Law:

Section:

Section 33 of the Income-tax Act, 1961 [Corresponding to section 10(2)(vib) of the Indian Income-tax Act, 1922], read with rule 33 of the Income-tax Rules, 1922 - Development rebate - Assessment years 1960-61 & 1961-62 - Central Board of revenue had issued a notification whereunder in assessing British shipping companies, assessing authorities were directed to permit those companies 'to elect to be assessed on basis of ratio certificate granted by UK authorities regarding income or loss and wear and tear allowances' - Assessee, a non-resident British Shipping company, whose ships plied all over world including Indian waters, was assessed in respect of its Indian income on basis of ratio certificates issued by U.K. authorities - Said certificates contained percentage ratios of total world profits of assessee, wear and tear allowance, and investment allowance (corresponding to development rebate under Indian Act) to its total world earnings - ITO purporting to assess assessee on second of three bases provided in Rule 33 took only percentage ratio of total world profits and wear and tear allowance but did not take into account development rebate - Tribunal, however, allowed development rebate to be taken into account - Whether since profits of assessee company were not computed in accordance with provisions of 1922 Act, second of three bases mentioned in Rule 33 could not apply and fact that authorities and parties were under a mistaken impression could not alter true position in law - Held, yes - Whether most appropriate basis under which ITO could have computed income was last basis, viz., 'in such manner as ITO may deem suitable as while adopting third basis under Rule 33, ITO was not required to apply rigidly various conditions prescribed in 1922 Act in matter of granting one or other of permissible allowances, and he could adopt any equitable basis so long as that basis did not conflict either with rule 33 or with Board of Revenue's instructions of directions - Held, yes - Whether as Tribunal had determined tax due from assessee on basis of ratio certificates given by U.K. Authorities, which was also accorded with instructions given by Board, it could not…

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