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TMI Blog1941 (4) TMI 14X X X X Extracts X X X X X X X X Extracts X X X X ..... 7, the Taiping shop informed the Ngathainggyaung shop that they were sending with the letter a draft on the Chartered Bank at Rangoon for ₹ 10,000, which was to be placed as soon as received to the credit of S. K. V. V. Meenakshi Achi with the Ngathainggyaung shop. At the same time that Meenakshi Achi wrote to Taiping to make the transfer, she also wrote to Ngathainggyaung informing that shop of what she had done and instructing them to credit the amount to her name. 3. In making the assessment, the Income Tax Officer held that the A. K. A. R. Family, Ngathainggyaung, was resident in British Burma, following the decision in 6 I. T. C. 96, and he included the sum of ₹ 10,000, in the Ngathainggyaung assessment as a remittance of income received in Burma from Taiping [Section 4(2) of the Act]. A copy of the Income Tax Officer's assessment order is attached hereto as Annexure A . The Income-tax Officer supported this inclusion by pointing out that there were profits in the Taiping business amounting to some ₹ 23,410, out of which the remittance could be made, and quoted M. R. A. R. P. L. Family v. CIT[1935] 9 ITC 158 as his authority. 4. The applicants ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... v. A. L. V. R. P. Firm), [1940] 8 I. T. R. 531 it was held that the different shops belonging to that firm were all branches of the same business and following that decision it is clear that in this case the Taiping and Ngathainggyaung shops are only two branches of the same business and not two separate concerns. That being the case, the fact that Meenakshi asked for ₹ 10,000, to be transferred from Taiping to be put to her credit in Ngathainggyaung does not necessarily affect the remittance. The movements of funds in a banking business take place according to the needs of the business and not according to the whims of the depositors, unless it should happen that the amounts affected by the whims of the depositors are so great as to overbalance the inter-branch distribution of the finance. In this case, there was no necessity for a remittance to be made to meet with Meenakshi's requirements, as she left the money on deposit in the Ngathainggyaung shop and did not withdraw any part of it ; on the contrary, it was made clear by her that it had to be kept at her credit. The Ngathainggyaung shop was, therefore, in a position to meet its liabilities on account of this trans ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... duced to ₹ 7,987-8 and 31.09 acres and the house remained unsold. In 1935-36, a further 14.76 acres of land were sold for ₹ 700. In 1936-37, 16.33 acres of land were sold for ₹ 250 and in 1937-38, the house was disposed of for ₹ 400. These details were not all on the record at the time of the assessment and the assessee claimed to set off a loss of ₹ 5,1378 being the net loss on the entire transaction after everything had been disposed of. The Income-tax Officer refused to allow the whole of this amount on the grounds that loss in so far as the land was concerned had been incurred in previous years and should have been claimed as it had been incurred. He allowed a loss of ₹ 1,500 representing what he estimated to be the loss during the account period relative to the assessment upon the sale of the house. In the appeal before the Assistant Commissioner, the latter remarked : I am disposed to agree with the Income-tax Officer. In respect of the sale of the lands, it is clear that losses were incurred in the preceding years, and it was for the appellant-family to claim such losses then and there. Against the argument that it was impossible to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the year. For the purpose of computing yearly profits and gains each year is a separate self-contained period of time, in regard to which profits earned or losses sustained before its commencement are irrelevant . Later on in the same judgment, the Chief Justice remarked: Inasmuch, however, as the assessment of the land, unless it is sold by the assessees in the accounting year, will be based upon what must ex necessitate rei be a mere estimate of the lands, in my opinion, it is fair and reasonable that an adjustment of the assessment should be made in the accounting year in which the assessees sell the lands, when it will be possible finally to ascertain whether or not in respect of the transaction a profit chargeable to income-tax has accrued to the assessees . That the lands and house concerned in this case could be valued piecemeal has been proved a simple possibility, and that they could be treated as separate lots is proved by the fact that they have actually been so treated by the assessee and sold as separate lots. In the circumstances, therefore, the Assistant Commissioner was correct in upholding the Income-tax Officer in deciding that the only loss which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee, which account was in credit in a Considerable sum. On the 15th October, 1937, Meenakshi Achi instructed the Taiping branch to send a sum of ₹ 10,000 by banker's draft to their branch at Ngathainggyaung this amount to be placed to her credit in a new account to be opened at Ngathainggyaung, and the cost of the draft to be debited to her account at Taiping. Her instructions were duly carried out. A draft for a sum of ₹ 10,000 on the Chartered Bank at Rangoon was purchased, and this amount was paid by the Chartered Bank to the Ngathainggyaung branch to the credit of Meenakshi Achi. Clearly the money sent was the money of Meenakshi Achi, and not the money of the assessee, and the remittance was made by her and not by the assessee. A.K.A.C.T.V. Family's Case [1935] 8 I.T.C. 112 is readily distinguishable for in that case the money was transferred at the instance and under the instructions of the assessees, and not under the instructions of the client. It is idle to say that the relation between a banker and his client is that of debtor and creditor, and that when the client deposits money in his account that money becomes the money of the banker which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l due respect, I should have thought that this question as framed, provided its own answer. As I have said, the assessee family carried on a money-lending business, and it has been pointed out in The CIT v. P.L.S.M. Firm [1935] 12 Rang. 483; 9 I.T.C. 82 that in this country Chettyars are bankers and money-lenders, and not landowners. They may be compelled to take over lands and other immovable property in liquidation of debts due to them in respect of loans, but the land which is received in repayment of a loan is the equivalent of cash, and should be treated as money's worth, and as such not fixed capital but working assets, and part of the stock-in-trade of their business as money-lenders. Furthermore, in assessing the amount of the profits and gains of a year which are chargeable to income-tax account must necessarily be taken of all losses incurred in that year. The Commissioner of Income-tax does not contest these propositions. Now, in the year 1928-29 the assessee took over 63.34 acres of paddy land and a house in settlement of a debt of ₹ 9,000. The land and the house have been sold at different times since then, at the best prices available at the time of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sses each year and allocate them to the year in which they are in fact incurred. This is undoubtedly correct. But in the course of their judgment in this case [ 1932] 6 I.T.C. 453. at p. 458, their Lordships of the Privy Council said this: Whether a debt is a bad debt, and if so at what point of time it became a bad debt, are questions which in their Lordships' view are questions of fact, to be decided in the event of dispute by the appropriate tribunal, and not by the ipse dixit of any one else. In the present case, no one could say that a loss had been incurred on this transaction, or what the amount of that loss, if any, was, until the transaction had been completed by the sale of the whole of the property. The case of In re K.H. Mody, is clear authority for the proposition that when only a part of the property has been sold, whilst the rest remains in the hands of the assessee, and might result in a profit or might result in a loss, and the whole transaction is not yet complete, no assessment can be made. The answer to the second question must therefore be that the loss of ₹ 5,137-8 is an admissible deduction in computing the profits or gains of the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X
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