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TMI Blog1929 (10) TMI 7X X X X Extracts X X X X X X X X Extracts X X X X ..... these: There was a firm in Madras and a firm in Ipoh carrying on money-lending business. The partners were the same. During the course of dealings moneys were due by the Ipoh firm to the Madras firm. The Ipoh firm was making profits in the accounting year 1925-26 the year of assessment being 1926-27. In the accounting year sums were remitted out of the Ipoh profits to this Madras firm, which in the Madras accounts were appropriated to wipe off the debt due to the Madras firm. The partner in the Madras firm who was also a partner of the Ipoh firm wrote a letter to the agent of the Ipoh firm on 26th March 1926 the material portions of which run as follows: As the debt due by us (Ipoh) to Madras has mostly been discharged it will not be con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ithin the year of accounting. 5. What happened in this case was that moneys were sent from Ipoh to Madras and these were credited in the Madras firm's books. The net result was that the amount which Ipoh owed to Madras was wiped out leaving a balance. There is no suggestion anywhere in the records that when these moneys were sent to the Madras firm they were credited in the Madras firm's books as profits received by each partner individually. Prima facie the Ipoh firm owed the Madras firm large sums of money and receipts were credited in the Madras partnership account. The assessee admits that the Madras firm will be taxable. In fact the assessee does not deny that this amount will be taxable as profits remitted to the firm and t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unt and $ 30,000 in E.M.'s account; and to credit Madras therewith. This does not show that the entire profits for the year were ascertained and that the $ 30,000 represented the profits remitted to the partner during the year of account. Where a partner draws moneys in the course of his business that will be taken into consideration at the end of the year and if there are any over drawings by one partner they will be debited to the account of that partner or set off against his profits and because a partner draws some moneys during the year of account it cannot be said at once that represents his share of the profits. Section 4 (2) is for the purpose of ascertaining the profits of a partner got from business carried on outside British ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taken over with the intention of selling them and that the profits derived from the transactions as a whole including the sales was as much a profit of the firm's business as that derived from its other money-lending transactions. The firm got these properties in discharge of debts due to it, resold the properties at a profit and the Income Tax authorities consider this as a profit derived from its business. 11. It is argued by Mr. K.S. Krishnaswami Iyengar, that the firm's business was only money-lending and no profit realized by the sale of the properties got in satisfaction of the debts due to the firm can be said to be profit made in the course of the firm's business and so it is not liable to be taxed. Reference is made ..... X X X X Extracts X X X X X X X X Extracts X X X X
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