Section-160 Read with The Income Tax Act, 1922, Section-23(3)
The appellant was assessed under Section 23(3) of the Income Tax Act, 1922 for the accounting year ended on 30 June, 1981 and the assessment year 1981-82. The Deputy Commissioner of Taxes, while making the said assessment treated a sum of Tk 8,15,79,411.00 as a windfall profit in the hands of the assessee appellant and added the same to its total income—Held: We are of the view that having regard to ‘the principles enunciated by the Judicial Committee in the case of Raja Bijoy Singh Dudhuria (supra) and the Indian Supreme Court in the case of CIT Vs Sitaldas Tirathdas (and followed by the Kerala High Court (supra) with which we are in agreement, there can be no hesitation in holding in the facts of the case before us that the price differential or the windfall profit having been credited in favour of the BPC under a Govt. decision before it became an income in the hands of the appellant, The principle of diversion of income by overriding title is fully attracted. The disputed amount never reached the appellant as its income. The obligation of the appellant was not to be discharged out of its own income but the amount was to be treated at its origin as income to the credit of the BPC. [Para-23]
Meghna Petroleurm Ltd. Vs Commissioner of Taxes 6 BLT (AD)-95
Section-160(1) Read with Income Tax Act, 1922, Section-42(3)
(a) The assessee company submitted its return of income for the assessment year 1978-79 claiming allowable expenses under different heads such as Head Office Telephone and Telegram expenses, travelling expenses, fees for plan approval, engineering etc. expenses for essential coordinating service and area overhead charge. Deputy Commissioner of Taxes disallowed the claim against which the company preferred an appeal before the Appellate Joint Commissioner of Taxes, who affirmed the disallowance made by the Deputy Commissioner of Taxes on the ground that the assessee company having earned income in Bangladesh was not entitled to deduct there heads. The company, thereafter, preferred appeal before the Taxes Appellate Tribunal, Ctg. who while taking decision fell in the line the findings of the authority below.
On reference it has been found that expenses was not capital expenditure nor that they were personal or incidental to the business of the assessee. Business of the assessee company was unlike, ordinary business of a business house. In the instant case the expenditure incurred and reflected in the books of account maintained in the Head office at New York were incidental to carrying out of the business in Bangladesh. The assessee-company could not do the business in isolation in Bangladesh without receiving any effective advise and co-ordination from the Headoffice technical know-how. Tribunal did not advert its attention of the nature of the business activity of the company.
Merely because the assessee has been declared a company under section 2 (5A) of the Act and is a unit of assessment it should not be considered that the expenses in question do not merit deduction in computing the total income of the assessee. [Para-4]
(b) The account maintained in the Head office reflected the true statement of income and expenditure and the debit-note is a reliable basis for claiming deduction in computing total income of the assessee as the assessee maintains mercantile system of accounting. [Para-5]
American Bureau of Shipping Chittagong Vs Commissioner of Taxes 2 BLT (HCD)-173.