Commissioner Of Income Tax West Bengal I, Calcutta v. Clive Insurance Co. Ltd., Calcutta

844 COMMISSIONER OF INCOME TAX WEST BENGAL I, CALCUTTA CLIVE INSURANCE CO. LTD., CALCUTTA May 2, 1978 [Y. V. CHANDRACHUD, C.J., D. A. DESAI AND R. S. PATHAK JJ,] Inco1ne-tax Act, 1922, S. 49D-Reliej in respect of incomes accruing or arising outside the taxable territories-Warran! of payn1ent of interini dii·idend shows net dividend after deducting at source U.K. income-tax and certified to be so -Whether relief under s. 49D of the Act pernzissible to the assessee. The claim f_or relief under s. 49D of the Income Tax Act 1922 made by the respondent-assessee Company in its return for the assessment year 1'60-61, the relevant previous year being the calendar year 1959, in respect of the net dividend income of Rs. 15_.2661- after deduction of British income-tax of Rs. 9,881/- was rejected by the Income-tax Officer without making the reasons for his decision explicit. In appeal by the assessee, the Appellate Assistant Commissioner confirmed the decision of the Income-tax Officer observing that even if it be held that the net dividend income suffered U.K. tax by deduction; there is nothing to show· that the tax deducted was paid to U.K. Revenue and therefore s. 49D is not attracted. In further appeal by the assessee the Tribunal accepted the contention of the assessee and at the instance of the Revenue referred the question to the High Court. The High Court -after an exhaustive examination of the relevant provisions of the Income-tax Act of U.K. and the decisions bearing on the question confirmed the decision of the Tribunal. Dismissing the appeal by certificate, the Court HEW : I. All the requirements of s. 49D of the Income-tax 1922 read B with Explanation have been satisfactorily established by the assessee and there-fore the High _Court rightly answered the question in the affi.rmath'e in favour of the assessee. [854 F] 2. To be eligible for relief under s. 49D read with its Explanation, the assessee must establish ~xcluding the non-disputed requirement that (i) the assessee has income which has accrued or arisen without taxable territory; and (ii) the assessee has p_aid in any country income-tax by deduction or otherwise under the Jaw in force in that country; (iii) in that event the assessee would be entitled F to the deduction from Indian income tax payable by him; (iv) a sum calculated on such doubly taxed income at the Indian rate of tax or the rate of tax of the said country, whichever is lower. The expression 'rate of tax of the said country'· must be given the meaning as set out in para (iii) of the explanation and in doing so the importance of the words 'income assessed in the said country' has to be borne in mind. [847 F-H] 3. Under U.K. 1aw, the con1pany has to pay tax on its profits or gains as its liability and not as agent of members to whom dividend is distributed out of G profits. Therefore, if dividend is distributed after profit or gain of the company is chargul to tax, it is optional with the company either to deduct or not t9 deduct income tax paid by it from the dividend paid to members and if 1t chooses to exercise the option it can do so at standard rate. There is no specific provision under U.K. Income-taJt Act \Vhich would show that dividend income in U.K. in the hands of the assessee is exempt from payment of income tax. The company is liable to pay income-tax on its profits and gains and s. 184 enables the company to deduct from the dividend paid out of profits, tax at the standard H rate for the year in which the amount payable becomes due. Dividends which represent the distribution of a taxed Fund are, therefore styled as franked income so far as concerns any further taxation at the standard rate, i.e. the rate at which deduction has been made. The assumption underlying this position is that the dividend represents the residue of the total incon1e wJUch has already been agra aR area, TART aaa, HAHA aATA ReTEae Seata Heaat fataes”(The Commissioner of Income Tax, West Bengal|Caicutta|geVs.. The Clive Insurance Company Ltd.)_ (2 #3, 1978) (aeq sorottenta arg. at. wrag, varenferata st. u. ate ate Sk. Ta. Tem) gatdeadaz,1922 (1922 a 11)fata49zi—faettadtart wat at aren atti ava fafer & seitt sreeae welt Ht wTBS CeTTAT TTaren errr at ater eetete Tare Feverrae fates tater & sit arges ferred F area.B dary at atte T ovengs arte Preheat emer 49(st) @BT TAT BT HAT| seoet-Prattedt va Pravet aerdt g ot areca set ATara aedt 1ara & oe aarees fared H ae wel Cacere aeafrat & eax ed1 ead are ter daet at aaaTS aT are at ataa Hele are aerges Peasy A seatar aarara Paar ToT aT1 TeaAt eee cae Us| 1922st rer49 & ate adie & Pau arden fear fart arrat afeartt 4arate 23 F exare ae fear1 Pratfedt aver acter faq att 1xafatauiberavast (attr)F arrae afeartt& fatrera at aeaét & fa wetaxa Pa gu ote ae ae ax at at rad fa ug Mages afsis wet Parse ar a a Tae aPaxtr at feat vat at aie gataq ret 49(st) ary ae atc seat- Sol ant attr far art oe afecacn F Praha at eet daax ot ate Sea eTaTAT at we wer Paetee Pao fe ao aa STeal ae oe ate ofetertaat F fraffedt # art F ag werwT waar ¢ fe set 15,266 wat ae aie at aaa achORT ayaT Hey AaTees Parse A arerHe er wat Pear afet fa ag efesor sree tag tac, 1922 at are 49-37 mTTUT ANT at wa Bah ? seewaaFe afuaresatte Y seq caraam Profle at waar at serra fot &| —afatratita—taeat ere 49-st &, sat easdtetyy atedAE ATT, TTT TTT HoT VA wH Pare Praha at ataareverota at eras ad gu ug faa wer afer fa (1) PrefhadtolWat are sg Tt Heady Use aT H ME Nets Aya JordGe s, ate (2) Prafhedhst fomdh dar a seer Pater Hoefer eteBT AxaT aera areaT tare fear s ate (3) va watPratfett saa arr ven uredta aaa HS Hetil aratm, (4)at tet afar abit ot cet aeerenra arett are oe wediHC HY AT HAST THT ST BH HC aT aL, What Ha al, ohrafasr HesBTU1 ‘sar ea eh at at at ove ar tar aef fear wat afewst epsdtneyyam fa (3) F graftsfrat qa g ate tat aeeam ‘sad ae Ht Pratfea, ara” weal wh Heer at cart A TAT STAT(far 4)ar| safe wa: wages Parse ah ara h TTT HI Tetras vAae h aatee caraTea ara «fau wa gah feather F are aeara eeatre att s fea St arial at Port oe eet ah areataaT wat é, Praffedt & att a atfed ara art we 1 gat vatF, gaat ae afasa & fo ania & ee HY at aT aa gt aeare areata ser & fas aor oa oe Pretedt & areal F ae aT at aTfreattedt & arat AF sr Te HT aT eT Sl RT WHI OE ATT AIS & arat AF sr Te HT aT eT Sl RT WHI OE ATT AIS arat AF sr Te HT aT eT Sl RT WHI OE ATT AIS AF sr Te HT aT eT Sl RT WHI OE ATT AIS sr Te HT aT eT Sl RT WHI OE ATT AIS Te HT aT eT Sl RT WHI OE ATT AIS HT aT eT Sl RT WHI OE ATT AIS aT eT Sl RT WHI OE ATT AIS eT Sl RT WHI OE ATT AIS Sl RT WHI OE ATT AIS RT WHI OE ATT AIS WHI OE ATT AIS OE ATT AIS ATT AIS AIS freattedt & arat AF sr Te HT aT eT Sl RT WHI OE ATT AIS & arat AF sr Te HT aT eT Sl RT WHI OE ATT AIS arat AF sr Te HT aT eT Sl RT WHI OE ATT AIS AF sr Te HT aT eT Sl RT WHI OE ATT AIS sr Te HT aT eT Sl RT WHI OE ATT AIS Te HT aT eT Sl RT WHI OE ATT AIS HT aT eT Sl RT WHI OE ATT AIS aT eT Sl RT WHI OE ATT AIS eT Sl RT WHI OE ATT AIS Sl RT WHI OE ATT AIS RT WHI OE ATT AIS WHI OE ATT AIS OE ATT AIS ATT AIS AISwet farl sam art F aeae wea fa aatecs. Pavey 7 feegeaaa aarraafate dfant ~~ [ 1979} 2 Te fo To anitSr ove semefaetteswerfearoT aKa21 (faT5 we 16)—co|agqe & tat amet ay & arheg feecht areswe fear ve war aag Ttsee sea Pate ae Tee @ ocere sooe fHewatz1 ofa ae area arent afafaan & aie ae miee fava49-zt at adenat at cha ae1 (fer 17)a , gad fate Bohlacteh ater sera eee aaRe Sr. 2ePTfaceax feat wea aon # 2Pau ov Se ag ag Oe oare BIE ffee at oe ard ow &farae iat fee eT ag Pattiegargs BriggTaeTONS TONS SARE. 7357 1 nF Rtaas Seapeastrens Kier Te wETET BAA AMG SAAS Wey TAT BEA— Byes pee inons-.CommissionersofInlandRevenue , Vs.Pox! CLSTUPCS BF TP HGF 861 TRIB SPT FERTEm1 ® gdae Penland Sao Rvcae 481 (erga ConA are arse): VS: Biotty;THT POP RE PST 2 ਮਈ, 1978 1 nF F toate AER AUT SHH: BME HATE Hisesfre ai (Bradbasy Ns. Gpelish: Sewing Cofton: Cossn4TESTSLimited);-_12 TREE TsThtse Pers Te BieTs Sie rs AS. GL#1 BRET Te TS) TOPRaeRt Fer? sSsrepPTE TORTIE 7 age Bro BieoMDEM FREE SPMAHL ATR STH ater WeHyatt.Tate ToTMofamissioner ¢fingomenlfas Vs aathGons. ¢=e fh Hvate Limited).2.‘=ie2S«TEBEFESS Rr i Sb 9S -FRRR Per UST as SSeSial 902, & ferro| BOER1 B & Ter Teeter TESTA PIS TeiPpRF tow HERP-(CoCERESsioneSETIncomea band:- oreCotton, IKI BFBVEE ENbHES[ &][ Ld-O00CL] Lintted[ Be] Bey[ wrtsrt] BET1 Te fo TSPePS TET BGR DET GL & poppy fers |ml, Safe Tide OPPS PARP ak Hat SEs WeoteTE TRaT ee saps fs foxTe ® BESPTPreMe i HEFIAAERcoe aoe UE pak Sai Vargs st hoe wip os bra pees OR SY SeFA MCA a] ore iS) TRADPorRete stapre TEP TERT Srtrets oa & we Sip? GST prs fotse awnste TE ive eet fex PIKEnmPOETS. Feral° SSSR PIDTsFASELP UR Raion?1 $ tft Tir OSS PSOb. ore vEtBSPRS pips te ite PES fe oe? pire .aa| apie 788), Beaaa atataa fase afast©[1979] 2 BA FitoFosararay ar fauty eareaferatast. w. dare A fear useg fran+ vaTT-y are at we attr HF 1NGT &arate fade det 138 F Hernan set earorea am Pata atasa a verre Prat &, Prax arrax acter afear, werneraTaMS ‘wa Gea uraTay at ferafated ver seat ua & Faefaefad foot: — aay aa & Tea a ee Te Tie oPeherhaat Hfauffadt & at a ag war a aacré fH saa15,266 wa we aria Ht ster Hetet are AxaT Heawages Paarsy F arene ar weraPepe at Preeag afusuagene tae tae, 1922ar ure 49-st ara 7$n. 2. sere -Praffedt wean Pravet peqdt& at aterstatweracl ATLATRHUTT Sot HEAT HH WaTads fa reH HT wa aT WaTae amit arafaat arr & 9,881 tae dt wt| gach & Pater arr fe aar aaah atatctd stat wet waaaqeatTe 15,266ead vt, Pore cam at oes eit & aaaedwat & afadt ferat war ati Prater ae 1960-61 & Pau qatarqa af Heise af 1959 g, Prath+eivewadt gepe caer tae;1922 (fea date a ‘aferfarae’ ser rer g) at are 49-87 Berjaad & feu ater feari arrae aferart a wade et at.|ee Poot Par fatsere & areot at cree aet Paar wat,afarProffittarr ate & agra agar atte A area7awa fa ufe & fafaera ug afateaifer at ae aa ax cree feat cnet ame gu fa fee ae aa annie at fos watae|am acd ger aerate Pease F ae afeeifod far wer a qa ae afar wet aret Hts ata vel s how Hele Poa aT HT aT.wTamt warges Pasa Huser faurr at fear var aT aiePmatauar 49-2) arp wet att 21 Prefectaver aaa a? gare farm & oefar ot gaa ae afte Ter Tee ATTATtae H ating TaeAT AT FA TA & aratera fateaeat apaearerter Ther at F reaTe, atoneH fahaeaT st Thve aRa 3. faulted2 afataeat are 49-st & aete Heersuey & aTex SET BA are aT SY aaa TAT HT TAT PeHAT2rer 49-3 ar GATT ATT EA TATE «49 (q). aerer ted dat H aret MTT ea (1) ate arg cafaroTfast of af AH HUNT& Praret 2 ae atfaa wear S fen caret Cet sya aaa,Wt oe at h ator Here usweat B aEHed UT VET Fe (are ot meri Tseetat TANTS arr et Heat & Vee aT ofeass & fae Ag cafraycogervat , sa te F saat Pate aH aeTTAweit & er X geet aaa, dace fat gat aE ATAare daa wre aaa FS eat ata at Heh 4sPaw gaart ater Porat tet ated we wit aT TT FE*aasit Hag SA TATE F— taxed in the hands of the company, the fiction being that if tax was not paid by the company there would have been a higher dividend and therefore the dividend income is already taxed. The company is treated as a I~rge partne~ship and though this system is high1y artificial but it is a domestic expedient limited Jn rts oreration to U.K. [849 F-G, 850 B-D, 85! E] According to the statute law of U.K. and the interpretation put on it by the highest court in that country,· the dividends which have borne tax in the hands of the paying company were treated as franl..ed income in the hands of the assessee. Tn other words it would mean that the income is the income in the form of dividends has been subjected to tax. It is immaterial whether they· are taxed in the hands of the assessee or not but they are deemed to have been taxed in the hands of the assessee in U.K. Dividends which are style<l as franked income have borne tax at the source. [852 C-0, F] If the dividends styled as franked income have been charged to incon1e-tax at the source, it \vould mean that it is the income in respect of which incon1e tax has been paid by deduction or otherwise in accordance with the law in force in the country in _\vhich the income accn1ed. If it is now charged to tax under the Indian Income-tax Act it obviously becomes a doubly taxed income and one of the requirements of s. 49D would be satisfied. [852 F-G] Bradbury v. English Sewing Cotton Co. Ltd., 8 Tax Cases 481 (House of Lords), Con1n1issioners of Inland Revenue v. Cull, 22 Tax Cases 603 at 636 Canadian Eagle Oil Co. Ltd. V. The King, 27 Tax Cases 205; Cenlon Fin.111ce Co. Ltd. ''· Ellwood, 40 Tax Cases 176 at 205; F. S. Securities Ltd. v. Com-1nissioners of Inland Revenue, 41 Tax Cases 666 discussed. 4. Undoubtedly ' to be entitled to relief under s. 49D the requirements for eli_gibility therein prescribed must be satisfied by the assessee·. One such require-ment is that income in respect of which relief from double taxation is sought, is the income in respect of which he has paid incon1e-tax by deduction or otherwise under the 1a\V in force· in the country in which the income accrued. [853 i\] While examining the question whether the mssessee has fulfilled this re-quirement, it will have to be ascertained what is the law bearing on income-tax in the country in which income has arisen and whether according to that law, the said income has suffered tax by deduction or otherwise again according to the law in that country. According to the income-tax law in U.K. dividends represent the distribution of a taxed fund and are therefore styled as franked income. The payment of tax by the company and deduction made at standard rate from dividend distributed to shareholder operates in relief of the share-holders. Such dividend income, according to the law of the country where it has arisen is deemed to have been subjected to tax. Viewed from this angle the dividend income in the hands of sha-reholder is not charged to income-tax. [853 B-Cl Inland Revenue Con1missioner v. Blott, [1921] A.C. 171 @ 201; quoted with approval. “49D. Relief inrespect of incomes accruinofarising outside the taxable territories:—|(1) If any person who is resident in the taxable terri-tories in any years proves that, in respect of his incomewhich accrues or arises during thet year without thetaxableterritories(andwhichis. notdeemedtoaccrue or atise in the taxable territories) he has paidin any country,with whichthere is.noreciprocalarrangement forrelief or avoidance of double taxa-tion,income-tax, bydeductionofotherwise, underthe law in force in that country,he shallbeentitledto the deductionfrom theIndianIncome' texpay-able by him of asumcalculatedon: suchdoubly 790geaaa sneerRte feet [19 Fo] 2eee.Ro qo |OP ETT at UT Gat ara PR, RO 4(i): aSe ere:(i) aaPsa(ili) “sau te & ax at ae a ahs 8 A “sau te & ax at ae a ahs 8 A te & ax at ae a ahs 8 A & ax at ae a ahs 8 A ax at ae a ahs 8 A at ae a ahs 8 A ae a ahs 8 A a ahs 8 A ahs 8 A 8 A ARCST ET Brcreetae at ete # wears fae (ili) “sau te & ax at ae a ahs 8 A “sau te & ax at ae a ahs 8 A te & ax at ae a ahs 8 A & ax at ae a ahs 8 A ax at ae a ahs 8 A at ae a ahs 8 A ae a ahs 8 A a ahs 8 A ahs 8 A 8 A A an|RM,at matte Sar are see seer a sree ae area areaPater ak0, Mamta Pei aeart taxed income at the Indian rate oftax or the rate of taxof the said’ country,’ whichever is the lower! ~~ Explanation. : —In this Section:— (iii) the expression “rate of tax of the said country”means. income-tax and: super-tax actually paid in thesaid country in accordance with the correspondinglaws of the said country after deduction of all Teliefsdue, but before deduction of any relief due in the saidcountry: in respect of double taxation, divided by the.Whole amountof the incomeassessed inthe.said—eountry.”” sraee aad to RaTea Geaiteher Brea [eto eee] 797 (4. ene AGATE, sed erdtren BerFe IFTsia aaa & feu or att & Feu faulfedtat atdaraace TeTeTat anata atwa ate 2 ot aesae we use fee oa Fkin aER arta TGHS fer (1)? waa Praifedt GENT a7a5 9k (ii) feathedtt & fant Gar sao fate sh site actacat deh arr Har ures arene FF Belay BT THATaeSige ee ReeaGSTeT ehPee TTatten apdrara fat (3)gratia. faut wat @ Alt Catae wae ‘sr a F faulted are’ areal e AeA ST PUTTHe VAI GIR FST. 5. er are H REahaare set z fr Pra tedt | Ohfear ment & aie waa wnreés Pare Fo area BaaT RTEarex irene @8 Gb. TAC ET & urea wie warete Teaseae fte tes, (SRT) A KAT eat wae[&][ TTT][ aT][ aye]ataare wae Aer et |Be eruffedta ania ara sre ate 1Prenata vera Pep we ceria STOHT OH AAT ET TE ESa Paste ee | oe apart AT aiTdt @ TH-+gapertacttgaatpe oterds Bae He Laterwe _ uns aoher areaSat. aT UH aTGe Bes@| 792. geqany araterote afer ararett eeveefet Cm tts a eaTE Te UH fafa eT Tea HT He TATAGiz96 120ats 1932'U’araetcera cis 7/9 deemaTaT Tet |3783Te aTaiT59 34 fe warga pattera. Patats,saver Pafeetr.8 tail TATT Us, HHA1| H cagere we senfoer aa gofa att & anil at sober a fae aufaa afeeart at dar ae fear war@ eye dag at feat we| owe areaae aiausesy PRATT are art Ft Ge erat wreae Pract FBe HT TAT eS Ba aT at wha aa HETeareare Porat ST 1 faaraz, 1959 aisat ara, car, sez. 14.” 7. aedtaen afore ge ose a afar Faeariaamsat HY ger ates amie F SF orrae at ach,Paethedtare qarges fawen & ardt are arr & eet are arraysaferoe ae atteat cat Paar at anat & ag tet ary ettay TTait AL face HaRT at AAT Pater Vt a He arefte eahau saat se & we cect: ae: me Pade at,TF ve axaet1are 49-st fafera er t ag cfeamcimt wait = featet sue& fare wate ar ema et A faq ag arr aHUTT UST-AT H AST Var ge F Ga we va eR, fredamy serees, sacar fate a eet aetdt caraera wut 5. Once it is accepted that the dividend represents franked income distributed out of profits and gains and not liable to further income-tax in the hands of member, it clearly transpires that for relief against double taxation it is the income which has been subjected to tax in the foreign country in which it has arisen and irrespective of the fact that there is no provision comparable to s. 18(5) of our Act in the Income-tax Act of U.K. yet the payment of tax by the company operates in relief of the shareholder and on that account alone the dividend income is not chargeable to tax in U.K. Therefore, it can be said v:.ith reasonable certaintv that in resoect of the dividend income of the assessee income-tax has been paid by deduction or otherwise under the law in force in the country in which income has arisen. The principle of agency in payment by the company is worked out on the basis of company being treated as a large partnership so tQat the payment of tax by the company would operate to discharge the quasi-partners. [854 D-E] Com1nissioner of Income-tax v. Tata Sons P. Ltd. [1974] 97 ITR 128; Com-111issioner of Incon1e Tax v. Cotton Fabrics Lid. [1976] 104 ITR 233 over-n1led, A 6. The expression 'income assessed in the foreign country would clearly, in the context in which it is used, mean subjected to tax in the foreign country. Jn order to ascertain whether the rate under the Indian Income-tax Act or the rate of tax in the foreign country is lower, apart from any other consideration, the rate of tax in U.K. in the context of dividend income is easily ascertainable inasmuch as company can deduct income-tax at standard rate only. Undoubtedly, where the assessee was also liable to pay surtax in U.K. on the dividend income no complication would arise in working out the rate because surtax is payable on dividend income. But in the present case that difficulty does not arise as B the assessee being a company, it was neither liable to any surtax nor entitled to any relief in U.K., ~nd, therefo~e? the rate of .~~x can be worked. out wlth certainty consistent with the prov1.s1~ns of. para (u1) of ~e Explanation. The assessee thus, in respect of the d1v1dend 1n~ome has paid tax at the standard rate and that is the rate of tax of the foreign country for the purpose of para (iii) of the Explanation. [853 F-H, 854 A] CIVIL APPELLATE JURISDICTION : Civil Appeal No. 1590 (T) of c 1973. From the Judgment and Order dated the 11th May 1971. of the Calcutta High Court in Income Tax Ref. No. 138 of 1967. S. I. Desai, K. C. Dua and A. Subhashini for the, Appellant. K. Ray, J. Ramamurthy and D. N. Gupta for the Respondent. D The Judgment of the Court was delivered by DESAI, J. The Revenue in this appeal by certificate questions the correctness of the judgment of the Calcutta High Court in Income Tax Reference No. 138 of 1967 in which the Income Tax Appellate Tribu-nal, Calcutta Bench 'A', referred the following question to the High Court for its opinion : E "Whether on the facts and in the circumstances of the case, the assessee could be said to have paid income-tax in U. K. by deduction or otherwise in respect of the net divi-dends of Rs. 15,266 so as to be eligible for the relief coa-tel]!plated by section 49D of the Indian Income Tax Act, 1922 ?" . F >ros arora safer feat ware1 ge are at afusa aay fear wawnat é fa cat wus& foes wate se are at ataa PaaroT acne & fre oe ve ea H yan fate H aaa, Pray agWt Heda usr-ata A Pravdy & etx area areranr sfefaqa% ag tet ara att afar-foe ox alee Ht wT F Q. ag ser fora ox Steere BT a aaa at TE, ae zfsFIT TE ATT AT Tt Aataes fa rsH A Mga Fe GT IX ARESfaasyaan ane ot saa array Poewm eae acidare axaT seaeT ae safer Peat Tat aT| feafe 210. amieMe aie arr oe ue & at waa F fear aarete war fausa & fH Hert H as & fue anitFF tacarealwl dad aia, Proffedt& aeat F arrax FPear stat & dt aerdt at ag Paaer soaPa ag aeeercayat aaa ane FS feat srrae at aetdl TAC BRATae eaReTeAY BY Hae ATT FS AH TT TL HHT aT HethZ.mh. wT Tae tae,1952 at ure 184)1 eeTHR—gareereat aren sree area are erent a vars wet S|PeperPatera eT a oe cx Praifecd # eet ¥ awherae sari g1 weeaters feate at eo # awd gu cere ea a ag ace A aefor warees Fervent at fate & sete amie are at at ah fayare ox arene Pretfed aed ah Pow ate cer at Pefan Per war2)aradt ch, are al atae Be oe He WaTPRT HL Par wet UE,ToTH eat AF aT srs HreeHe S was eel MT1He:seek ant ag omer rar & fa ort fer ot oe ehh Peat &fau ug afeta frat star atta fa fauftadt & get # anvteray wages Parse & arrae at Pet ax oe Paaffer at art atSE AERLS, SAAE EAT SRR, PLT,esCATATOSgh giteee Bo arta Peewee a - areaae PateeiSeda dhe Feerate eraax at area Sz eer“SPataar8 2, ae we eens Sat aifat tf -cereeotaver atwma afar AVL eT ster Et Pep SeaeeaTa aise“heeet fore: apa Fa: apmfactsPat sat #1AT:aprrer g ein fa ae forked feat a Tl ace a onat-2 Sh a at aredee ABT @.feu AAog f Teasat meldwt at attaw at ate ate ag fewer ar satLer 18 8 wth, pert at aero & afaael ae vie oq eeeEmota daw emia# a fatesaeare ae afeene at Hetatare até at aoa aig ee rareeat Esa, seth at wg atteT ubeat oer aH at, PraffedTETJafeg err. 18 4 soar (4)] 10 antiga feet weitfrofherat sett aie st ert are anetdt at aS ate oofalana te.an sah ad F oe ae A sre|Tereae dha fact gor é fH careée feewen H aerit are 184@ ade at afact ox at an xara edt& ate dace@an age ant amie stagttFF ate ape ait ae oe a ae varat A aed weacitt wh ae anPOT GT Het Vest A GS at Howmaa adh Peaaenf. ert cee asia AG are at ae arent at etd atwenat @ fa ag tet at.att are @ Wat fa ie 49-et ara Th.OF 12. ee. Cay aig fatatene Sey Al TAA WaT FtDagAva ail etaaah at fe fonict. Hae & wea eet yea 21a qaete ae facree age anit & aria akSTSOXaaaat aay a a alacant € we are 184BTBRTMer Ba AT ae aaT wet se fore ere4& wet oH Pe urrH ae oe fat afatear arene ar arare é,aPetraeBee KefarSe ert eal Teaa cet A meerare Beale sat goatAePrem aEae aer Ht éoa ate artya Pal acawaren Pear git at ser“SP,“ereemerage.aPeart tar eh adits aerdt waa ea fara AFecaetaaiag softest gar wate wee fe fatter aera Ht aeer eepq at cae atc Ttax baz RRRTere ewer Pa ae! a Paw Paar ahr zetava..1842-a7e7 tremeer: Ee ana a ayex get Pos cerare. Perett ereatface Paster a ste ores erenfer aétSon9, RE Ra Teh Vee oC atettee J ate Haar1gdaq RBar 481 (Isa WH AST)..Wot, arftantah waar al art agra@ aaifa wg wet HeratSAM GER TTTIMATS OH ATTR IL Oe aTfoal ae are sadtl ar g Se areF we sear atearray Pau Te AAT ATS TS HIT TAT HTTAHL ITT ACaad sl’i The Respondent assessee is a resident Company carrying on busi-ness of general insurance. The Compi!lly held shares of U.K. based joint stock companies. The net dividend income in respect of the shares held by it amounted to Rs. 15,266/- after deduction of British Income-tax of Rs. 98811-, the amount being stated in: rupee equivalent of the pound sterling. For the assessment year 1960-61 the relevant G previous year being the calendar year 1959, the assessee applied for relief under s. 49D of the Indian Income-tax Act, 1922 (for short 'the Act'). The Income-tax Officer declined to grant the relief but the reasons for the decision were not .made explicit. In appeal by the assessee, the Appellate Assistant Commissioner confirmed the decision of the Income-tax Officer observing that even if it be held that the net dividend income suffered U.K. tax by deduction, there is nothing to H show that the tax deducted was paid to U .K. Revenue and, therefore, s. 49D is not attracted. In further appeal by the assessee, the Tribunal accepted the contention of the assessee and at the instance of the Revenue, referred the question hereinabove set out, to the High Court. The High Court, after an exhaustive examination of .t~e relevai;t pro-visions of the Income-tax Act of U.K. and the dec1S1ons bearing on the question, confirmed the decision of the Tribunal. The Assessee claims relief in resp~ct of the income arising outside the taxable territory under s. 49D of the Act. The relevant portion of s. 49D reads as under : "49.D. Relief in respect of incomes accruing or arising outside the taxable territories :-(1) If any person who is resident in the taxable territories in any year proves that, in respect of his income which accrues or arises during that yea1· without the taxable territories (and which is not deemed to accrue or arise· in the taxable territories), he has paid in any country, with which there is uo reciprocal arrangement for relief or avoidance of double taxation, income-tax, by deduction or otherwise, under the law in force in that country, he shall be entitled to the deduction from the Indian income-tax payable by him of a sum calculated on such doubly taxed income at the Indian ratei of tax or the rate of tax of the said country, whichever is the lower. Explanation-In this section,-(i) x x· x x (ii) x x x x (iii) the expression "rate of tax of the said country" means income-tax and super-tax actually paid iii the said country in· accordance with the corresponding laws of the said country after deduction of all reliefs due, but before deduction of any relief due in the said country in respect of double taxation, divided by the whole amoun