1933 (11) TMI 26 - HC - Income Tax

Summary

Issues Involved:

1. Application of Section 25-A in the case of partial division of joint family property.
2. Preclusion of raising a claim in subsequent assessment years due to failure in earlier years.
3. Evidence supporting the conclusion that certain profits were derived from transactions in British India.
4. Consideration of losses from foreign transactions as losses in British India.
5. Refusal to investigate claims regarding interest payments on deposits by family members and relatives.

Issue-wise Detailed Analysis:

1. Application of Section 25-A in the case of partial division of joint family property:

The Court examined whether Section 25-A of the Income Tax Act applies to partial division of joint family property. The Court concluded that Section 25-A does not apply to cases where there is merely a division of a particular portion of the joint family property among members. The section is intended for situations where a complete partition has taken place, and the joint family property has been divided among members in definite proportions. The Court stated, "Section 25-A does not refer to a case like the present where there is an allegation that there was no partition in the joint family but there was merely a division of a particular portion of the joint family property among the various members."

2. Preclusion of raising a claim in subsequent assessment years due to failure in earlier years:

The Court addressed whether the assessees are precluded from raising a claim in a subsequent year of assessment due to their failure to substantiate the claim in an earlier year. The Income Tax Commissioner conceded that the assessees are not precluded from advancing a claim. Therefore, the Court accepted this view and answered the second question in the negative, stating, "the assessees are not precluded from advancing a claim."

3. Evidence supporting the conclusion that certain profits were derived from transactions in British India:

The Court evaluated whether there was any evidence before the Income Tax department to conclude that the sum of Rs. 36,000 and odd represents profits derived by the assessees from transactions in British India. The Court found that the evidence was present in the account books of the Jaipur, Calcutta, Bombay, and Ajmere branches, which showed that the interest on capital accrued in British India. The Court answered this question in the affirmative, stating, "The evidence for this is the books of the Calcutta, Bombay and Jaipur branches where these sums were clearly shown."

4. Consideration of losses from foreign transactions as losses in British India:

The Court considered whether losses incurred in respect of the business at Tonk, Saronj, Jodhpur, and Shahpura shops should be regarded as losses incurred in transactions in British India. The Court concluded that the losses in these Indian States are not shown to have any connection with British India, and no income from these shops had been brought into British India and assessed under Section 4 (2). Thus, the answer to this question was in the negative, stating, "the losses incurred in respect of the business at Tonk, Saronj, Jodhpur and Shahpura shops should not be regarded as losses incurred in transaction that took place in British India."

5. Refusal to investigate claims regarding interest payments on deposits by family members and relatives:

The Court examined whether the Assistant Commissioner was right in refusing to investigate the claim as to the payment of interest on deposits alleged to have been made in the business by family members and relations. The Court held that such claims cannot be legally made on appeal and should have been raised before the Income Tax Officer at the time of assessment. The Assistant Commissioner was correct in refusing to entertain the claim, and this decision was within his discretion. The Court answered this question in the affirmative, stating, "I think he was correct in refusing to entertain the claim."

Costs:

The Court decided on the matter of costs, noting that the applicants succeeded only on a technical point regarding Section 25-A. The applicants were ordered to pay three-fourths of the costs of the opposite party, who would pay one-fourth of the costs of the applicants. The fees of the learned counsel instructed by the Commissioner were assessed at Rs. 250.