COMMISSIONER OF INCOME TAX Vs. INDIAN BANK LIMITED

JUDGEMENT

(1.) WE are of the view that the question referred to us should be answered in favour of the assessee, the question being whether, in the circumstances and on the facts of the case, the Tribunals decision that the assessee is entitled to double taxation relief of a sum of Rs. 2,23,399 is correct in law. WE are here concerned with the assessment year 1947-48. The assessee is a public limited company carrying on banking business with its headquarters at Madras. It has a number of branches in different places. Travancore State was one of such places where it had a number of branches. In respect of the previous year ended December 31, 1946, the assessee returned a business income of Rs. 11,23,729. This amount included among other things the income of the Travancore branches. In Travancore the bank was separately assessed on a total income of Rs. 2,26,159. This income was arrived by the income-tax authorities in that State after declining a claim to deduction of Rs. 48,338 representing interest payable by Travancore branches taken together to the head office of the assessee. The assessee in the circumstances applied for double income-tax relief in respect of the sum of Rs. 2,23,399 which included the sum of Rs. 48,338. The Income-tax Officer gave the relief asked for, but only limited to Rs. 1,74,496 On appeal, the Appellate Assistant Commissioner of Income-tax did not agree with him in so far as he had declined tax relief in respect of the sum of Rs. 48,338. The appellate authority was of the view that this sum too was qualified to the relief. The Tribunal, on appeal by the department, accepted the view of the Appellate Assistant Commissioner and rejected the appeal. This reference therefore comes before us at the instance of the department.

(2.) IT seems to us that, on the facts we have set out, the only conclusion which is possible is the one taken by the Appellate Assistant Commissioner and confirm by the Tribunal in regard to the relief granted in respect of the sum of Rs. 48,338. Under section 49A of Indian Income-tax Act, 1922, the Income-tax (Double Taxation Relief) (Indian States) Rules, 1939, were framed. Rule 3 of these Rules is as follows :

(3.) LORD Weight expressed himself thus :