1953 (4) TMI 23 - HC - Income Tax

Summary

Issues:
Interpretation of the term "brought into" in the Income-tax Act, 1922 for assessing income
Determining the tax liability of an assessee for money remitted from a branch outside British India

Analysis:
The case involved an interpretation of the term "brought into" in the Income-tax Act, 1922 regarding the tax liability of an assessee for money remitted from a branch outside British India. The question was whether the amount remitted by the Sanawad shop to Upleta via Bombay could be included in the total income of the assessee for the assessment year 1944-45. The firm had its main place of business at Khandwa, with a branch at Sanawad and partners residing in Upleta, both outside British India at the time. The money was sent to Upleta via Bombay, and the Tribunal noted discrepancies in whether the money actually reached Upleta.

The relevant provisions of the Income-tax Act, 1922 were analyzed, focusing on Sections 4(1)(b)(iii) and 14(2)(c). The contention revolved around whether the money was "brought into" British India, as it was not a case of income "received" in British India. The term "brought into" had not been subject to judicial interpretation previously. The assessee argued for a restricted interpretation based on past cases where the term "received" was narrowly construed. However, the court emphasized that the purpose for which money was brought into British India was irrelevant for taxation purposes if the income initially accrued as profits.

In analyzing past cases like Rai Bahadur Sundar Das v. Collector of Gujrat and Pondicherry Railway Company v. Commissioner of Income-tax, the court differentiated between "received" and "brought into" for tax assessment purposes. The court held that once money representing income, profits, or gains was brought into any part of British India, it could be assessed for income tax, irrespective of the intention for retention or investment. The court cited the principle that if a person falls within the letter of the law, they must be taxed, emphasizing adherence to the words of the statute in fiscal enactments.

Ultimately, the court held that the amount remitted from the Sanawad shop to Upleta could be included in the total income of the assessee for the assessment year 1944-45. The decision was based on the interpretation of the term "brought into" in the Income-tax Act, 1922, and the assessment of income, profits, or gains brought into British India. The assessee was directed to bear the costs of the case, including counsel's fee.