Law:

Section:

Section 90 of the Income-tax Act, 1961 [Corresponding to section 49A of the Indian Income-tax Act, 1922] read with the Double taxation Avoidance agreement [DTAA] between India and Pakistan - Double Taxation Relief - Where agreement exists - Assessment year 1947-48 - Assessee-bank had income in India, Pakistan and some other countries - Assessment in India had already been done on footing of Pakistan income as assessed in India and excess and total income had been calculated upon that footing - Whether it was Pakistan income as assessed in India that must be taken in account and not amount as assessed in Pakistan for purposes of calculating abatement - Held, yes - Whether in calculating abatement under article V of DTAA, whole income and not half Pakistan income should be considered for comparing taxes payable in that dominion with that payable in India and, then, only one half of lower tax was payable - Held, yes FACTS A bank called the Imperial Bank of India was constituted under the Imperial Bank of India Act (Act XLVII of 1920), and took over the undertakings of the then existing Presidency banks at Bombay, Madras and Calcutta. The said Imperial Bank of India had numerous branches all over British India including the territories now comprised in Pakistan. On 1-7-1955, the State Bank of India Act (XXII of 1955), came into force and by virtue of the said Act the entire undertaking of the Imperial Bank of India along with all its properties, rights and liabilities, devolved on and vested in, the State Bank of India. The income-tax authorities, therefore, proceeded to assess the State Bank of India as the successor of the Imperial Bank of India for the year 1947-48. In that year, the said Imperial Bank of India was resident both in India and Pakistan. Consequently, under the said Act, the income accruing in both the countries, together with foreign income outside the countries, were included in the 'world income' of the assessee. Since the assessee had income in both the countries as well as in foreign countries, the question arose as to the abatement that it was entitled to, as a result of section 49AA of the said Act read with the said agreement. The abatement…

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