Sabyasachi Mukhaeji, J.:— The assessee is a limited company. It was a non-resident company in the relevant assessment year. We are concerned in this reference with the assessment year 1963-64, for which the relevant previous year ended on 31st December, 1962. The assessee-company was taxed in India on its United Kingdom income. The ITO invoked the provisions of s. 11 of the Finance Act, 1946, which provided that the excess profits tax refund was to be deemed as income for the purposes of the Indian I.T Act, 1922. In this connection, it may be appropriate to refer to the relevant provisions of the Indian Finance Act, 1946. Sub-section (11) of s. 11 of the Finance Act, 1946, read as follows:
Section 11(11)
“Any sum being excess profits tax repaid in respect of any chargeable accounting period under the provision of section 10 of the Indian Finance Act, 1942, or of section 2 of the Excess Profits Tax Ordinance, 1943 (XVI of 1943), shall be deemed to be income for the purposes of the Indian Income-tax Act, 1922, and shall, notwithstanding the provisions of section 34 of that Act, be treated as income of the previous year which constitutes or includes the chargeable accounting period in respect of which the said sum is repayable:
Provided that any such sum repaid in respect of any profits which are also assessable to excess profits tax under the law in force in the United Kingdom shall be treated, for the purpose of assessment to income-tax and super-tax, as income of the previous year during which the repayment is made.”
2. Sub-section (14) of s. 11 of the said Act was as follows:
Section 11(14)
“Where under the provisions of sub-section (2) of section 12 of the Excess Profits Tax Act, 1940 (XV of 1940), excess profits tax payable under the law in force in the United Kingdom has been deducted in computing for the purposes of income-tax and super-tax the profits and gains of any business, the amount of any repayment under sub-section (1) of section 28 of the Finance Act, 1941 (4 & 5 Geo 6 c. 30), as amended by section 37 of the Finance Act, 1942 (5 & 6 Geo 6 c. 21), in respect of those profits, shall be deemed to be income for the purposes of the Indian Income-tax Act, 1922, and shall, for the purpose of assessment to income-tax and super-tax, be treated as income of the previous year during which the repayment is made.”
3. The assessee being aggrieved with the order of the ITO filed an appeal before the AAC, who found that the Indian I.T Act, 1922, was repealed by the I.T Act, 1961, and the assessment year under consideration was governed by the I.T Act, 1961. The AAC, therefore, held that although excess profits tax refund was taxable under the Indian I.T Act, 1922, the same was not taxable under the I.T Act, 1961, because, according to the AAC, there was no saving clause in the I.T Act, 1961, on this account. The AAC further held that the assessee being a non-resident company and the post-war excess profits tax refund having been received in the United Kingdom, the same was not assessable under the I.T Act, 1961. The AAC in his order set out sub-s. (11) of s. 11 of the Finance Act, 1946, and came to the aforesaid conclusion and held that the inclusion on this account of a sum of Rs. 1,33,280 could not be sustained. The revenue preferred an appeal before the Tribunal. The Tribunal, after noting the rival contentions, observed as follows:
“We find ourselves in agreement with the reasoning given by the Appellate Assistant Commissioner. The Indian Income-tax Act, 1922, has been repealed by the Income-tax Act, 1961, and, unless there was a specific saving clause in the Act of 1961, the provisions of the Indian Income-tax Act, 1922, cannot apply; the said post-war E.P.T refund was made taxable under the Finance Act, 1946, which, in turn, had reference to the Indian Income-tax Act, 1922. We are, therefore, of the view that since there is no express saving clause in the Act of 1961 the repayment of the E.P.T which is received by the assessee, a non-resident, in the United Kingdom cannot be taxed under the Income-tax Act, 1961.”
4. The Judicial Member of the Tribunal made certain further observations which were as follows:
“I would add the following only as regards the E.P.T refund in the U.K Even taking that the reference in section 11 of the Indian Finance Act, 1946, to the Indian Income-tax Act, 1922, has, by virtue of section 8 of the General Clauses Act, to be taken as reference to the Income-tax Act, 1961, still the refund can be taxed under the 1961 Act only if it is taxable thereunder. The proviso to section 11 which specifically refer to the U.K refunds provides only for its being treated as income in the year of receipt. It does not provide for the said amount being treated as income accruing or arising in India. The locus of the income has thus to be ascertained. The refund arose under a statute in the U.K and was due and payable there. It thus accrued and arose there. The foreign income of a nonresident is not taxable in India. The assessee is a non-resident and the income accrued abroad. It cannot, therefore, be taxed by reference to section 11 of the Finance Act, 1946, or the Income-tax Act, 1961.”
5. In the premises, under s. 256(1) of the I.T Act, 1961, the following question has been referred to this court:
“Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the post-war E.P.T refund received by the assessee in the United Kingdom was not liable to be included in the assessable income of the assessee by reference to section 11 of the Finance Act, 1946, or the Income-tax Act, 1961, for the assessment year 1963-64?”
6. It is apparent that the AAC had considered the question of assess-ability of the amount in question by reference to sub-s. (11) of s. 11 of the Finance Act, 1946. That was not, however, the appropriate section because that sub-section dealt with the refund of excess profits tax paid under the Indian Finance Act, 1942, or excess profits tax in respect of the payments made in India. In respect of the excess profits tax payable under the law in force in the United Kingdom the appropriate provision is sub-s. (14) of s. 11, which also we have set out hereinbefore. Counsel for the assessee contended that, in those circumstances, it would not be proper for us to express our opinion on the question because the Tribunal has not referred to sub-s. (14) of s. 11. The Tribunal has mentioned that the Tribunal was in agreement with the views of the AAC who, as we have mentioned hereinbefore, had referred to the inappropriate section, viz., sub-s. (11) of s. 11 of the Act. The question, however, is whether the amount involved was assessable in the relevant assessment year. This question, in our opinion, is wide enough to permit us to examine whether this is so by virtue of sub-s. (14) of s. 11 of the relevant Act. The fact that the AAC has referred to a wrong subsection would not, in our opinion, debar the court from examining the question by reference to the proper sub-section of the Act, if that is possible without investigation of any fresh facts. In this case, no question of any fresh facts arises. The assessee was a non-resident company in the relevant assessment year. The amount involved was the post war excess profits tax refund which was paid under the law in force in the United Kingdom. The amount had been refunded to the assessee and received by the assessee in the United Kingdom. In those circumstances, the question is whether such amount is assessable in view of the provisions of the Finance Act, 1946, or the Income-tax Act, 1961.
7. Counsel for the assessee contended that in the relevant year, in order to be a resident company under sub-s. (3) of s. 6 of the I.T Act, 1961, it was necessary for the company to be either an Indian company or during the year the control and management of the company should have been situated wholly in India. But under s. 4A(c) of the Indian I.T Act, 1922, in order to be a resident company, the company had to be either an Indian company or during the year the control and management of its affairs should have been situated in the taxable territories. It was, therefore, urged that though sub-s. (14) of s. 11 had made the receipt in question to be the income and had made that receipt assessable to income-tax or super-tax, the sub-section had not made the further provision that such income should be deemed to have accrued or arisen in India. Our attention was drawn to the relevant provisions of s. 5 and s. 9 of the I.T Act, 1961, and it was submitted that under s. 9 of the Act, for a non-resident company, a receipt would not be taxable unless such income or receipt could be considered to have arisen or accrued in India or deemed to have arisen or accrued in India. It was submitted that sub-s. (14) of s. 11 had not made further deeming provision that such income should be deemed to have arisen or accrued in India and in the case of a non-resident company, without such further deeming provision, the amount could not be taxable. In this connection, reliance was placed on the theory that the deeming provision should be strictly construed and fictions in statute should be limited to the particular purpose for which it was created and the scope should not be extended beyond the purpose. Reliance in this connection was placed on the observations of the Supreme Court in the case of Commissioner Of Income-Tax v. Ajax Products Ltd. (In Voluntary Liquidation), [1965] 55 ITR 741.
8. The arguments advanced on behalf of the assessee are attractive but we are unable to accept the same. It is apparent that sub-s. (14) of s. 11 clearly by the operation of that sub-section makes the amount received as refund not only the income but also the income of the previous year for the purpose of assessment to income-tax and super-tax. The object of making such receipt income for the purpose of super-tax and income-tax, in our opinion, clearly indicate that the Legislature was expressing the intention to make the amount in question assessable under the provision of the relevant Income-tax Act. Counsel, however, sought to urge that even though the receipts were made assessable or were given the quality of being assessed until it was said that these were to be assessed either because they had accrued or deemed to have accrued either by operation of s. 9 or by operation of any further provision in the Finance Act, 1946, such receipts, though assessable, could not be subject to assessment. We are unable to accept this contention. The clear intention of the Legislature is that the amount in question should be dealt with as assessable income and that is the meaning of the expression used. This, in our opinion, follows logically from the language used in sub-s. (14) of s. 11 of the Finance Act, 1946. But quite apart from this, the matter, in our opinion, is concluded by the decision of this court which has been affirmed by the Supreme Court. We first, refer to the decision of this court in the case of McGregor and Balfour Ltd. v. CIT, [1955] 27 ITR 389. There, the assessee-company was incorporated in the United Kingdom and had its registered office there and had its control and management also wholly situated outside India. The assessee-company traded in India and paid excess profits tax under the relevant Acts both in India and in England. In respect of the tax paid in India and in the United Kingdom, the assessee availed themselves of the provision of s. 12(1) and 12(2) of the E.P.T Act, 1940, respectively, and deducted appropriate amounts in computing their profits and gains of the relevant years for the purposes of income-tax and supertax. In the accounting year ended on 31st October, 1946, the assessee obtained in the United Kingdom repayment under s. 28(1) of the English Finance Act, 1941, of a certain amount out of the excess profits tax paid there. The question was whether in the assessment year 1947-48 the amount repaid could be included in the taxable profits of the assessee and could also be taken into consideration for determining their residence under s. 4A(c)(b) of the Indian I.T Act, 1922. It was held by the Division Bench of this court that the amount repaid was income of the assessee and was liable to be assessed under the Indian I.T Act, 1922, during the assessment year 1947-48 by virtue of s. 11(14) of the Finance Act, 1946, and, the amount could not be treated as income arising in India, and, therefore, could not be taken into consideration for the purpose of determining the residence of the assessee-company under s. 4A(c)(b) of the Act. Chief Justice Chakravartti referred to the purpose of sub-s. (14) of s. 11 and observed that the section was obviously enacted to meet the case where the assessee, having paid some excess profits tax in the United Kingdom, had an equivalent sum removed from his taxable profits and was not taxed therefrom and would, when any part of the excess profits tax was refunded to him, escape Indian income-tax on that sum altogether, unless a provision for the taxation of such amount was made. Section 11(14), according to the learned Chief Justice, supplied such a provision. It was urged before that court, as it was urged before us, that while the section made the amount of the refund income, it did not make it assessable income and that the liability to tax had been left to be determined by the general provisions of the I.T Act. The learned Chief Justice was unable to accept this contention and he referred to the similar provision of the Finance (No. 2) Act of 1915 in England. He also referred to the observations of Lord Han-worth M.R in the case of A. and W. Nesbitt Ltd. (In liquidation) v. Mitchell, [1926] 11 TC 211 (CA) and the observations of Rowlatt J. in the case of Oliv and Partington Ltd. v. Rose, [1929] 14 TC 701 (KB). He quoted the observations of the House of Lords in the case of Kirke's Trustees v. IRC, [1926] 11 TC 323, 332. The said observations are as follows:
“The express mandatory terms of the sentence show, in carefully chosen language, that he is to submit to something by reason of his having previously enjoyed this advantage in the shape of repayment of an amount previously paid by way of Excess Profits Duty. Something which is not a profit, but is only a money repayment, something which may not result in a profit, because although trading goes on there is so great a loss on the year that this repayment does not make up the deficit, something which may not be a trading profit, because trading has ceased altogether, nevertheless is to be treated as profit and as profit for the year. ‘Treated’ is a fresh word free from legal technicality. It is the widest word that could be chosen. The Legislature avoided saying ‘shall be assessed as’ or ‘shall be brought into the computation of profit and loss,’ and simply says that something which is not profit but mere payment shall be treated as profit, which it may or may not be, and as profit for the year. I think, therefore, that the word ‘treated’ is an apt word to impose a charge.”
9. The learned Chief Justice further went on to observe that the language of the English Act was only that the amount repaid should be treated as profit for the year in which the repayment was received, the Indian section was expressed in far stronger language and said that it should be for the purpose of assessment to income-tax and super-tax and be treated as income of the previous year during which the repayment was made. The learned Chief Justice, therefore, came to the conclusion that the effect of sub-s. (14) of s. 11 was to make the amount of repayment not only income but also the assessable income in India. The said decision was approved by the Supreme Court in the case of McGregor and Balfour Ltd. v. CIT, [1959] 36 ITR 65 where Hidayatullah J. (as his Lordship then was), observed at page 71 of the report as follows:
“Mr. Mitra for the company contends that no doubt the amount may be treated as ‘income’ for the purposes of the Indian Income-tax Act, but the department is still under a duty to prove that the company is liable to tax at all. According to him, this will have to be treated as income received outside the taxable territory, because if the fiction contemplated its being treated as ‘within the taxable territory’, it would have said so specifically. In our opinion, this submission cannot be accepted.
That this would have been taxable income but for the provisions of section 12(2) of the Excess Profits Tax Act, goes without saying. The income character of the receipt is restored by the fiction, and it is to be brought under assessment without any further proof than this that it has been received as repayment of the United Kingdom tax, in respect of which a deduction was made in the earlier years. The distinction between incomes within and without taxable territories is made unnecessary by demanding that this amount by way of repayment shall be brought to tax and ‘treated’ as income within the previous year. The effect thus is that the sub-section charges the said amount with a liability to tax by its own force or, to borrow the words of Lord Sumner, is apt to ‘impose a charge’.
In our opinion, the amount received as repayment of excess profits tax must be deemed to be ‘income’ for the purposes of the Indian Income-tax Act, and for assessment it must be treated as income of the previous year. The answer to question No. 1 given by the Calcutta High Court was thus correct.”
10. For the reasons aforesaid, we are unable to accept the contention urged on behalf of the assessee that the amount in question was not assessable, because there was no finding that the amount had accrued or had been received or deemed to have accrued or to have been received in India nor/was there any provision making the amount received by the assessee as deemed to have been received by him in India.
11. It was next contended that sub-s. (14) of s. 11 had made these amounts income for the purposes of the Indian I.T Act, 1922, but the Indian I.T Act, 1922, had been repealed. Therefore, under the I.T Act, 1961, the said amount repaid could not be made taxable.
12. section 8 of the General Clauses Act, 1897, which reads as follows:
“Construction of references to repealed enactments.—(1) Where this Act, or any Central Act or Regulation made after the commencement of this Act, repeals and re-enacts, with or without modification, any provision of a former enactment, then references in any other enactment or in any instrument to the provision so repealed shall, unless a different intention appears, be construed as references to the provision so re-enacted.”
is an answer to this contention.
13. Learned counsel, however, sought to urge that in case where. “any provision of the former enactment” mentioned in the said s. 8 would refer to a particular provision but in this case no particular provision of the Indian I.T Act, 1922, has been re-enacted under the I.T Act, 1961, under which the receipt in question was sought to be made taxable. This question also, in our opinion, is without substance because when the section says “any provision”, it means any or all provisions of the Act. This argument is also concluded by the decision of this court as well as the Supreme Court. Reliance in this connection may be placed on the observation of the Division Bench of this court in the case of Ram Prosad Ramnarain v. Bejoy Kumar Sadhukhan, AIR 1966 Cal 488, where with reference to s. 8 of the General Clauses Act, 1897, the court held that any reference to the Limitation Act, 1908, after its repeal should be read as reference to the Limitation Act, 1963, in the City Civil Courts Act, 1953. In the case of New Central Jute Mills Co. Ltd. v. Assistant Collector of Central Excise, (1970) 2 SCC 820 : AIR 1971 SC 454, the Supreme Court held that on the repeal of the Sea Customs Act reference to the Sea Customs Act in the Central Excises and Salt Act, 1944, should be read as reference to the provisions of the Customs Act, 1962. This contention, on behalf of the assessee, therefore, cannot also be accepted.
14. In the result, we must hold that under sub-s. (14) of s. 11 of the Finance Act, 1946, the amount in question was assessable and was liable to be included in the income of the assessee for the relevant assessment year.
15. The question is, therefore, answered in the negative and in favour of the revenue. Parties, however, will bear and pay their own costs.
Guha, J.:— I agree.