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TMI Blog1969 (9) TMI 14X X X X Extracts X X X X X X X X Extracts X X X X ..... equently, however, restrictions were imposed regarding the booking of railway wagons for transporting timber and the applicant had to close down his business and sell away the assets and stock-in-trade for nominal amounts in 1943. The applicant was again arrested in 1944 but he was released after a period of 120 days. He returned to India in June, 1948. The assessee had claimed compensation from the Government of Thailand as follows: (a) Loss on sale of saw mill, machinery, etc ... .... pound 29,682 (b) Loss on forced sale of the stock-in-trade such as timber, charcoal, etc. pound 11,582 (c) For wrongful arrest, personal prejudice and loss of income. 1,094 The applicant was allowed an amount of pound 27, 257 towards his claim under items Nos. (a) and (b) above and a sum of pound 113 under item No. (c). On the 25th October, 1952, the applicant received a sum of Rs. 3,28,449 from the Custodian of Enemy Property, Government of India as compensation for damage to property and for personal prejudice. On receipt of this information, the Income-tax Officer initiated proceedings under section 34 of the Act after obtaining the sanction of the Commissioner of Income-tax, U.P. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly converted into capital assets in the shape of saw mill, machinery, etc., but upon sale thereof, forced and voluntary, they were reconverted into cash. In the opinion of the Tribunal the whole of the amount of the sale proceeds "had the character of income earned outside the taxable territories". The Tribunal noticed that under section 4(1)(b)(iii) foreign income earned before the 1st of April, 1933, was exempt but it held that the assessee could not have earned much before that date, because until 1925 the assessee was serving only as a watchman on a petty salary and the timber business must have been started on a small scale. It was only in the year 1937 that the assessee expanded his business and set up the saw mill. The assessee had not produced any documentary or other evidence to show what was the amount of income earned by him before 1933. In the view taken by the Tribunal, the sum of Rs. 92,873, which has been assessed in the hands of the assessee, is only a small portion of the total amount received by him and the whole of it was attributable to income earned after the year 1933 and taxable under section 4(1)(b)(iii) of the Act. On behalf of the assessee exemption unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntion is without substance. It is admitted that the compensation had been claimed by the assessee from the Government of Thailand for loss sustained by him on account of the forced sale of the assets including the stock-in-trade of the business he was carrying on in that country. It is also common ground that compensation was paid by the Government of Thailand to the Government of India for distribution amongst various claimants similarly circumstanced. The Government of India merely passed it on to the assessee and other claimants like him. It is, therefore, futile to contend that the income had accrued to the assessee in Bombay and that the amount in question was not a remittance to him from a foreign country. Another contention of the assessee was that the entire amount of compensation, viz., Rs. 3,28,449, was not sufficient to cover even the value of the capital assets of the business, namely, the saw mill, machinery, etc., which the assessee had to sell in Thailand for a nominal price under compulsion of events and hence no part of the compensation could be attributed to the value of the stock-in-trade of the timber business. It was pointed out in this connection that the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ur opinion, there is not the least doubt that the sum of Rs.92,873 was assessable to tax under section 4(1)(b)(iii) of the Act, being the accumulated profits of the assessee's business in Thailand. The assessee claimed exemption under clause (ii) of the fourth proviso to section 4(1)(b) of the Act, which runs as follows (omitting the immaterial portions) : " Provided further that, in the case of a person resident in the taxable territories .... so much of the income, profits and gains referred to in sub-clause (iii) of clause (b) as accrued or arose to him without India and were not chargeable under this Act, unless brought into or received in the taxable territories, shall not be included in his total income if-. . . . (ii) in any case where such income, profits and gains are brought into of received in the taxable territories after the 2nd day of September, 1951, and before the 30th day of September 1954, half of the amount of such income, profits and gains is invested within three months of the receipt thereof in the taxable territories in securities of the Central Government or of a State Government purchased through the Reserve Bank of India and kept with the said bank f ..... X X X X Extracts X X X X X X X X Extracts X X X X
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