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PETITIONER: MAZAGAON DOCK LTD.

       Vs.

RESPONDENT: THE COMMISSIONER OF INCOME-TAX AND EXCESS PROFITS TAX

DATE OF JUDGMENT: 12/05/1958

BENCH: AIYYAR, T.L. VENKATARAMA BENCH: AIYYAR, T.L. VENKATARAMA GAJENDRAGADKAR, P.B. SARKAR, A.K.

CITATION:  1958 AIR  861            1959 SCR  848

ACT: Income  Tax-Non-resident cayrying on business with  resident No profit  accruing from dealings between them-Assessment of resident-Validity-"  Business ", meaning of -Indian  Income- tax Act, 1922 (11 Of 1922), s. 42(2).

HEADNOTE: Under s. 42(2) Of the Indian Income-tax Act, 1922, " Where a person  not  resident  or not  ordinarily  resident  in  the taxable  territories  carried  on  business  with  a  person resident  in the taxable territories, and it appears to  the Income-tax  Officer  that  owing  to  the  close  connection between  such persons the course of business is so  arranged that  the  business  done by the resident  person  with  the person  not resident or not ordinarily resident produces  to the  resident  either no profits or less than  the  ordinary profits  which might be expected to arise in that  business, the  profits derived therefrom, or which may  reasonably  be deemed  to have been derived therefrom, shall be  chargeable to  income-tax in the name of the resident person who  shall be  deemed  to  be, for all the purposes of  this  Act,  the assessee in respect of such income-tax The  appellant,  a  private  limited  company  carrying   on business  as  marine engineers and ship  repairers  had  its registered office in Bombay and was resident and  ordinarily resident  in  India,  but  its  entire  share  capital   was beneficially  owned  by  two  non-resident  companies  whose business  consisted  in  plying ships for  hire.   Under  an agreement between them the ships plied for hire by the  non- resident  companies  were to be repaired  by  the  appellant company  at  cost,  charging  no  profits.   The  Income-tax Officer made an assessment on the appellant company under S. 42(2) of the Indian Income-tax Act, 1922.  It was  contended for the appellant (1) that S. 42(2) imposed a charge only on a  business carried on by a non-resident and that  therefore no  tax could be imposed on the business of  the  appellant, and  (2)  that it was a condition for the levy of  a  charge under  that subsection that the non-resident must  carry  on business  with the resident and that in the instant case  it was  not satisfied, as all that the  non-resident  companies did  was only to get their ships repaired by  the  appellant

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company: Held,  (1) that the business which is the subject-matter  of taxation under s. 42(2) Of the Indian Income-tax Act,  1922, is  that  of the resident and not of  a  non-resident.   The expression 849 "  derived  therefrom " in that sub-section  refers  to  the business of the resident. (2)that  a person can be said to carry on a business  with another  if  the dealings between them  form  concerted  and organised activities of a business character. Where, as in the instant case, the nonresident companies got their ships repaired by the appellant, not as they might  by any  other  repairer  but under  a  special  agreement  that repairs  should be done by the appellant at cost,  the  non- resident companies must be held to have carried on  business with  the  appellant within the meaning of s. 42(2)  Of  the Act,  even  though  the non-resident  companies  might  have derived no profits from the dealings with the appellant. Narain Swadeshi Weaviing Mills v. The Commissioner of Excess Profits Tax, [1955] 1 S.C.R. 952 and Commissioners of lnland Revenue  v. I corporated Council of Law Reporting, (1888)  3 Tax Cas. 105, relied on.

JUDGMENT:    CIVIL  APPELLATE  JURISDICTION: Civil Appeal No.  381  of 1956. Appeal  by special leave from the judgment and  order  dated February  24, 1955, of the Bombay High Court  in  Income-Tax Reference No. 52/X of 1954. N.   A. Palkhivala (with him, Jamshedji B. Kanga), S.   N. Andley, J. B. Dadachanji, P. L. Vohra and  Rameshwar Nath, for the appellant. H.   N. Sanyal, Additional Solicitor-General of India, G.   N.  Joshi and R. H. Dhebar, for the  respondent.  1958. May 12.  The Judgment of the Court was delivered by VENKATARAMA AIYAR J.-This is an appeal against the  judgment of the High Court of Bombay in a reference under s. 66(1) of the Indian Income-tax Act, 1922, hereinafter referred to  as the Act. The  appellant  is a private  limited  company  incorporated under the Indian Companies Act, and is carrying on  business as  marine  engineers and ship  repairers.   Its  registered office  is  in  Bombay and it  is  resident  and  ordinarily resident in India.  Its entire share capital is beneficially owned by two British companies, the P. & 0. Steam Navigation Co. Ltd., and the British Indian Steam Navigation Co.  Ltd., whose business 850 consists  in  plying  ships for hire.   Under  an  agreement entered into with the two companies aforesaid, which will be referred  to hereinafter as the non-resident companies;  the appellant  repairs  their  ships at  cost,  and  charges  no profits.   Now, the point for determination is  whether,  on these  facts,  the appellant is chargeable to tax  under  s. 42(2) of the Act.  That sub-section runs as follows: " Where a person not resident or not ordinarily resident  in the  taxable territories carries on business with  a  person resident  in the taxable territories, and it appears to  the Income-tax  Officer  that  owing  to  the  close  connection between  such persons the course of business is so  arranged that  the  business  done by the resident  person  with  the

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person  not resident or not ordinarily resident produces  to the  resident  either DO profits or less than  the  ordinary profits  which might be expected to arise in that  business, the  profits derived therefrom, or which may  reasonably  be deemed  to have been derived therefrom, shall be  chargeable to  income-tax in the name of the resident person who  shall be  deemed  to  be, for all the purposes of  this  Act,  the assessee in respect of such income tax.  " The  Income-tax  Officer, Bombay who dealt with  the  matter took the view that the appellant company had so arranged its business  with  the non-resident companies that it  did  not produce any profits to it, and that was because it was those companies  that  really owned its share  capital,  and  that therefore  the profits which it could ordinarily  have  made but  for their close financial connection were liable to  be taxed  under  s.  42(2), and he computed  the  same  at  Rs. 6,80,000 for the account year 1943-1944, at Rs. 4,67,559 for the  account  year  1944-1945 and at Rs.  4,68,963  for  the account  year 1945-46.  On the basis of the above  findings, orders of assessment of income-tax were made for the account years 1944-1945 and 1945-1946 and of excess profits tax  for the  account  years  1943-1944,  1944-1945  and   1945-1946. Against  these five orders, the appellant preferred  appeals to the Appellate Assistant Commissioner, who by his 851 order  dated July 3, 1952, confirmed the same.   Then  there was  a  further  appeal by the appellant  to  the  Appellate Tribunal,  and  the Bench which heard the same  having  been divided  in  its opinion, the matters came  up  for  hearing before the President, who by his order dated March 19, 1954, held  that s. 42(2) was inapplicable and he accordingly  set aside  the  orders of assessment of  income-tax  and  excess profits  tax made on the appellant.  On the  application  of the Department, the Tribunal referred the following question for the opinion of the High Court of Bombay: " Whether on the facts and in the circumstances of the  case any   income  falls  to  be  included  in  the   appellant’s assessment under s. 42(2).  " The reference was heard by Chagla C. J. and Tendolkar J. who by their judgment dated February 24, 1955, held that, on the facts found, s. 42(2) was applicable and that the  appellant was  liable to be assessed to income-tax and excess  profits tax  under  that section.  The appellant  applied  under  s. 66(A)  for  leave to appeal against this  judgment  to  this court,  and that application was dismissed.   The  appellant thereafter applied for and obtained leave to appeal to  this Court under Art. 136, and hence this appeal. It must be mentioned that on December 31, 1948, an order  of assessment  bad  been  made in  respect  of  the  income-tax payable by the appellant for the account year 1943-1944, and therein, the profits chargeable under s. 42(2) had not  been included.   But  subsequently, the Income-tax  Officer  took action under s. 34 of the Act, and on May 29, 1953, made  an order  assessing the appellant to tax for that year  on  the profits  deemed to have been made by it under s. 42(2),  and against  that  order,  an  appeal  is  pending  before   the Appellate  Assistant  Commissioner.  That order is  not  the subject-matter   of  the  present  proceedings,  which   are concerned  only  with the assessment of income-tax  for  the account years 1944-1945 and 1945-1946 and of excess  profits tax  for  the account years 1943-1944, 1944-1945  and  1945- 1946. Now,  the  sole point for determination in  this  appeal  is whether  on the facts found the appellant is  chargeable  to tax under s. 42 (2) of the Act.  Mr. Palkhivala,

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852 learned counsel for the appellant, contends that it is  not, and urges two grounds in support of his contention: (1) that s. 42(2) imposes a charge only on a business carried on by a nonresident,  and  that therefore no tax  could  be  imposed under that provision on the business of the appellant who is a resident; and (2) that it is a condition for the levy of a charge  under s.42 (2) that the non-resident must  carry  on business with the resident, and that in the instant case  it is not satisfied.  The first ground does not appear to  have been  put forward in the Court below, but before us  it  has been  presented  with  great elaboration  and  pressed  with considerable insistence.  The argument in support of it  may thus  be stated: S. 42 (2) imposes a charge on profits of  a business, actual or notional, when the conditions  specified therein  are satisfied; but the section does not, in  terms, say who the person is whose business is liable to be  taxed, but  that  that can only be the non-resident is  clear  from other parts of the section.  Thus, the tax is imposed  under s.  42 (2) on profits " derived " from business, which  must mean  profits  actually  made therein.   Ex  hypothesi,  the resident  has  so  arranged his business  that  it  produces little  or  no  profits to him.  If  it  has  produced  some profits, then they are taxable in his hands even apart  from this provision, and if he has made no profits, then the word "   derived  "  would  be  inapplicable  to  his   business. Therefore,  the  profits " derived " and taxable  under  the section  can have reference only to the business of  a  non- resident.  Then again, the profits are chargeable under this section  in  the  name  of the  resident.   If  the  profits chargeable  under  s. 42(2) accrue from a  business  of  the resident, he would be the person who would, even apart  from the  section, be liable for the tax, and in that  situation, the  expression  " in the name of the resident  "  would  be inappropriate.  It would make sense if, in fact, the profits accrued in a business carried on by a person other than  the resident,  and  the legislature sought to tax  them  in  his hands.   The  true intention behind the legislation,  it  is said,  is  that the profits of the  non-resident  should  be taxed,  but  that  the tax should fall on  the  resident  by reason of his 853 close  connection  with the nonresident.  Support  for  this contention is sought in the provision in s. 42 (2) that  the resident shall be deemed to be the assessee for all purposes of  the Act.  The word " deemed " imports, it is  argued,  a legal  fiction, and if it was the, business of the  resident that  was  intended to be taxed, then he is,  in  fact,  the assessee,  and it would be’ inconsistent with that  position that he should be treated as an assessee by a legal fiction. It is also urged that sub-ss. (1) and (3) of s. 42 deal with the  profits of a nonresident and prescribe  the  conditions under which and the manner in which the tax could be imposed and  collected,  and  s. 42 (2) must  in  this  setting,  be construed as referring to the business of the nonresident. There  would have been considerable force in this  argument, had  there been any ambiguity or undertainty in the  wording of  s.  42  (2)  as to whether it is  the  business  of  the resident  that  is  sought  to  be  taxed  or  that  of  the nonresident.   But  that  is not so.  The  language  of  the enactment  imposing the charge is too plain to admit of  any doubt.   Now, s. 42 (2) is, it may be noted, in  two  parts. The  first part commencing with the opening words " Where  a person not resident " and ending with the words " which  may reasonably  be  deemed  to have  been  derived  therefrom  "

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prescribes  the conditions on which the charge  arises.   It does  not of itself impose the charge.  That is done by  the second  part,  which  provides  that  "the  profits  derived therefrom  or  which may reasonably be deemed to  have  been derived  therefrom shall be chargeable to -income-tax."  The word " therefrom " is very important for the purpose of  the present  discussion.  In the context, it can refer  only  to the  business  of  the resident, and  it  is  this  business therefore that is the subject of the charge under s. 42  (2) It was suggested for the appellant that the word therefrom " has reference to the arrangement between the nonresident and the   resident,  but  apart  from  the  fact  that  such   a construction would, on the grammar of it, be untenable,  :it is impossible to conceive how an arrangement relating to the conduct of business can, as such, be the 854 subject-matter  of  income-tax, apart from the  business  in which  profits  or  gains are made.   The  language  of  the section  is clear beyond all reasonable doubt as to what  it is  that is sought to be taxed under this section.  That  is only  the  business  of the resident and  not  that  of  the nonresident.  In this view, it is only necessary to consider whether there is anything in the wording of the other  parts of s. 42 (2) relied on for the appellant, which precludes us from  giving  effect  to  the plain import  of  the  word  " therefrom ". It  is on the expression "profits derived" in  the  charging part  of the enactment that the appellant leans  heavily  in support of his position that it is the business of the  non- resident  that  is really intended to be taxed.   But  then, those  words do not stand alone.  They are  associated  with the  words " or which may reasonably be deemed to have  been derived  ",  and  this association has  its  origin  in  the preceding clause produces to the resident either no  profits or less than the ordinary profits which might be expected to arise  in  that  business ". This  clause  contemplates  two classes  of  cases, one where the business of  the  resident produces  no  profits and the other where it  produces  less than  the  normal profits.  The charge is  imposed  on  both these  classes  of  cases,  and the word  "  derived  "  has reference to the latter, while the words " profits which may reasonably  be deemed to have been derived " relate  to  the former.   That both these clauses relate to the business  of the  resident  is clear from the words " to the  resident  " occurring  therein.  The word " derived " in s. 42 (2)  must therefore be interpreted as referring to the business of the resident. The respondent sought further support for this conclusion in the  words  " which may reasonably be deemed  to  have  been derived"  in s. 42(2), and contended that those words  could apply  only to a business which does not yield profits,  and that will fit in, in the context, only with the business  of the resident and not of the non-resident.  The answer of the appellant  to this contention is that the words in  question should be construed as meaning not notional profits but such proportion of the actual profits of the nonresident as 855 could  reasonably be apportioned to the business  in  India. Reliance was placed in support of this contention on Rr.  33 and  34  of  the Indian Income-tax  Rules,  1922.   Rule  33 provides  for  the determination of the profits  of  a  non- resident  in cases falling within s. 42(1), and one  of  the modes prescribed for such determination is to fix an  amount which bears the’ same proportion to the total profits of the non-resident  as  the  Indian receipts  bear  to  the  total

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receipts  in the business.  Rule 34 then provides that  "the profits  derived from any business carried on in the  manner referred to in s. 42 (2) may be determined for the  purposes of assessment to income-tax according to the preceding  rule ".  Now,  the  argument  of  Mr.  Palkhivala  is  that   the interpretation   put  on  s.  42  (2)  by  the   rule-making authorities  as  manifest  in R. 34  is  that  the  business chargeable under s. 42 (2) is that of the non-resident,  and that the words " which may reasonably be deemed to have been derived  therefrom " had reference to the  apportionment  of the  Indian, out of the total profits.  We see no  force  in this  contention.  There is nothing in R. 34 to justify  the assumption  that  the  rule-making  authorities   considered either  that  s. 42 (2) applied to the business  of  a  non- resident or that the words " which may reasonably be  deemed to have been derived therefrom " meant apportionment of  the Indian out of the world profits of the non-resi. dent.   And even  if  those.  be the assumptions on which  the  Rule  is based, that can have no effect on the true interpretation of s. 42 (2).  And whatever doubts one migt have had as to  the meaning  to  be given to the words "  derived  therefrom  or which  may  reasonably  be  deemed  to  have  been.  derived therefrom " if they had to be construed in isolation, in the context.of  the  section and read in conjunction  with  the. words " to the resident " and " therefrom ", there cannot be any  doubt that they have reference to the business  of  the resident and not that of the non-resident. The  word  " or " in the clause would appear  to  be  rather inappropriate,  as it is susceptible of  the  interpretation that when some profits are made but they log 856 are less than the normal profits, tax could only be  imposed either  on the one or on the other, and that  accordingly  a tax on the actual profits earned would bar the imposition of tax   on   profits   which   might   have   been   received. Obviously,that could not have been intended, and the word  " or  " would have to be read in the context as meaning "  and ". Vide Maxwell’s Interpretation of Statutes, Tenth Edn. pp. 238-239.   But  that, however, does not affect  the  present question  which is whether the word " derived "  indubitably points to the business of the nonresident as the one taxable under  s.  42 (2), and for the reasons  already  given,  the answer must be in the negative. The  appellant also relied on the clauses in s. 42 (2)  that the  profits shall be chargeable to tax in the name  of  the resident’ and that he shall be deemed to be the assessee for all  purposes of the Act’ as indicating that it is  not  the business of the resident that is really sought to be  taxed. But these clauses are explainable with reference to the fact that  the profits taxed are not actual profits but what  are deemed  to  be profits.  It was argued that if  it  was  the intention  of  the  legislature that what  was  not  profits should  be  deemed  to be profits,  that  should  have  been independently  provided for before the tax is  imposed,  and that in the absence of such a provision, the word " deemed " must be construed as referring not to notional profits being treated  as actual profits, but to a person who is  not,  in fact, an assessee, being treated as an assessee.  We see  no substance  in  this  argument.  There is no  reason  why  an enactment  should  not  both  declare  notional  profits  as taxable profits and at the same time impose a charge on  the resident  in  respect  of those  profits,  and  that,  quite clearly,  is  what s. 42 (2) has done.  It may be  that  its language  is not felicitous. But there can, however,  be  no

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mistaking  its sense that it is the resident that is  to  be dealt  with as assessee in respect of profits which  he  had not, in fact, made. Nor do we see much force in the argument that s. 42, sub-ss. (1) and (3) relate to income of the nonresident and that  s. 42(2)  which is wedged in between them should  therefore  be interpreted as having 857 reference  to  the  profits of  the  non-resident.   If  the language of s. 42(2) is clear that it is the resident who is chargeable to tax, it is of no consequence that under s. 42, sub-ss.  (1) and (3) it is the non-resident that  is  taxed. It should be remembered that s. 42 occurs in Ch.  V headed " Liability  in Special Cases ", and s. 42(2) is  a  liability which   is  out  of  the  ordinary  run,  and  it   is   not inappropriate  to  deal with it in s. 42, because  while  s. 42(1)  seeks  to  bring within the  ambit  of  taxation  the profits  of a non-resident which accrue in India,  s.  42(2) seeks  to  tax the resident in respect of profits  which  he would  have normally made but for his  business  association with a non-resident.  On the other hand, on the construction contended  for  by  the  appellant  s.  42(2)  would  become practically  useless  because a non-resident  whose  profits could  be taxed under s. 42(2) could also be taxed under  s. 42(1),  as also the resident if he were the agent.  None  of the  considerations  put  forward by  the  appellant  is  of sufficient  weight  to displace the conclusion to  be  drawn from  the words " to the resident " and " therefrom " in  s. 42(2),  and  we  must hold that the business  which  is  the subject-matter  of taxation under that provision is that  of the  resident  and not of a non-resident.   This  contention must accordingly be found against the appellant. We shall next consider the second ground urged in support of the  appeal that it is a condition for the levy of a  charge under s. 42(2) that a non-resident should carry on  business with  the  resident,  and that, on  the  facts  found,  that condition  is not satisfied, and that therefore the  tax  is unauthorised.   It is argued that the business of  the  non- resident  companies is to ply ships for hire, and  that  the appellant has no concern with that; that the business of the appellant  is  to  repair ships and  that  the  non-resident companies  have no connection with that business;  and  that all that the non-resident companies do is to get their ships repaired  by  the  appellant, and that does  not  amount  to carrying  on any business with the appellant.  A person  who regularly purchases his goods from a particular dealer  does not, it is said, carry on business with 858 that dealer, and on the same analogy, in getting their ships repaired by the appellant the non-resident companies  cannot be said to carry on business with them in the real sense  of that word. We  are  unable  to agree with this  contention.   The  word "business"  is, as has often been said, one of  wide  import and  in  fiscal statutes, it must be construed  in  a  broad rather than a restricted sense.  Discussing the  connotation of  the word trade", Scott L. J. observed in Smith Barry  V. Cordy (1): "  The  history  of judicial  decisions  has  been  similar, showing  a  strong  tendency not to restrict  the  scope  of Schedule D; a tendency which was, we think, in sympathy with the  general  social and economic outlook  of  the  country. There  is hardly any activity for gaining a  livelihood  and not  covered by the other Schedules, which does not seem  to us to be swept into the fiscal net by the Schedule D."

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’The word business’ connotes", it was observed by this Court in  Narain  Swadeshi Weaving Mills v.  The  Commissioner  of Excess   Profits  Tax  (2),  "some  real,  substantial   and systematic or organised course of activity or conduct with a set  purpose."  Now, it may be conceded that when  a  person purchases  his  requirements from a  particular  dealer,  he cannot  without more be said to carry on business with  him. But  here  there is much more.  The  non-resident  companies send  their ships for repair to the appellant, not  as  they might  to any other repairer but under a  special  agreement that  repairs  should be done at cost.  And  further  unlike customers  who purchase goods for their own  consumption  or use, the non-resident companies get their ships repaired for use in what is admittedly their business.  These are clearly trading  activities,  organised  and  continuous  in   their character and it will be difficult to escape the  conclusion that they constitute business.  We are not even concerned in this appeal with the larger question whether the  activities of  the nonresident companies in connection with the  repair of  the  ships amount to carrying on of business.   What  we have to decide is whether having regard to the (1) (1946) 28 Tax Cas. 250, 259. (2) [1955] 1 S.C.R. 952, 961. 859 course  of dealings between the non-resident  companies  and the  appellant it can be said of the former that they  carry on business with the latter within the meaning of s.  42(2). Now,  it  should be observed that s. 42 speaks  not  of  the nonresidents  carrying  on business in the abstract  but  of their  carrying  on business with the resident, and  in  the context, it must include all activities between them  having relationship  to their business.  That is the view taken  by the  learned  Judges  in  the Court below,  and  we  are  in agreement with it. In this connection, reference may be made to s. 42(1)  under which  a  charge  is imposed on  income,  profits  or  gains accruing  to a non-resident through any business  connection in  the taxable territories.  In Commissioner of  Income-tax v.  Curimbhoy  Ebrahim & Sons (1), it was  observed  by  the Privy  Council  that  business connection  in  s.  42(1)  is different from business as defined in s. 4(2) of the Act.  " The phrase business connection’, observed Sir George Rankin, "  is  different  from, though not unrelated  to,  the  word business’  of which there is a definition in the Act ".  And in Anglo-French Textile Co., Ltd. v. Commissioner of Income- tax,  Madras (2), this Court has observed that " when  there is a continuity of business relationship between the  person in  British  India  who helps to make-the  profits  and  the person  outside British India who receives or  realises  his profits,  such  relationship  does  constitute  a   business connection".   Vide  also  the  observations  in   Bangalore Woollen,  Cotton and Silk Mills Co. Ltd. v. Commissioner  of Income-tax,  Madras  (3  ). The words "where  a  person  not resident in the taxable territories carries on business with a   person   resident"  in  S.  42(2)  must   be   similarly interpreted,  and a non-resident should be held to carry  on business with a resident, if the dealings between them  form concerted and organised activities of a business  character. We are accordingly of opinion that, on the facts found,  the non-resident  Companies  must  be held to  have  carried  on business with the appellant as provided in s. 42(2). (1) [1935] 3 I..T.R. 395.      (2) [1953] S.C.R. 454. (3) [1950] 18 1,T.R. 423. 433. 434. 860 It  was argued that the result of this arrangement was  only

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to reduce the repairing charges and enable the  non-resident Companies to thereby make a saving; that that was not profit or gains of a business liable to be taxed under the Act, and the  decisions  in  Tennant v. Smith (1)  and  In  re  Major John(") -were cited in sup. port of this position.  But,  as already  held by us, the subject-matter of the tax under  s. 42(2)  is the business of the resident and not that  of  the non-resident, and what we have to decide is not whether  the nonresident  Companies made profits in their  dealings  with the  appellant but whether what they did was  business,  and for  that  purpose it is immaterial that  the  business  was carried  on  by them in such manner that  no  profits  could accrue   to  them  therefrom.   Vide  the  observations   of Coleridge C. J. at p. 113 in Commissioners of Inland Revenue v.  Incorporated  Council of Law Reporting (3  ).  The  fact therefore  that  the nonresident Companies could  derive  no profits  from  the  dealings with the  appellant  would  not detract from their character as business with the appellant. This contention must, therefore, be rejected. It  was finally contended that the profits chargeable  under s. 42(2) must be separately assessed and not added on to the other  profits or income of the appellant.  This  contention is  based  on the assumption that s. 42(2)  imposes  on  the appellant,  a  vicarious  liability,  the  charge  being  in reality  on the profits of the nonresident.  On our  finding that the charge is on the business of the appellant and  not of  the  non-resident Companies, this  contention  does  not survive. In the result, the appeal fails and is dismissed with costs. Appeal dismissed. (1) [18921 3 Tax Cas. 158. (2) [1938] 6 I.T.R. 434. (3) [1888] 3 TaxCas. 105. 861