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Issues:
1. Whether the item of Rs. 1,04,000 is liable to tax as income accruing in British India or constitutes exempt receipts under the Income-tax Act. 2. If the item is taxable, whether the Assistant Commissioner was justified in deeming the amount paid on a specific date. Analysis: Issue 1: The case involved a reference by the Commissioner of Income-tax regarding the taxation of a sum of Rs. 1,04,000 received by Major A.U. John as an auctioneer. The Court considered the definition of income under the Income-tax Act, emphasizing the element of periodical monetary return from definite sources. Referring to a Privy Council judgment, the Court highlighted that income must be a regular or expected return, excluding windfalls. The Court disagreed with a previous interpretation that restricted the Privy Council's observations to specific cases, asserting that the Privy Council intended to provide a general principle for defining income. The Court also analyzed Section 4(3)(vii) of the Act, which exempts receipts not related to business or employment and concluded that the auctioneer's commission did not qualify as taxable income due to its non-business nature. Issue 2: The Court addressed the second question regarding the justification of the Assistant Commissioner's decision on the timing of the payment. The Court ruled that since the item of Rs. 1,04,000 was not liable for income tax, the second question regarding the Assistant Commissioner's decision did not arise for consideration. Consequently, the Court did not delve into the Assistant Commissioner's justification for deeming the amount as paid on a specific date. In conclusion, the Court held that the item of Rs. 1,04,000 was not subject to income tax under Section 4(1) of the Act and was exempt under Section 4(3)(vii). As a result, the Court did not address the second question raised in the reference.
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