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TMI Blog1969 (3) TMI 28X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 34 of the Indian Income-tax Act, 1922. In the course of reassessment proceedings the assessee submitted that the income which had accrued in the United Kingdom during the assessment years 1939-40 to 1958-59 was from interest and dividends, that they were capitalised by the purchase of securities and that after sale the amounts were ultimately brought to India in February, 1958. According to the assessee the sale proceeds of the said investments cannot attract the provision of section 4(1)(b)(iii) of the Indian Income-tax Act, 1922. The Income-tax Officer negatived the assessee's contention and held that there had been remittances of profit within the meaning of section 4(1)(b)(iii) of the said Act and included the said sum of Rs. 90,000 in the reassessment made. There was an appeal before the Appellate Assistant Commissioner who held that, inasmuch as the assessee was a resident-assessee, he could not, by investing for the time being his income earned abroad, change its character. The Appellate Assistant Commissioner held that the sum of Rs. 90,000 was correctly taxed under section 4(1)(b)(iii) of the Indian Income-tax Act, 1922. There was a further appeal before the Trib ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fter the 1st day of April, 1933, are brought into or received in the taxable territories by him during such year. The question that requires consideration in this reference is whether this sum of Rs. 90,000 was income, profits or gains and was brought into the taxable territories by the resident-assessee. In the case of Commissioner of Income-tax v. Ahmedabad Advance Mills Ltd., the Privy Council was considering the case of assessees who were the owners of sterling bonds of the Government of India the interest on which was payable in England. The assessees received the said interest in England in the year 1935-36 on these securities to the extent of Rs.18,333. They had invested that income in the purchase of certain mill stores and machinery in England and brought the articles purchased to British India in the assessment year 1936-37 and employed them for the purposes of their mills. They were assessed to income-tax in British India in respect of this sum of Rs. 18,333 on the ground that the income in question was brought to British India within the meaning of section 4(2) of the Indian Income-tax Act. It was held by the judicial Committee confirming the decision of the Bombay Hi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Madras HighCourt held that there was no material to justify the conclusion arrived at by the income-tax authorities. Mr. B. L. Pal, learned counsel for the revenue, contended before us that there was no evidence of any positive purpose for conversion of the income into capital assets and subsequent sale thereof. According to him,on the sale of these capital assets, the sale proceeds resumed their original character, namely, the character of income and when the sale proceeds were received in India, according to him, it was income that was received in India. The question here is whether income after it has been capitalised, if there is sale of the said capital, is income or it represents the sale proceeds of capital. It is important in this connection to reiterate that the Tribunal has found that this investment into capital assets and subsequent sale were not resorted to by the assessee as a device for the purpose of remittances of the moneys to India without running the risk of being taxed. Mr. B. L. Pal relied on the decision in Walsh V. Randall . There what happened was that the assessee who was resident and ordinarily resident in the United Kingdon had two sources of i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n Income-tax Act, 1922, with which we are concerned. Further Wrottesley J. observed at page 61 : " The fact is that if a man resides here he cannot, by investing for the time being his income abroad, change its character vis-a-vis the income-tax collector. " What the position, therefore, would have been if the assessee had made the investment not for the time being and if he had acquired assets of a different nature than by investment in the bank, did not fall for consideration by the court in that case. The next case relied on by Mr. Pal was the decision of the Madras High Court in Commissioner of Income-tax v. Rm. Al. Ct. Annamalai Chettiar. There, the assessee, a Nattukottai Chettiar, carrying on money lending business in the Federated Malay States, instructed in the year of account his bank at Kuala Lumpur to remit to its British Indian branch a sum of Rs. 8,000 which the bank in British India was to hold as a fixed deposit of the assessee, repayable at the end of twelve months. The money which the assessee paid into the bank at Kuala Lumpur represented profits which the assessee had made at the Federated Malay States. When the deposit matured the amount was paid to th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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