1944 (8) TMI 15 - HC - Income Tax

Summary

Issues Involved:
1. Residence of the assessee firm in British India.
2. Evidence supporting the remittance of Rs. 58,599 from Indore to Bombay as income or profit.
3. Inclusion of Rs. 89,000 in the net amount of remittance from Indore to Bombay.
4. Nature of the amount Rs. 2,26,816 on the debit side of the Indore account.

Issue-wise Detailed Analysis:

1. Residence of the Assessee Firm in British India:
The primary question was whether the assessee firm was a resident in British India. The Commissioner found that the assessee firm was indeed a resident in British India during the relevant year. This finding was based on several pieces of evidence, including the registration certificate, earlier assessment records, evidence from a High Court suit, a power of attorney, and the contents of the Chithi Nondh. The registration certificate explicitly stated Bombay as the principal place of business, which was a significant factor. The court held that a firm could have more than one place of residence, as established in Swedish Central Ry. Co. v. Thompson and Egyptian Delta Land and Investment Co. v. Todd. The court concluded that the Commissioner had sufficient evidence to support his finding.

2. Evidence Supporting the Remittance of Rs. 58,599:
The court addressed whether there was evidence before the Income Tax Officer to treat Rs. 58,599 as a remittance from income or profit. The court did not provide a specific answer to this question due to the resolution of the second issue, which rendered this question unnecessary to address directly.

3. Inclusion of Rs. 89,000 in the Net Amount of Remittance:
The second question was whether there was evidence to include Rs. 89,000 in the net amount of remittance from Indore to Bombay. The relevant facts showed that the accounts of two creditors in the Bombay books were debited with Rs. 80,000 and Rs. 9,000, respectively, and corresponding amounts were credited to the Indore shop account. Payments were made to these creditors out of the Indore firm's cash. The court referred to In re Multanchand Johurmal, where it was held that payments made outside British India did not amount to receipts in British India. The court found that the facts of the present case were similar and concluded that the amounts paid to the creditors in Indore did not constitute receipt in British India. Therefore, the answer to the second question was in the negative.

4. Nature of the Amount Rs. 2,26,816:
The third question regarding the nature of the amount Rs. 2,26,816 on the debit side of the Indore account was not pressed by the assessee, and no answer was provided for this issue.

Conclusion:
The court concluded that the Commissioner had sufficient evidence to support the finding that the assessee firm was a resident in British India. The court also determined that the amounts paid to creditors in Indore did not constitute receipt in British India, thereby answering the second question in the negative. The third question was not addressed as it was not pressed by the assessee. The court ordered the Commissioner to pay three-fourths of the costs of the reference.