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TMI Blog1961 (2) TMI 96X X X X Extracts X X X X X X X X Extracts X X X X ..... questions that arise both in R. C. Nos. 26 of 1953 and 73 of 1957 relate to the same set of assessment proceedings and, as we said, they are really alternative positions to be considered before the questions at issue between the assessee and the department are ultimately disposed of. It is rather unfortunate that the specific findings required have not been recorded in the statement of the case submitted in R. C. No. 73 of 1957. The department filed T. C. M. P. No. 41 of 1959 to call upon the Appellate Tribunal to submit a further statement of the case with reference to the questions which they were directed to refer to this court in C. M. P. No. 7015 of 1956. Learned counsel for the assessee took time for consideration and eventually r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rry on its business. That aspect also will have to be considered in full by the Tribunal in submitting the further statement of the case called for. Learned counsel for the assessee points out that these proceedings, which relate to the assessment year 1949-50, have been pending long enough. The Tribunal will submit the further statement of the case within six weeks from the date of receipt of the records by the Tribunal. In R. C. Nos. 26 of 1953 and 73 of 1957, the assessee was Mr. Narayanswami, one of the two partners of Messrs. Chitra and Co., Madras. The assessee in R. C. Nos. 36 of 1953 and 17 of 1957 is Mr. Subramanian, the other partner. The questions that arise for determination in R. C. Nos. 36 of 1953 and 17 of 1957 are virt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ame of Chitra and Company. Chitra and Co., a firm of stock-brokers, had its head office at Madras and a branch at Trivandrum. Out of the profits earned and accumulated at Trivandrum in Travancore, which was outside British India which then constituted the taxable territories, and which profits were therefore not assessed, each of the partners purchased Mysore Securities which were held at Trivandrum. They desired to change the investment to Travancore Securities. Each of them sold the Mysore Securities to the firm, Chitra and Co., on August 6, 1947, under what was styled a brokers contract. It was common ground that facilities for purchase and sale of securities were better at Madras, where the firm had its head office. On August 7, 1947, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arayanaswami, the Tribunal referred under section 66(1) the following question : Whether there was material for the Tribunals finding that the real effect of the transactions put through was to bring about a remittance to the assessee of his foreign profits to the extent of ₹ 37,006 assessable under section 4(1) (b) (iii) ? (R. C. No. 26 of 1953). Under the directions of this court a further question was referred under section 66(2) of the Act which ran : Whether, in the circumstances of the case, even if the amount of ₹ 37,006 was a remittance to the assessee, such a remittance did not amount to remittance of capital ? (R. C. No. 73 of 1957). Identical questions were referred with reference to the other assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reinvestment of the sale proceeds in the substituted securities - the contracts for sale and purchase had already been concluded on August 7, 1947, and August 8, 1947 - cannot be viewed as a remittance at all; much less can it be viewed as a remittance of unassessed profits. The contention of the learned counsel for the assessee, that the accumulated unassessed profits held at Trivandrum had been capitalised when they were invested in the purchase of Mysore bonds, is well founded and is supported by authority : see Commissioner of Income-tax v. Muhammad Ismail Rowther. Learned counsel for the department referred us to the judgment of Wrottesley J. in Walsh v. Randall and contended that it should not be viewed as a case of capitalisation of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pital. Though that will be enough to give relief was a remittance of capital. Though that will be enough to give relief to the assessee in these proceedings, we propose to answer the reference under section 66(1) of the Act for the sake of completeness. Our answer to the reference under section 66(2) of the Act in R. C. Nos. 17 and 73 of 1957 is that Commissioner of Income-tax v. Muhammad Ismail Rowther concludes the issue, and that even if there was a remittance by the assessees themselves, the remittances were of capital. Our answer to the reference under section 66(1) of the Act in R. C. Nos. 26 and 36 of 1953 is in the negative and in favour of the assessee. Each of the assessees will be entitled to costs but only to one set of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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