INDER SINGH GILL S Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THE judgment will govern the decision of both the aforesaid references. They arise out of the same order of the Tribunal. The assessee, S. Inder Singh Gill, is a resident in Uganda (Africa). We are concerned with six assessment years i.e., 1946 -47, 1947 -48, 1948 -49, 1949 -50, 1950 -51 and 1951 -52, the corresponding previous years being the financial years ending with the 31st of March of each year. For these aforesaid years, one Jeevansingh Grewal was treated as the assessee's statutory agent within the meaning of S. 43 of the Act. In those assessment, the only income belonging to S. Inder Singh Gill, who is the assessee before us and to whom we would hereafter refer as the assessee, assessed was income from certain Bombay properties. In February, 1955, the ITO found that the assessee owned in the taxable territories certain other properties also. He, therefore, with the previous approval of the CIT, initiated proceedings under S. 34(1) (a) of the IT Act (hereafter referred to as the Act). It is to be noticed that this notice was issued against the assessee him -self and not against Jeevansingh Grewal, who had been, in the original assessments, treated the assessee's statutory agent within the meaning of S. 43 of the Act. After receiving the notice, the assessee, in due course, filed returns of his income and we are here concerned with the three contentions raised by the assessee.

(2.) THE first contentions raised by the assessee was that he was entitled to have deductions of the allowances permissible under S. 9 of the Act in respect of his income from all his properties situate within the taxable territories. In the first assessment, which was made against the statutory agent, this permissible deduction was not given in respect of the Bombay properties. He, therefore, claimed that he should be allowed those deductions in respect of the Bombay properties also. This claim of the assessee was resisted by the Revenue on the ground that the assessment in respect of the income from the Bombay properties had become final in the first assessment made against the statutory agent. In a reopened assessment under S. 34, assessment relating to the Bombay properties cannot be reopened at the instance of the assessee. The second contention raised by the assessee was that in computing his world income, the tax paid by him to the Uganda Government on this Uganda income should be deducted. This claim of the assessee also was resisted by the Revenue. The third contention raised by the assessee was that, during the assessment years, he had paid certain sums to effect an insurance on his life and he claimed exemption from being taxed in respect of those amounts under Sub -S. (1) of S. 15 of the Act. This claim of the assessee was also resisted by the Revenue, and it was contended on behalf of the Revenue that the assessee was not entitled to claim benefit under Sub -S. (1) of S. 15 of the Act, because the sums paid by way of premia to effect an insurance on his life were not paid out of the total income of the assessee, but were paid out of his foreign income. The ITO rejected the first two contentions of the assessee. In respect of the last contention, namely, as regards the benefit under Sub -S. (1) of s. 15, the ITO apportioned the said premia account for each year between the assessee's total income and his total world income. The assessee, feeling dissatisfied, took an appeal to the AAC. The AAC not only rejected the assessee's contentions, but even deprived the assessee of the proportionate relief allowed by the ITO. The assessee took a second appeal before the Tribunal. Before the Tribunal, it was contended that the income from Bombay properties should not have been taken in the assessments at the figure determined in the assessment made on the statutory agent, Jeevansingh Grewal, but should have been re -computed after making certain allowances permissible under S. 9 of the Act. Relying on the decision of this Court in CIT vs. A. D. Shroff (1957) 31 ITR 284, the Tribunal rejected this contention. It was also contended that notwithstanding that the life insurance premia was paid out of the assessee's foreign income, the assessee should have been given the benefit under S. 15 of the Act. This contention prevailed with the Tribunal. It took the view that to accept the Department's contention would amount to read in the section that "the tax shall not be payable in respect of any sums paid out of his total income by an assessee to effect an insurance". In the opinion of the Tribunal, there was no warrant for reading the words "out of his total income" in Sub -S. (1) of S. 15. The Tribunal, therefore, held that, even though the assessee had paid the premia out of his foreign income, he was entitled to get the benefit under S. 15 of the Act. In support of the aforesaid conclusion, the Tribunal has given also other reasons besides the one stated above. But it is not necessary to refer to those reasons inasmuch as learned counsel for the assessee did not support the order of the Tribunal on the strength of those reasons. The assessee also contended that the tax paid by him to the Uganda Government on his foreign income should be deducted in determining the assessee's foreign income and in including it in his total world income. This contention also was rejected by the Tribunal. Both the CIT as well as there assessee filed applications under S. 66(1) of the Act. The Tribunal held that questions of law did arise out of the aforesaid order of the Tribunal. On the application of the CIT, the Tribunal has referred the following question in its statement of the case. We will number it as question No. 1 :

(3.) THE question of exempting any sum from being charged to taxed arises only when that sum could or would possibly enter the field of that particular taxation. Sec. 3, which is the charging section, provides that "where any Central Act enacts that income -tax shall be charged for any year at any rate or rates, tax at that rate or those rates shall be charged for that year in accordance with, and subject to the provisions of, this Act in respect of the total income of the previous year of every individual, HUF, company and local authority, and of every firm or other association of persons or the partners of the firm or the members of the association individually." It follows that income -tax is a tax on the categories of persons mentioned in S. 3 in relation to their total income of the previous year. Sub -s. (15) of S. 2 defines the total income in the following terms :