1938 (11) TMI 29 - HC - Income Tax

Summary

Issues:
1. Whether a remittance received by the assessee can be treated as profits made during a specific period.
2. Whether there is evidence to support the finding of the Income-tax Officer regarding the nature of the remittance.
3. Whether the remittance from the business abroad is a remittance out of profits or not.
4. Whether the presumption that a remittance from a business abroad is out of profits is rebuttable.
5. Whether the remittance in question includes taxable profits.
6. Whether the remittance falls under the proviso of Section 4 of the Income-tax Act regarding income accrued prior to a specific date.

Analysis:
The judgment involves a case where the assessee received a remittance from Penang, which the Income-tax authorities treated as profits made during a particular period, leading to an income-tax assessment for the year 1935-36. The primary issue was whether this remittance indeed represented profits earned abroad within specific years. The court considered the evidence and circumstances surrounding the remittance to determine its nature and taxability. The assessee argued that the remittance did not constitute profits made during the relevant period, challenging the Income-tax Officer's finding.

The court examined the history of the assessee's personal account in a money-lending firm in Sumatra, noting various credits and debits over time. A significant remittance was made from Tebing Tinggi to Penang, which was later transferred to Madras. The court emphasized that the remittance originated from the assessee's personal account, and the funds represented profits received before April 1, 1933. This fact was crucial in determining the taxability of the remittance as profits made during the specified period.

Regarding the presumption that a remittance from a business abroad constitutes profits, the court acknowledged its existence but emphasized that it is rebuttable. In this case, the court found that the presumption had been effectively rebutted based on the evidence presented. The court highlighted that the profits of the assessee's firm had not been ascertained since the end of 1931, indicating that the remittance could not be attributed to profits made after the commencement of 1932.

Furthermore, the court analyzed the proviso of Section 4 of the Income-tax Act, which outlines the taxability of income accrued before April 1, 1933. The court clarified that the remittance, including a specific amount designated as salary, did not fall under taxable profits as per the proviso. Ultimately, the court concluded that the evidence affirmed that the remittance was not derived from profits made during the specified period, resulting in a favorable judgment for the assessee in terms of costs and deposit refund.