1956 (5) TMI 1 - SC - Income Tax

Whether no question of law arose from the order of the Income-tax Appellate Tribunal dated the 4th November 1949? Held that - On a consideration of the facts and circumstances of this case no real or substantial question of law arises from the order of the Appellate Tribunal and the High Court was justified in dismissing the appellant s application under section 66(2) of the Indian Income-tax Act 1922. Appeal dismissed.

Issues Involved:
1. Material for finding constructive remittance.
2. Correctness of constructive remittance.
3. Remittance of entire profits.
4. Evidence supporting inclusion of entire profits in remittance.
5. Justification of sum received as income (withdrawn).

Issue-wise Detailed Analysis:

1. Material for Finding Constructive Remittance:
The appellant questioned whether there was any material to support the finding that instead of direct remittance, the appellant instructed a debtor in Jubbal State to discharge a part of his debt by making the payment of Rs. 32,000 in British India. The Income-tax Appellate Tribunal and the High Court upheld the view that the payments were made according to the appellant's instructions, amounting to constructive remittances from Jubbal State to British India. The Tribunal concluded that the payments were tantamount to constructive remittances of profits, as there was no evidence to the contrary provided by the appellant.

2. Correctness of Constructive Remittance:
The appellant contended that the receipt of Rs. 32,000 was incorrectly held to be a constructive remittance from Jubbal State to British India. The Supreme Court rejected this argument, stating that the payments made by the purchaser to the appellant's creditor and to the appellant himself in British India were under the appellant's instructions. This amounted to constructive remittance, as if the appellant had received the money in Jubbal and then remitted it to British India. The Court held that the Tribunal's conclusion that the payments were constructive remittances was correct.

3. Remittance of Entire Profits:
The appellant argued that it was incorrect to hold that the entire profits of the accounting year 1942-43 were remitted in the sum of Rs. 32,000. The Supreme Court found no merit in this argument, emphasizing that profit accrues on the sale, which in this case took place in 1942-43. The profit on the sale of timber was ascertained at Rs. 18,758, and the presumption was that remittances of money from foreign business to British India must be of profits unless the contrary was shown. The appellant failed to provide evidence to rebut this presumption.

4. Evidence Supporting Inclusion of Entire Profits in Remittance:
The appellant questioned whether there was any evidence to support the finding that the sale proceeds of Rs. 32,000 received in British India included the entire profits earned or accrued in Jubbal State in the accounting year 1942-43. The Supreme Court held that the Tribunal and the Income-tax authorities were justified in concluding that the payments made in British India were under the appellant's instructions, amounting to constructive remittance of profits. The appellant did not discharge the onus of proving otherwise, and the presumption that the remittances included profits stood unrebutted.

5. Justification of Sum Received as Income (Withdrawn):
The appellant withdrew this question, and it was not addressed in the judgment.

Conclusion:
The Supreme Court concluded that no real or substantial question of law arose from the order of the Appellate Tribunal. The High Court was justified in dismissing the appellant's application under section 66(2) of the Indian Income-tax Act, 1922. The appeal was dismissed with costs.

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