Law: Business Profits Tax Act, 1947

Section: Sch.II,r.2(2)

(a) Business Profits Tax Act (XXI of 1947)----Sch. II, r. 2 (2)-Scheme of Act Computation of "capital" Money spent by company in setting up another unit of "very concern" for purpose of increased profits Does not constitute "investment" Expenditure not deductible from capital in computing admissible abatement "Capital expenditure" and "investment" Distinguished. (b) Business Profits Tax Act (XXI of 1947)- --Sch. II, r. 2 (2)¬Expenditure made outside "taxable territory" Immaterial for deciding question of "investment" or "capital"--Being fiscal provision must be strictly interpreted. (c) Business Profits Tax Act (XXI of 1947)--- -Sch. II, r. 2 (2)-"Investment" "capital expenditure" : a mixed question of law and fact. (d) Capital Expenditure -- -- Capital expenditure" for purposes of Income tax Act (XI of 1922) does not necessarily have the sense of "capital" as used in Business Profits Tax Act (XXI of 1947). Vallambrose Rubber Company case 5 T C 529 ; British Insulated and Halsby Cables Limited case 1926 A C 205 ; City of London Contract Corporation Limited case 2 T C 239 ; Tata Hydro Electric Agencies case 64 I A 215 ; Golden Horse Shoe Limited case (1934) 1 K B 548 ; Gas Lighting Improvement Company case 1923 A C 723 and Assam Bengal Cement Company Limited case A I R 1953 Cal. 368 rel. THIS JUDGMENT DELIVERED BY: CORNELIUS, CHIEF JUSTICE:------------ This certificated appeal is brought by the Commissioner of Income tax, East Pakistan to call in question the answer returned by a Division Bench of the Dacca High Court to a reference made at the instance of the appellant on the following question, viz. : "Whether on the facts and in the circumstances of the case money spent by the Company in the construction of the Mill in India would constitute investment under sub rule (2) of rule 2 of the Second Schedule to the Business Profits Tax Act ?." The answer returned was in the negative, and the Commissioner appeals for the purpose of obtaining a decision that the expenditure in question does constitute "investment" and is therefore not to be taken into account in allowing the "abatement" provided by the Act in the computation of "taxable profits." The scheme of the…

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