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TMI Blog1990 (11) TMI 6X X X X Extracts X X X X X X X X Extracts X X X X ..... se appeals by certificate granted by the High Court at Calcutta have been filed against the judgment and order of the said High Court dated May 7, 1965, in Income-tax References Nos. 22 and 73 of 1959. These appeals relate to chargeability of business profits tax under the Business Profits Tax Act, 1947, for the accounting period April 1, 1946, to March 31, 1947. The appellant, hereinafter referred to as "the assessee", was having textile mill in what was known as British India at the relevant time. The cloth manufactured at the mill of the assessee was sold in British India as well as in some of the former Indian States. Under section 42(3) of the Indian Income-tax Act, 1922 (hereinafter referred to as "the Income-tax Act"), out of the to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome-tax Officer did not include these sums in his computation of the assessee's British Indian business profits but included the same in the assessee's total income under the head "Other sources" While making assessment for the purpose of business profits tax, the Income-tax Officer took into consideration the materials and information contained in the corresponding income-tax proceedings and adopted the assessee's business profits as computed in the said income-tax assessment. He, however, included the entire amount of Rs. 5,67,206 which was computed to be the amount of merchanting profits arising in the Indian States in that period for assessing the income of the assessee for the purpose of chargeability of business profits tax. The said ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at there was no material before them showing that the remittance was made out of profits made prior to the accounting period ?" Both these references were heard together and decided by the High Court by judgment dated May 7, 1965. The High Court answered the questions referred against the assessee and in favour of the Revenue. Feeling aggrieved by the said decision, the assessee had filed these appeals after obtaining a certificate from the High Court. Shri B. Sen, learned counsel for the assessee, has submitted that the income-tax authorities were in error in including the entire amount of Rs. 5,67,206, which has been computed to be the amount of merchanting profits arising in the Indian States as part of the taxable profits of the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m of Rs. 9,01,363 was remitted to British India was made before the chargeable accounting period. We find considerable substance in the aforesaid submissions. In the statements of case that were submitted by the Appellate Tribunal to the High Court in both the references, it has been mentioned in paragraph 5 : "During this accounting period, there was a total remittance of Rs. 9,01,363 from the Indian States, to British India. The Income-tax Officer held that to the extent of Rs. 1,18,754, the said remittance should be treated to have come out of the income which accrued or arose in the Indian States in the same period and the remaining part, viz., Rs. 7,82,609, should be treated to have come out of the income which accrued or arose in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e purpose of business profits tax, the Income-tax Officer as well as the Appellate Assistant Commissioner and the Appellate Tribunal have ignored the order passed by the Incometax Officer in the proceedings for assessment of income-tax for the assessment year 1947-48 covering the same accounting period. While making the assessment for the purpose of business profits tax, the revenue authorities could not take a different view and hold that a larger amount, viz., Rs. 5,67,206, had been remitted by the assessee from the Indian States to British India out of the profits arising in the Indian States during the chargeable accounting period. The Appellate Tribunal was, in our opinion, not right in proceeding on the basis that there was no materi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he remittances were out of profits made prior to the accounting period. In that view of the matter, the High Court was not justified in answering the questions referred to it against the assessee. Since the matter has not been properly considered by the Appellate Tribunal in the light of the relevant material, namely, the orders passed in the proceedings for assessment of income-tax for the assessment year 1947-48 covering the same accounting period, which material was before the Appellate Tribunal, the finding recorded by the Appellate Tribunal is defective in law. The questions of law referred to the High Court cannot be answered in view of the defective finding recorded by the Appellate Tribunal without considering the relevant material ..... X X X X Extracts X X X X X X X X Extracts X X X X
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