1935 (9) TMI 13 - HC - Income Tax

Summary

Issues:
Determining whether the sum paid by a Penang Firm to a creditor of a Tinnevelly Firm can be considered a remittance of foreign profits in British India.

Analysis:
The case involved a question regarding the inclusion of a sum paid by a Penang Firm to a creditor of a Tinnevelly Firm in the additional assessments made for the year 1932-33. The petitioner, in this case, issued hundies on his Penang shop for the amount due to the Tinnevelly shop, which was paid by the Penang shop. The transactions were recorded in the books of both shops. The petitioner did not dispute that the profits in Penang covered the remittances.

The main issue was whether the amount in question was received in British India within the meaning of the Income Tax Act. The petitioner argued that the amount was not received in India, relying on a previous case. However, the court distinguished the present case from the precedent cited, emphasizing that the debt was discharged by issuing a hundi in India, making it a receipt of gains in India. The court rejected the argument that there was a special arrangement to discharge the debt outside India.

Another argument raised was that for a receipt to occur under the Income Tax Act, there must be an actual transfer of money and receipt in India. The court found no authority supporting this contention and ruled that the sum should be treated as a remittance of foreign profits in British India. The judgment concluded by awarding costs to the Commissioner.

In separate judgments, Stone and King, JJ., concurred with the decision.