| Case ID |
059cc17f-0089-403a-a09e-6c414ffa7e24 |
| Body |
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| Case Number |
CIVIL APPEAL No. 381 OF 1956 |
| Decision Date |
May 12, 1958 |
| Hearing Date |
|
| Decision |
The Supreme Court upheld the decision of the High Court, affirming the applicability of Section 42(2) of the Income-tax Act, 1961, to the appellant, Mazagaon Dock Ltd. The court concluded that the non-resident companies had indeed carried on business with the appellant, as they had a continuous trading relationship in the repair of their ships, which constituted a business activity. The court emphasized that the profits deemed to have been derived from the business of the resident were subject to taxation, even if those profits were not actually realized. The judgment clarified the interpretation of 'derived' in the context of the resident's business and confirmed that the charge of tax could be applied to notional profits in certain circumstances, thereby reinforcing the tax liability on the resident as defined by the law. |
| Summary |
In the landmark case of Mazagaon Dock Ltd. v. Commissioner of Income Tax, the Supreme Court of India addressed critical issues regarding the taxation of income deemed to accrue in India under the Income-tax Act, 1961. The case revolved around the interpretation of Section 42(2), which pertains to the taxation of profits derived from business transactions with non-resident entities. The appellant, a marine engineering firm, was wholly owned by two non-resident companies engaged in shipping. The primary contention was whether the profits from repairs conducted by the appellant for these companies were taxable under the Act. The Supreme Court ruled that, despite the absence of actual profits, the business relationship constituted sufficient grounds for tax liability. This case highlights the complexities of international tax law and the importance of understanding how business relationships can impact tax obligations. Keywords: Income-tax Act, Section 42(2), non-resident taxation, business profits, Supreme Court of India, international tax law. |
| Court |
Supreme Court of India
|
| Entities Involved |
Mazagaon Dock Ltd.,
Commissioner of Income Tax & Excess Profits Tax
|
| Judges |
Venkatarama Aiyar,
Gajendragadkar,
A.K. Sarkar
|
| Lawyers |
Jamshedji B. Kanga,
N.A. Palkhivala,
J.B. Dadachanji,
S.N. Andley,
P.L. Vohra,
Rameshwar Nath,
H. N. Sanyal,
G.N. Joshi,
R.H. Dhebar
|
| Petitioners |
Not available
|
| Respondents |
Not available
|
| Citations |
1958 SLD 312 = (1958) 34 ITR 368
|
| Other Citations |
Anglo-French Textile Co. Ltd. v. CIT [1953] 23 ITR 101 (SC),
Bangalore Woollen, Cotton and Silk Mills Co. Ltd. v. CIT [1950] 18 ITR 423 (Mad.),
CIT v. Currimbhoy Ebrahim & Sons [1935] 3 ITR 395 (PC),
CIR v. Incorporated Council of Law reporting [1888] 3 Tax Cas. 105,
Major A.U. John, In re [1938] 6 ITR 434 (All.),
Narain Swadeshi Weaving Mills v. CEPT [1954] 26 ITR 765 (SC),
Smith Barry v. Cordy [1946] 28 Tax Cas. 250,
Tennant v. Smith [1892] 3 Tax Cas. 158,
CIT/EPT v. Mazagaon Dock Ltd. [1955] 28 ITR 35 (Bom.)
|
| Laws Involved |
Income-tax Act, 1961
|
| Sections |
9,
42(2)
|