ELLERMAN LINES LIMITED Vs. COMMISSIONER OF INCOME TAX WEST BENGAL CALCUTTA

JUDGEMENT

(1.) The first two appeals have been brought by certificate and the other two by special leave. The later tow appeals came to be filed because the certificates on the basis of which the earlier appeals were brought were found to be defective inasmuch as the High Court had not given any reason in support of those certificates. Hence it is sufficient, if we deal with the latter two appeals.

(2.) The appellant is a non-residence British Shipping Co. whose ships ply in waters all over the world including the Indian waters. For the assessment years 1960-61, and 1961-62 (the relevant accounting years being calendar years 1959 and 1960), the Income-tax Officer, computed its total income taxable under the Indian Income Tax Act, 1922 (which will hereinafter be referred to as the Act) by taking into account the ratio certificates issued by the Chief Inspector of Taxes, U. K. which were based on the assessments made on the appellant in U. K. During the relevant period, there was in U. K. "investment allowance" corresponding to "development rebate" under the Act. The certificates issued by the Chief Inspector contained the percentage ratio of the total world profits of the appellant to its world earnings and similarly the percentage ratio of the were are tear allowance and the investment allowance to its total world earnings. In making the assessment, the income-tax Officer purported to proceed on the basis of rule 3 of the Indian Income-tax Rules 1922. The said rule reads:

(3.) The Income-tax Officer proceeded to assessee the appellant-assessee on the second of the three bases mentioned in rule 33, but in computing Indian earnings, he did not include the destination earnings received in Indian i.e. fright received in Indian ports in respect of cargo loaded at non-Indian ports nor did he take into account the investment allowance granted to the appellant in its U. K. assessments.