COMMISSIONER OF INCOME TAX Vs. ELLERMAN LINES LTD

JUDGEMENT

(1.) This is a reference under Section 66 (1) of the Indian Income-tax Act, 1922. The two questions of law which have been referred to this court for an answer as follows :

(2.) The facts giving rise to these questions of law may now be briefly stated. The assessment years 1960-61 and 1961-62 are the relevant years. The previous relevant years are the calendar years 1959 and 1960. The assessee is a non-resident British shipping company whose vessels ply on the waters all over the world including Indian waters.

(3.) The Income-tax Officer determined the assessee's Indian profits at a percentage of its total earnings on the basis of Rule 33 of the Income-tax Rules. Of the three alternative methods laid down by Rule 33 for estimating the assessee's Indian profits, the statement of the case makes it quite clear that the Income-tax Officer adopted the second of the three methods. In other words, he computed the assessee's Indian profits at an amount which bore the same proportion to the total profits of the business (computed in accordance with the Central Board of Revenue Circular No. 7 of 1942 dated 10th February, 1948) as the receipts accruing or arising in the taxable territories bore to the total receipts of the business.