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The Secretary, Board Of Revenue ... vs The Madras Export Company on 30 October, 1922 cites

Board Of Revenue vs Ramanadhan Chetty Minor By Guardian ... on 1 October, 1919

8. The charging section of the Act is Section 5 Sub-section (iv) makes chargeable 'income derived from business' and (income) for the purposes of this case has the meaning read into Section 3(1) which I have set out above: that is, it would cover income accruing or arising outside British India through or from any business connection in British India. Thus such income itself is only chargeable when it is "income derived from business "by force of Section 5. The phrase in Section 5 is not "income derived from or through any business connection "At one stage of his argument the Government Pleader contended that such a phrase might be implied under Sub-section (v) of Section 5, "income derived from other sources "but such a contention I cannot accept, as it violently contravenes the principle enunciated above that taxation must be imposed by express words. The real question for decision is, is the phrase "through or from any business connection "in Section 33(1) governed and controlled by the phrase, ' derived from business ' in Section 5(iv) or not. That it is, seems to me to be obvious from the fact that Section 33(1) is not designed or situated in the Act as a charging section in addition to Section 5. It is not found under the 'chapter ' Taxable Income ' alongside the charging section, but under the Chapter headed "Liability in special cases ", a Chapter which is designed to provide for the collection of the tax from persons other than the direct beneficiaries of the income received, that is, guardians, trustees, agents, receivers, and so on. That is, it is a part of the 'machinery ' sections setting out the method by which the tax, if otherwise chargeable, is to be collected in certain cases when the direct beneficiary cannot be got at, and it is not a charging section designed to declare some other gains taxable beyond what has been declared by Section 5 to be taxable. I am fortified in this conclusion by the remarks of Oldfield J, no doubt Obiter dicta, in Board of Revenue v. Ramanathan Chetty (1919) I. L.R. 43 Mad. 75:37 M.L.J. 665 (F.B) that Section 33 is intended to provide for the liability to tax of a person through whose hands in one capacity or other the profits in question will pass in British India, and whom therefore the Crown can reach in order to collect it, and also by the rules framed under Sections 23 by the Governor in Council, printed at page 76 of the Income Tax Manual of 1920, where it is laid down that profits in a case like this may be calculated on the percentage of the turnover of the business carried on in British India. The object of Section 33(1) then is merely to provide for an agent being the assessee in place of his non-resident principal, so far as that principal is liable under Section 5, as hitherto interpreted, to the tax i.e. in respect of income derived by the principal from business in British India. The condition precedent to assessability is business in British India and not merely a business connection in British India, and it is not laid down in the Act that the two phrases are identical in meaning. The test, I take it is: Is the non-resident firm by its agancy out here in British India, making profits in British India which pass to it through the hands of its agent. If it is, then Section 33(1) applies. If not, not. I am therefore unable to hold in the absence of more clear and express words, that Section 33(1) was intended in any way to enlarge the scope of S. (5) or to bring into the net any income accruing outside British India but not derived from business within British India merely because that income was received through or from a business connection in British India.
Madras High Court Cites 23 - Cited by 13 - Full Document
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