HON’BLE SUPREME COURT · SOURCE-REVIEWED NOTE
C.A.P. Andiappan v. Commissioner of Income-tax, Madras & Another
Civil Appeals Nos. 1689 and 1690 of 1968
[1972] 1 SCR 88 ·
Indian Income-tax Act, 1922: section 49A · India-Ceylon Double Taxation Agreement: article 3 and Schedule item 8 · Ceylon Income-tax Ordinance, 1932: section 45(2)
Sources & disclosures includedDownload original judgment / order
2-judge bench; unanimous judgment delivered by K. S. Hegde, J. · K. S. Hegde, J. · A. N. Grover, J.
Assessment years: 1959-60, 1960-61
01 · Facts of the case
An Indian resident earned essentially all assessable income from business in Ceylon for two years. Ceylon taxed him as a resident under its Ordinance and the bilateral agreement, producing lower liability than hypothetical non-resident tax. India assessed under its law, credited the actual Ceylon tax and demanded the balance. The assessee claimed either complete exemption or the higher hypothetical credit (SCR pp.88-91; PDF pp.1-4).
Source: Primary judgment: facts
02 · Discussion by the Hon’ble Court
Article 3 began by authorising each country to assess ordinarily under its own law. Read with Schedule item 8, it required deduction of the lower tax attributable to the same income in the other country. 'Attributable' meant payable after applying the whole foreign statute, including exemptions and allowances, not tax hypothetically leviable on a non-resident. Ramesh R. Saraiya supported treating the agreement as limiting tax retained, not assessment power (SCR pp.91-93; PDF pp.4-6).
Source: Primary judgment: discussion
03 · Judicial decision
The Court rejected both contentions and dismissed the appeals without costs, sustaining abatement of only the Ceylon tax actually payable (SCR p.93; PDF p.6).
Source: Primary judgment: decision
04 · Outcome / in whose favour
In favour of Revenue: Indian assessment stood and the foreign-tax abatement did not include tax relieved by Ceylon law (SCR pp.92-93; PDF pp.5-6).
Source: Primary judgment: outcome
05 · AKHB REVIEW POINT
AKHB analysis: in treaty-credit work, separate the right to assess from the relief limiting double collection, and calculate foreign tax under the foreign law actually applied. This historic agreement cannot substitute for current treaty and credit-rule review (based on SCR pp.91-93; PDF pp.4-6).
Source: Primary judgment: review point
Source & verification
Download original judgment / order · Open cited source rendition
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Statutory scope
The decision applies a historical India-Ceylon agreement and the repealed 1922 Act; current treaty text, residence rules and foreign-tax-credit provisions were not checked.
Later treatment
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