ELLERMAN LINES LTD. vs C.I.T. WEST BENGAL, CALCUTTA

The Supreme Court held that under Section 5(8) of the Income-tax Act, 1922, the computation of income for non-resident British shipping companies must not solely rely on the second basis outlined in Rule 33 of the Indian Income-tax Rules, 1922. The Court found that the High Court erred in its assumption that the second basis was applicable, as the actual profits were not computed according to the Act. The Court concluded that the income should be computed using the first or third basis, with the latter being the most appropriate for the appellant's case.