HON’BLE SUPREME COURT · SOURCE-REVIEWED NOTE
Commissioner of Income-tax, West Bengal III, Calcutta v. Carew and Co. Ltd.
Civil Appeal No. 2097 of 1978
[1980] 1 SCR 633 ·
Indian Income-tax Act, 1922: sections 2(1), 4, 6, 49A and 49D · India-Pakistan Agreement for Avoidance of Double Taxation: Articles I, IV and VI and Schedule
Sources & disclosures includedDownload original judgment / order
2-judge bench; separate concurring opinions by N. L. Untwalia and R. S. Pathak, JJ. · N. L. Untwalia, J. · R. S. Pathak, J.
Assessment years: 1956-57
01 · Facts of the case
The Indian company had Pakistan manufacturing profit of Rs.3,26,368 and a Pakistan agricultural loss of Rs.3,20,839. Revenue netted them before allowing Agreement abatement; the assessee claimed full business-profit abatement and separate loss adjustment (SCR pp.633-637; PDF pp.1-5).
Source: Primary judgment: facts
02 · Discussion by the Hon’ble Court
Foreign agricultural income was outside the Act's India-linked exemption and entered domestic total income, but the Agreement allocated taxing rights by separate sources. Agricultural income was outside the relevant Agreement machinery, so its loss could not reduce the manufacturing-profit abatement base. Unilateral-relief aggregate-income reasoning was distinguishable (SCR pp.637-644; PDF pp.5-12).
Source: Primary judgment: discussion
03 · Judicial decision
The full manufacturing profit qualified for abatement, the agricultural loss remained separately adjustable, and Revenue's appeal was dismissed with costs (SCR pp.642, 644; PDF pp.10, 12).
Source: Primary judgment: decision
04 · Outcome / in whose favour
In favour of Carew and Co. on final merits under the historical Agreement (SCR pp.642-644; PDF pp.10-12).
Source: Primary judgment: outcome
05 · AKHB REVIEW POINT
AKHB analysis: maintain separate computation layers for domestic total income, treaty source allocation and relief. A loss can affect domestic taxable income without shrinking a distinct treaty abatement base (based on SCR pp.640-644; PDF pp.8-12).
Source: Primary judgment: review point
Source & verification
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Statutory scope
The 1922 Act and 1947 India-Pakistan Agreement are historical; no present treaty or unilateral-relief treatment is represented.
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