Law: Income Tax Act, 1922

Section: 4(1)(b)(ii),4A(c),64(1)

(a) Income-tax Act (XI of 1922)------Ss. 4 (1) (b) (ii) & 4-A (c)­Charging resident's foreign income-Not ultra vires the Legislature. (b) Income-tax Act (XI of 1922)-----S. 64 (1)-Sleeping partner ­Can be assessed at place of partnership business. The contention of the Appellant Company was that by reason that it took no active part in the partnership business it did not carry on business at the partnership place of business. Held, that the essence of partnership is that each of the partners is the agent of the others for the purpose of carrying on the partnership business. Failure by any one partner to take part to the management of the business does not therefore have the result that he is not carrying on business as a partner. He can therefore be assessed by the Income-tax Officer of the area in which the place of business of the partnership is situated. JUDGMENT LORD UTHWATT.----This is an appeal by leave of the Federal Court of India from a judgment of that Court dismissing an appeal by the appellant Wallace Brothers & Co. Ltd., from a judg­ment of the High Court of Bombay answering in favour of the respondent. The Commissioner of Income-tax Bombay District certain questions of law referred to the High Court by The Income­ tax Appellate Tribunal. Two questions are in issue : first the validity of certain pro­visions of The Indian Income-tax Act, 1922-1939, by virtue of which there was made on the appellant Company an assessment to income-tax on income which included income arising without British India, and second, the jurisdiction of a particular Income­ tax Officer to make that assessment. The directly relevant provisions of The Income-tax Act, 1922­1939, are contained in sections 3, 4, 4-A and 64. These so far as it is necessary to state them are as follow :- 3. Where Any Act of the Central Legislature enacts that income-tax shall be charged for any year at any rate or rates tax at that rate or those rates shall be charged for that year in accordance with, and subject to the provisions of, this Act, in respect of the total income of the previous year of every individual, Hindu un­divided family, company and local authority, and of every firm and…

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