Law:

Section:

Section 219 of the Income-tax Act, 1961 [Corresponding to section 18(A)(11) of Indian Income-tax Act, 1922], read with section 18(3) of Indian Independence Act 1947 - Advance Tax - Credit of - Assessment year 1947-48 - During partition of country between assessee paid advance tax at Lahore - Assessment in Pakistan was completed and amount paid as advance tax in Lahore was set off against tax assessed there - Assessee sought deduction of said amount of advance tax be set off against tax liabilities in India - Whether effect of the Indian Independence Act was not to double the advance money assessee had paid - Held, yes - Whether amount of money he paid as advance tax remained same and assessee having been given credit by Pakistan Government he could not claim that there was any amount left on which section 18A(11) could operate - Held, yes - Whether, therefore, assessee was not entitled to have an adjustment of the advance tax paid by it in Lahore, against demand of tax raised in India - Held, yes FACTS For the assessment year 1947-48, the assessee's assessment was completed by the Pakistan ITO completely ignoring the Double Taxation. Avoidance Agreement the assessment for the same year was also made by ITO in India. The assessee claimed for adjustment of advance tax paid to ITO in Pakistan under section 18A of 1922 Act assessee's claim for set off of the advance tax in India was disallowed by the ITO and the AAC, observing that there was no balance of tax paid under section 18A to be adjusted by the ITO for the Indian assessment became the amount under section 18A had been adjusted by the Pakistan authorities towards payment of tax. However, on second appeal, the Tribunal allowed the claim on the ground that the language of section 18A(11) was mandatory, and it was the duty of the income-tax authorities to give credit for the amount paid by the assessee as advance tax in the regular assessment made under the Act and what the income-tax authorities would do or may have done to the advance tax paid to the ITO, Lahore was entirely immaterial. On reference, the High Court upheld the Tribunal's findings. On appeal to Supreme Court. HELD The effect of section 18(3)…

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