Judgement

SHAH, J.: Netherlands Steam Navigation Company Ltd. - hereinafter called "the assessee" - is a non-resident Company engaged in shipping business. For the assessment years 1952-53 to 1956-57 the assessee filed its return of income for the relevant accounting years disclosing taxable income computed on the basis of its annual turnover in its Indian trade i.e., "round voyages" to and from Indian Ports. The assessee did not furnish particulars of its world income. The Income-tax Officer computed the taxable business income of the assessee for each year by the application of the following formula:

Indian Port receipts

Indian trade profits

Total Port receipts

By the expression "Indian trade profits" in the formula was meant profit earned in "round voyages" made by the assessee s ships which touched Indian ports. Operation of the formula may be illustrated by taking a sample computation by the Income-tax Officer for the year 1953-54:

"Total gross earnings in Indian Trade Kr. 10,024,996

Deduct :-

(1) Total expenses in Indian Trade. Kr. 7,705,474

(2) Depreciation allowance Kr.733,671 Kr. 8,439,145

Net profit Indian Trade Kr. 1,585,851

Gross earnings from Indian ports Kr. 5,440,042

Pr