Law: Income Tax Act, 1922

Section: 18A,2,34,31,33,31(3)

Law: Business Profits Tax Act, 1947

Section: 14

Income-tax Act, 1922 -- Section 31 -- Indian loss and proportionate head office expenses converted into Pakistan currency to be set off or allowed as a deduction against Pakistan income -- Whether such conversion should be limited to the period of devaluation -- Power of A. A. C. to enhance assessment beyond the period of limitation -- Company resident and ordinarily resident in Pakistan, with head office in India -- Indian loss and proportionate head office expenses, to be converted into Pakistan currency before one is set devalued on 19-9-1949 -- Assessee's objection that proportionate loss for post-devaluation period should have been converted into Pakistan currency -- Not tenable -- Objection, however, upheld in respect of head office expenses -- Business Profits Tax -- Interest paid to non-resident, held, admissible for purpose of business profits tax assessment though not for purpose of income tax -- Capital -- Computation -- Taxation reserve, shown as such on first day of relevant chargeable period, to be included -- Amount paid as advance tax out of circulating capital not to be deducted. Powers of Appellate Assistant Commissioner -- Extent -- In enhancing assessment such power should not travel beyond subject-matter of assessment -- A.A.C. cannot touch new source of income which was not subject-matter of consideration by I.T.O. -- Conversion of loss set off, or admissible deductions, from Indian to Pakistan currency -- Within power of A.A.C. -- JUDGMENT (The judgment was delivered by Syed Ali Khan, President).- The Income-tax appeals arise out of the appellant's assessments made for the charge years 1950-51 and 1951-52. The Business Profits Tax appeals concern the chargeable accounting period ending the 31st December, 1949, and the 31st December, 1950. 2. We will take up the Income-tax appeal relating to the assessment for 1950-51 first. Only ground No: 4 of the petition of appeal has been pressed before us. This objection relates to the extent or manner of conversion of Indian loss as also the head-office expenses into Pakistan currency. The appellant is a limited company which has been treated as "resident and ordinarily resident1' in Pakistan. The…

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