be treated, for the purpose of assessment to income-tax and super-tax, as income of the previous year during which the repayment is made."
(2.) Sub-section (14) of Section 11 of the said Act was as follows : Section 11(14) " Where under the provisions of Sub-section (2) of Section 12 of the Excess Profits Tax Act, 1940 (XV of 1940), excess profits tax payable under the law in force in the United Kingdom has been deducted in computing for the purposes of income-tax and super-tax the profits and gains of any business, the amount of any repayment under Sub-section (1) of Section 28 of the Finance Act, 1941 (4 & 5 Geo 6 c. 30), as amended by Section 37 of the Finance Act, 1942 (5 & 6 Geo 6 c. 21), in respect of those profits, shall be deemed to be income for the purposes of the Indian Income-tax Act, 1922, and shall, for the purpose of assessment to income-tax and super-tax, be treated as income of the previous year during which the repayment is made."
(3.) The assessee being aggrieved with the order of the ITO filed an appeal before the AAC, who found that the Indian I.T, Act, 1922, was repealed by the I.T. Act, 1961, and the assessment year under consideration was governed by the I.T. Act, 1961. The AAC, therefore, held that although excess profits tax refund was taxable under the Indian I.T. Apt, 1922, the same was not taxable under the I.T. Act, 1961, because, according to the AAC, there was no saving clause in the I.T. Act, 1961, on this account. The AAC further held that the assessee being a non-resident company and the post-war excess profits tax refund having been received in, the United Kingdom, the same was not assessable under the I.T. Act, 1961. The AAC in his order set out Sub-section (11) of Section 11 of the Finance Act, 1946, and came to the aforesaid conclusion and held that the inclusion on this account of a sum of Rs. 1,33,280 could not be sustained.;