1953 (6) TMI 9 - HC - Income Tax

Summary

Issues Involved:
1. Material for finding constructive remittance.
2. Correctness of holding Rs. 32,000 as constructive remittance.
3. Remittance of entire profits of Rs. 32,000.
4. Evidence supporting Rs. 32,000 as entire profits.
5. Justification of Rs. 32,000 as income liable to tax.

Issue-wise Detailed Analysis:

1. Material for Finding Constructive Remittance:
The assessee questioned whether there was any material to support the finding that instead of direct remittance, he instructed a debtor in Jubbal State to discharge part of his debt by making the payment of Rs. 32,000 in British India. The Appellate Tribunal concluded that the assessee chose to realize the sale proceeds in British India rather than in Jubbal State, which constituted constructive remittance. This decision was based on the circumstances and the business requirements of the assessee.

2. Correctness of Holding Rs. 32,000 as Constructive Remittance:
The assessee contested whether the receipt of Rs. 32,000 was correctly held as a constructive remittance from Jubbal State to British India. The Tribunal held that the remittance was constructive and could give rise to a question of law, but deemed the answer so obvious that making a reference was unnecessary. The Tribunal's decision was based on the factual determination that the remittance included the available profits.

3. Remittance of Entire Profits of Rs. 32,000:
The assessee argued whether it was correctly held that the entire profits of the account year 1942-43 were included in the sum of Rs. 32,000. The Tribunal found that the sum included the entire profits, a conclusion drawn from the magnitude and requirements of the assessee's business. The High Court referenced previous cases establishing that remittances received in British India from a business outside could be presumed to include profits unless proven otherwise by the assessee.

4. Evidence Supporting Rs. 32,000 as Entire Profits:
The assessee questioned if there was any evidence to support the Tribunal's finding that the sale proceeds of Rs. 32,000 received in British India included the entire profits earned or accrued in Jubbal State during the account year 1942-43. The Tribunal's finding was based on a presumption that remittances from a foreign business to British India represent profits, a presumption supported by multiple precedents unless rebutted by the assessee with contrary evidence.

5. Justification of Rs. 32,000 as Income Liable to Tax:
The assessee challenged whether there was any material to justify the conclusion that the Rs. 32,000 received in British India was 'income' and therefore liable to tax. The High Court upheld the Tribunal's decision, referencing several cases where it was established that remittances from a foreign business to British India are presumed to be profits unless the assessee can prove otherwise. This presumption is a question of fact and not of law, and its strength varies with the circumstances of each case.

Conclusion:
The High Court agreed with the Tribunal's findings and held that the questions raised by the assessee did not warrant a reference as they were based on factual determinations supported by established legal principles. The presumption that remittances from a foreign business to British India include profits was upheld, and the assessee's failure to provide contrary evidence justified the taxation of the Rs. 32,000 as income.