9911796707
TMI Blog1938 (3) TMI 22X X X X Extracts X X X X X X X X Extracts X X X X ..... rst instance that this is really a question of fact which ought not to have been referred to us. No doubt, the question whether or not the sums were actually received in British India, is a question of fact, but, if the sums were not actually received, the question whether they ought to be treated as constructively received is a question of law. Unfortunately, the learned Commissioner of Income-tax has not stated the facts of the case very clearly in this reference. The reference in part concerns a question as to the construction of Rule 29, which eventually was not raised, and the material facts as to this interest on foreign investments are not found with clarity. However, the learned Advocate-General has admitted, for the purposes of thi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot disputed by the Commissioner of Income-tax or the Assistant Commissioner, is that the dividend was in fact paid by raising a loan on the security of the reserve fund which was available for payment of dividend and that in point of fact although this foreign interest was taken into account for the purpose of ascertaining the amount of profits and the sum which should be applied in payment of dividend, the actual sum was not used in payment of dividend. The answer to the question raised really depends on the construction of Section 4 of the Indian Income-tax Act, which provides that the Act shall apply to income, profits or gains accruing or arising or received in British India or deemed under the provisions of this Act to accrue, or ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the profits for the year and has been taken into account also in determining the amount to be paid in dividend seems to me irrelevant unless it be proved that this actual income has been received in India and applied in payment of dividends, and that is not shown. The case seems to me to be covered in principle by the decision of the House of Lords in Gresham Life Assurance Society v. Bishop [1902] A.O. 287. The proviso to Section 4(2) of the Indian Income-tax Act also supports this view. In my opinion, therefore, we must answer the question raised in the negative. The asses-sees should get their costs from the Commissioner of Income-tax taxed on the original side scale. Kania, J.-I agree. The short point for consideration is the constr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... included in the total interest shown in the balance-sheet. This does not go against the assessees, because the explanation to Section 4 clearly provides that the mere inclusion of such interest in the balance-sheet does not make the amount, as received in British India. The next fact relied upon was the statement in the directors' report that after taking into consideration the interest on those securities the total profit was determined and the dividend would absorb a certain amount. In my opinion the fallacy underlying this argument is that it is treated as if this profit was received in India. The report of the directors and the statements contained therein, in my opinion, do not amount to an admission that the foreign in come wa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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