1958 (4) TMI 8 - SC - Income Tax

Whether the appellant is liable under section 4(1)(b)(iii) of the Income-tax Act to pay tax on 1, 20, 000 remitted by him from Srinagar in Kashmir to British India in the relevant accounting year as his profits accumulated outside British India and brought by him into British India? Held that - We find nothing to throw any doubt on the Tribunal s finding that the present contention was raised by the appellant for the first time when the case came back to the Tribunal on the report of the Income-tax Officer. Indeed it is quite clear to us that if this contention had been raised earlier the remand to that Officer would have been wholly unnecessary and the appellant himself would have pointed this out especially in view of the fact that he was not in a position to show that his profits at Srinagar had not been mixed up with the working funds to enable him to do which alone the case had been remanded. There is no valid objection to the Tribunal s judgment and we therefore dismiss this appeal

Summary

Issues:
1. Interpretation of section 4(1)(b)(iii) of the Income-tax Act regarding tax liability on remitted profits.
2. Assessment of appellant's income for the year 1945-46 based on remittances from Srinagar to British India.
3. Burden of proof on appellant to show remittances were not from profits mixed with working funds.
4. Tribunal's refusal to allow appellant to raise new contention regarding ownership of remitted moneys.
5. Dismissal of application for reference to High Court and subsequent appeal to Supreme Court.

Analysis:
1. The case involved an appeal by the assessee against an order confirming tax liability under section 4(1)(b)(iii) of the Income-tax Act on Rs. 1,20,000 remitted from Srinagar to British India. The appellant argued the remittances were not from accumulated profits but from working funds, leading to a dispute over tax liability.

2. The appellant had businesses in Srinagar and Amritsar, with remittances made for goods purchased in British India. The Income-tax Officer assessed Rs. 3,00,000 as income from Srinagar, leading to tax liability. The Appellate Assistant Commissioner reduced the amount to Rs. 1,20,000, which was upheld by the Tribunal.

3. The Tribunal remanded the case to the Income-tax Officer to determine if remittances were from preceding years' profits. The appellant admitted mixing profits with working funds in Srinagar, hindering the assessment of remitted amounts. The Tribunal found the appellant failed to prove remittances were not from profits, upholding tax liability.

4. The appellant sought to argue that remitted moneys were not his own but belonged to sellers in British India. The Tribunal rejected this new contention, stating it required further evidence. The appellant's failure to raise this earlier led to dismissal of the appeal against tax liability.

5. The appellant's application for reference to the High Court was dismissed, leading to an appeal to the Supreme Court. The Court upheld the Tribunal's decision, stating the appellant failed to provide sufficient evidence to support the new contention. The appeal was dismissed, and the stay on tax realization proceedings was vacated.

This detailed analysis covers the issues raised in the judgment, including the interpretation of tax laws, assessment of income, burden of proof, refusal to allow new contentions, and the legal proceedings leading to the final dismissal of the appeal.