Law:

Section:

Sections 49A and 49D of the indian income-tax act, 1922 [corresponding to sections 90 and 91 of the income-tax act, 1961] read with articles iv and vi of agreement for avoidance of double taxation in india and pakistan-Double taxation relief-Assessee-company derived income, in India, from business and interest on securities and, in Pakistan, from manufacturing business and agricultural properties-Assessment year 1956-57-Indian income computed at rs. 2,01,702 and Pakistan income at Rs. 5,529 after adjusting agricultural loss of rs. 3,20,839 from business profit of rs. 3,26,368-Assesses claimed under aforesaid agreement relief on entire business income in pakistan without adjustment of its agricultural loss-Tribunal and high court accepted assessee's claim-Whether appellate authorities legally right in granting relief claimed-Held, yes Facts The assessee-company was resident in India having its registered office at Calcutta. During the relevant assessment year 1956-57, in respect of the previous year ending 30-6-1965, the assessee derived income in India from business and interest on securities and in Pakistan from manufacturing business and agricultural properties. The ITO determined the net assessable income in India at Rs. 2,01,702 and in Pakistan at Rs. 1,029 as per computation below: Rupees I. Indian income -Business 2,01,329 -Interest on securities 373 2,01,702 II. Pakistan income -Manufacturing business 3,26,368 Less: -Loss in agricultural property 3,20,839 5,529 -Statutory deduction 4,500 1,029 The assessee initially claimed an abatement of tax on Rs. 5,529. In its subsequent revised return, it claimed (i) an abatement on the entire business profit of Rs. 3,26,368 in Pakistan, and (ii) a set off of entire loss in agricultural property from Indian income. The ITO, however, granted relief against double taxation only at Rs. 1,029 in terms of article IV of the agreement for Avoidance of Double Taxation. The assessee's appeal before AAC was unsuccessful. On further appeal, the Tribunal held that income-tax relief was admissible on the entire business income in Pakistan without setting it off against the loss in agricultural operations and that, since the…

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