1969 (6) TMI 20 - HC - Income Tax

Whether the Tribunal was justified in holding that the amount of Rs. 2 lakhs had been remitted to the taxable territories by the assessee during the accounting year out of his accrued profits of earlier years - assessee stays for more than 365 days in the four preceding previous years and for two months in the relevant previous year - burden of proving that the visit for two months in the latest previous year is only occasional or casual is on the assessee - onus being on the assessee to establish that the remittances were out of capital, the Tribunal was justified in holding that the conditions of section 4(1)(b)(iii) of the Income-tax Act have been complied

Summary

Issues Involved
1. Determination of the assessee's residential status for the assessment year 1948-49.
2. Justification of the remittance of Rs. 2 lakhs to the taxable territories by the assessee during the accounting year out of accrued profits of earlier years.

Issue-wise Detailed Analysis

1. Determination of the Assessee's Residential Status for the Assessment Year 1948-49

The primary issue was whether the assessee was a resident but not ordinarily resident in the taxable territories for the assessment year 1948-49 under section 4A(a)(iii) of the Indian Income-tax Act, 1922. The requirements under this section include that the assessee must be in the taxable territories during the four years preceding the previous year for a period of 365 days or more, and in the relevant previous year at any time, with the visit not being casual or occasional.

The Tribunal held that the assessee was in India for more than 365 days during the four years preceding the previous year and was also in India during the relevant previous year. However, the crux of the matter was whether the visit in 1947 was casual or occasional. The Tribunal relied on the assessee's voluntary disclosure and affidavit, which stated that he resided in India for two months after 9th September 1947. The Tribunal concluded that the assessee failed to prove that his visit was casual or occasional, thereby fulfilling the conditions of section 4A(a)(iii).

The court referred to precedents, including the Supreme Court's ruling in Commissioner of Income-tax v. B.K. Dhote, which established that the onus of proving the casual or occasional nature of the visit lies on the assessee. The court found no evidence that the Tribunal acted without basis in its conclusion. Thus, the question was answered in the affirmative, favoring the revenue.

2. Justification of the Remittance of Rs. 2 Lakhs to the Taxable Territories by the Assessee

The second issue concerned whether the remittance of Rs. 2 lakhs was made out of the assessee's accrued profits of earlier years. The remittances were made from the firm's account in Rangoon to Calcutta, and it was evidenced that the firm had no business in India, indicating no need for funds in India for the firm's purposes. The Tribunal found that the money was ultimately used by the assessee, who had a dominant interest in the firm.

The Tribunal held that it was the assessee's responsibility to prove that the remittances were out of capital rather than income. Despite being given opportunities, the assessee failed to produce accounts to substantiate this claim. The court cited the Supreme Court's decision in Bipin Lal Kuthiala v. Commissioner of Income-tax, supporting the Tribunal's stance.

The court also addressed the contention that account books filed before the Tribunal were not considered. It found no evidence that these documents were admitted or that the Tribunal granted leave to adduce additional evidence. Consequently, the court upheld the Tribunal's decision, answering the question in the affirmative and in favor of the revenue.

Conclusion
Both issues were resolved in favor of the revenue. The court affirmed the Tribunal's findings that the assessee was a resident but not ordinarily resident in the taxable territories for the assessment year 1948-49 and that the remittance of Rs. 2 lakhs was out of accrued profits of earlier years. The assessee was ordered to pay the costs of the reference.