Judgment

JAGANMOHAN REDDY, J.:-(On behalf of himself and Khanna and Dua JJ.) These are appeals by certificate from a common judgment of the Madras High Court rendered in three references under Section 66 (1) of the Income-tax Act, 1922 (hereinafter called the Act ) pertaining to assessment years 1953-54, 1954-55 and 1955-56. In the reference relating to the first assessment year three questions (and) in respect of the last two, two questions were referred by the Tribunal. The three questions relating to the first reference are:

1. Whether on the facts and in the circumstances of the case, the Tribunal is right in its view that the Commissioner of Income-tax had jurisdiction to revise the order of refund?

2. Whether on the facts and in the circumstances of the case, the Tribunal is right in its view that the order of refund under Section 48 read with Section 49-D is independent and distinct from the assessment order ?

3. Whether on the facts and in the circumstances of the case, the Tribunal is right in confirming the computation of relief as modified by the Commissioner?

In the reference relating to the last two assessment years, the questions were:

1. Whether on the facts and in the circumstances of the case, the Tribunal is right in modifying the order of the Appellate Assistant Commissioner?

2 Whether on the facts and in the circumstances of the case the Tribunal is right in its interpretation of Section 49-D?

2. Before the High Court the first question on the first reference was not pressed and therefore was answered against the assessee. The remaining two questions which were considered to be similar to the two questions in the other two references were also answered against the assessee. Before us the second question in the first reference was not pressed, as such substantially the third question in that reference and the first and second questions in the other two references which deal with the validity of the order of the Commissioner and the High Court need alone be considered in these appeals.

3. The assessee who is now dead and is succeeded by legal representatives was doing money lending business in Malaya as well as in this country. He also owned rubber gardens abroad. In respect of the first assessment year 1953-54 the assessee declared his foreign income as Rupees 2,22,532 and showed a loss on business in India as Rs. 68,858 and income from other sources as Rs. 39.142/-. In the other two references it is not necessary to refer to the incomes earned by him abroad and in India except to say that the Appellate Assistant Commissioner allowed the appeal in part holding that the income from all the sources in India have to be considered together just as Income from all sources abroad must be considered together and in that view held that the net assessed income in India from Malaya is what has suffered double tax. What is to be determined in these appeals is on what basis should the double taxation relief be afforded to the assessee It will be sufficient if we take the first assessment as illustrative of the problem which is posed in these appeals.

4. The Income-tax Officer allowed double taxation relief on a sum of Rs. 1,92,816/- by adding income from other sources to the foreign income and deducting from the total thus computed the loss of Rs. 68,858. The Commissioner in exercise of his powers under Section 48 read with Section 49-D however held that that computation was wrong because according to him the business loss of Rs. 68,858 incurred by the assessee can be set off only against the business profits of Rs. 2,22,532 earned in Malaya resulting in a business income of Rs. 1,53,674 being the only income from Malaya which can be considered to have suffered double taxation. In appeal against the order of the Commissioner, the Tribunal following the judgment in C.I.T. Madras v. Arunachalam Chettiar, (1963) 49 ITR 574 (Mad) came to the conclusion that the expression "such doubly taxed income" can only indicate that it is that