1932 (8) TMI 3 - HC - Income Tax

Summary

Issues:
Interpretation of tax liability on remittance of foreign profits to British India, presumption of remittance out of profits, rebuttal of presumption based on book entries.

Analysis:
The case involved the assessment of a sum of money received from Ipoh by the petitioner in Rangoon as a remittance of foreign profits to British India. The petitioner contended that the amount sent back to Ipoh, used to pay income tax, came from a tax-free fund already taxed, thus not liable to be taxed again. The court examined the book entries which showed that the money received from Rangoon was re-invested with constituents in Ipoh, indicating that the remitted amount did not come from the taxed fund. The petitioner relied on a presumption that payments are made from already taxed funds, but the court held that this presumption was rebutted by the book entries, which clearly demonstrated the source of the remittance.

The judgment referenced the Sugden v. Leeds Corporation case to distinguish the present case, emphasizing that the presumption of payments from taxed funds was not applicable here due to the conclusive book entries. The court rejected the petitioner's argument that the presumption of remittance out of profits was rebutted, highlighting that the book entries provided irrefutable evidence contrary to the petitioner's claims. Additionally, the Quilon case was cited to illustrate that book entries could be used to rebut presumptions, supporting the Income-tax authorities' reliance on such entries to counter the petitioner's assertions.

In conclusion, the court sided with the Income-tax Commissioner, affirming the tax liability on the remittance based on the evidence from the book entries. The unanimous decision of the judges upheld the assessment against the petitioner, emphasizing the importance of book entries in determining the source of remittances and rebutting presumptions regarding tax liability.

This detailed analysis of the judgment showcases the court's meticulous examination of the facts, application of legal principles, and reliance on book entries to establish the tax liability on the remittance of foreign profits to British India.