Norman Macleod, C.J.
1. This is a reference by the Commissioner of Income Tax under Scetion 66(2) of the Indian Income Tax Act of 1922 in the matter of the assessment for super-tax of Mr. P.S. Mellor. The assessee was a partner in Messrs. P. Chrystal & Co., a registered firm. For the purpose of income tax for the year 1922-23 the basis of the assessment was the profits of the year ending September 30, 1921. During that year Mr. Mellor's share in the partnership was three-sixteenths. At the time of the assessment for the year 1922 23, namely December 6, 1922, the constitution of the firm had changed, and Mr. Mellor had become entitled to a three-eighths share. For the purpose of assessment for income tax, the change in the constitution of the firm made no difference. The firm was liable to pay income tax on the profits of the year ending September 30, 1921. If the firm had not been registered then it would also have been liable to pay super-tax under Scetion 55 of the Act, and consequently any new member who might have come into the firm since September 30, 1921, would be liable as a member of the firm to pay super-tax. But as the firm was registered, the firm as a firm had nothing whatever to do with the payment of super-tax by the individuals who constituted the firm. They would pay the super-tax on their total income for the year ending September 30, 1921. The Commissioner has decided that because Mr. Mellor's share in the firm at the time of assessment for the year 1922-23 was three-eighths, he was liable to be assessed for super-tax on three-eighths of the profits of the firm for the year ending September 30, 1921, although for that year his share was only three-sixteenths.
2. Under Scetion 56 the total income of an individual shall for the purpose of super-tax be the total income as assessed for the purpose of income tax. By Scetion 2(15) total income means the total amount of income, profits and gains from all sources computed in the manner laid clown in Scetion 16. That section only lays down that on computing the total income certain exemptions allowed. in previous sections shall be included, and dividends shall be increased by the amount of income tax payable by the Company concerned. In other words although under the exemptions tax is not payable by an asseesee on certain receipts which are included in the term income, profits and gains, those receipts must be included, while certain other receipts must be increased, when calculating the total income.
3. Under Scetion 14(2) an individual shall not be taxed in respect of such an amount of the profits or gains of any firm which have been assessed to income tax as is proportionate to his share of the firm. Mr. Mellor, therefore, when paying income tax for the year 1922-23 on his income for the previous year would exclude such an amount of the profits in the firm of P. Chrystal and Co., as was proportionate to his share in the firm. I should have thought it clear that he would exclude three-sixteenths of the profits and not three-eighths. But if the Commissioner's contention for the purpose of calculating super-tax were to be allowed it must also hold good for the purposes of calculating the amount to be excluded for the purposes of assessing to income tax.
4. The Commissioner, however, has omitted to notice that the provisos to Sub-scetion (1) of 8. 7, the provisos to Scetion 8 and Sub-scetion (2) of Scetion 14 and Scetion 15, which contain the exemptions referred to in 9. 16, are rendered by Scetion 58 inapplicable to the charges, assessment, collection and recovery of super-tax. Nor can Scetion 26 be relevant to the question in issue, as it only relates to the question on whom the assessment is to be made when there has been a change in the constitution of a firm, or when a person has succeeded to any business, profession or vocation. We are, therefore, thrown back on the question: What was Mr Mellor's total income for the previous year? It is unfortunate that the drafting of the Act has rendered it possible for the most ingenious arguments to be raised on the question how an individual partner in a registered firm is to compute his total income for the purpose of super-tax. The definition of total income in Scetion 2(16) is as inexact as a definition possibly can be. Total income has to be computed in the manner laid down in Scetion 16; but, as I have already pointed out, Scetion 16 gives no direction how the total income has to be computed. All that one can say is that 'total income' means the total amount of income, profits or gains from all sources, including (1) certain receipts on which an assessee is exempt from paying income-tax, and (2) the amount of tax deducted at the source by companies when paying dividends. The result must be that Mr. Mellor in calculating his total income for the previous year was bound only to include the profits which he actually received from the firm.
5. No question is propounded in the reference by the Income Tax Commissioner but we may take it that we have to decide whether his decision included in the following words: 'Hence in calculating the total income of an individual we have to include such an amount of the profits or gains of his firm as is proportionate to his 'share in the firm'' is correct. In our opinion the actual share which Mr. Mellor held in the firm in 1922-23 has nothing whatever to do with the assessment for super-tax for that particular year, since it could only be based on his total income for the previous year, which would only include the profits which he actually received for the year ending. September 30, 1921, according to the share he had then in the firm.
6. Costs will follow the event.
7. Costs to be taxed as on the Original Side. Only one counsel is certified.