Beaumont, C.J. - This is a reference made by the Commissioner of Income-tax under Section 66(2) of the Act raising a question which does not, I think, present any serious difficulty.
The facts are, that the assessees are rice merchants carrying on business in Bombay and Rangoon, the Head office being in Bombay and the Branch office in Rangoon, and down to the 31st March, 1937. Burma was part of British India, but it ceased to be part of British India as from the 1st April, 1937. The year of assessment is the year 1937-38, during the whole of which Burma was not part of British India, but under Section 3 of the Income-tax Act as construed by the High Court of Calcutta in In the matter of Beharilal Mullick, I.L.R. 54 Cal. 630 the tax for the year of assessment has to be levied on the actual income of the previous year, which in this case ended November, 1936, so that during the whole of the previous year Burma was part of British India. The argument of the Commissioner is that you can only tax under Section 4 the profits which accrued or arose in British India, and that must mean in British India during the year of assessment while the tax is imposed by the Finance Act of the year. But as you have to impose the tax for the year of assessment on the actual income of the previous year, it seems to me plain that you must take the facts as they existed during that previous year; otherwise you are not ascertaining the actual income of the previous year, you are only ascertaining what would have been the income of the previous year if the facts had been as thy existed in a subsequent year. On the facts as they existed in the previous year Burma was part of British India, and therefore under Section 24 it is plain that you can set off the loss in Rangoon against the profits in Bombay. The exact point has been decided by a Full Bench of the Madras High Court in Commissioner of Income-tax, Madras v. Valliammai Achi 1939 Mad. 388 Even if I felt any doubt upon the point I should think it right to follow the decision of the Madras High Court, there being no conflicting authority, because it is obviously undesirable that in construing an All India Act like the Income-tax Act different constructions should be placed upon the Act in different provinces. The actual question raised is :-
'Whether the assessees are entitled to have a deduction of Rs. 34,950 on account of the loss disclosed by their Burma accounts in view of the fact that though from the commencement of the year of assessment, Burma ceased to be a part of British India, during the 'previous year' of the assessees in which the said loss was sustained Burma was part of British India.'
And the answer will be in the affirmative. The second question does not arise. Costs to be paid by the Commissioner.
Kania, J. - I agree.
Reference answered in the affirmative.