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Issues involved:
1. Determination of whether income, profits, and gains of a specific year can be presumed to have been brought into British India and taxed in a subsequent assessment year. 2. Allocation of the burden of proof when determining if a remitted sum represents capital or profits. 3. Assessment of whether a specific sum represents profits or capital brought into British India. Analysis: 1. The case involved a reference under Section 66(3) of the Indian Income-tax Act regarding the assessment of an assessee carrying out business in British India and Jodhpur State. The dispute arose from supplementary assessment proceedings and a subsequent modification by the Commissioner, leading to questions regarding the taxation of profits remitted to British India (para 1-2). 2. The Department contended that profits remitted to British India were presumed to be included in the remittance based on previous years' profit and loss statements. However, the Court emphasized that under the Income-tax Act, income must accrue or arise before being brought into British India. The Court highlighted the legal requirement that profits must be determined for the specific year before being included in remittances (para 3). 3. The Court analyzed the profit and loss statements of the foreign business for the relevant years to determine the inclusion of profits in remittances. It was established that profits from the previous year were absorbed by subsequent losses and remittances, leading to a balance that the assessee failed to account for. Ultimately, the Court concluded that the assessee had rebutted the presumption of profits being included in the remittance (para 4). 4. Addressing objections raised by the Department regarding the formulation of questions and arguments presented at previous stages, the Court clarified that legal arguments need not be identical at all stages as long as the core contention is consistent. The Court proceeded to answer the questions posed, clarifying the formulation of the third question for accuracy (para 5). 5. The Court's responses to the questions were as follows: the income was not presumed to have been brought into British India in the specific year, the burden of proof lay on the assessee regarding the nature of remitted sums, and the sum in question did not represent profits from the foreign business based on the circumstances of the case (para 6).
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