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TMI Blog1925 (4) TMI 5X X X X Extracts X X X X X X X X Extracts X X X X ..... income of the applicant and ordered that for purposes of assessment, the income of the applicant from business should be taken to be ₹ 26,070-1-9. He was accordingly taxed on a total income of ₹ 26,370-1-9 for the year 1923-1924. He then applied to the Commissioner of Income-tax under Section 66 of the Income-tax Act of 1922 for a reference to the High Court. His contention was that he was not liable to pay income-tax on sewai or prospective interest which had neither been actually realized by him nor has become payable during the period for which assessment had been made. The Commissioner of Income-tax overruled his contention and declined to make a reference to the High Court on the ground that no question of law arose in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ok-profits when that is the system of accountancy with any particular assessee. I think no point of law is involved in this case and I do not see any object to be gained in referring the matter to the High Court. 2. The applicant has now moved this Court under S. 66(3) of the Act to call upon the Commissioner of Income-tax to state the case and refer it for the orders of this Court. The facts of this case are not disputed before us and the only question, which we have to decide at this stage, is whether on the facts as admitted by both the parties a question of law arises justifying an order by us calling upon the Commissioner of Income-tax to make a reference to this Court. It is admitted by both the parties that the applicant makes a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... law and not a question of fact. In Groshaw Life Assurance Society v. Bishop(1) Lord Lindley has observed at page 296 as follows: My Lords, I agree with the Court of appeal that a sum of money may be received in more ways than one, e.g, by the transfer of a coin or a negotiable instrument or other document which represents and produces coin, and is treated as such by business men. Even a settlement in account may be equivalent to a receipt of a sum of money, although no money may pass; and I am not myself prepared to say that what amongst business men is equivalent to a receipt of a sum of money is not a receipt within the meaning of the statute which your Lordships have to interpret. But to constitute a receipt of anything there must b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e question whether particular entries on the credit side in the kasar khata constitute income or, not when there is no dispute in regard to the meaning of those entries and the circumstances under which they were made is a question of law. 5. In this connexion, we should like to observe that the Income-tax Act of 1922 applies to all income, profits or gains as described or comprised in S. 6 of that Act from whatever source derived, accruing or arising or received in British India vide S. 4 of the Act, S. 6 mentions the several heads of taxable income one of which is Business with which we are concerned in the present case and S. 10 describes the way in which income derived from business should be calculated. That section enacts that in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ur opinion raises a question of law. 7. In a very recent case decided by the Privy Council, St. Lucia Usines and Estates Co. v. S. Lucia(6), Lord Wren-bury has observed:- The words income arising or accruing are not equivalent to the words debts arising or accruing. To give them that meaning is to ignore the word income. The words mean money arising or accruing by way of income. There must be a coming in to satisfy the word income . If the taxpayer be the holder of a stock of a foreign Government carrying, say, 5 per cent, interest, and the Government is that of a defaulting State which does not pay the interest, the taxpayer has neither received nor has there accrued to him any income in respect of that stock. A debt has a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the kasar khata, it was rightly taken into account in determining the applicant's income. In other words, while there is no dispute between the parties in regard to the facts of the case, each wishes to draw his own inference from those facts and to interpret the entries in the kasar khata to suit his own case. This raises a question as to which of the two inferences is the correct inference and which is the proper mode of construing sewai entries in the kasar khata. 9. It has been held by their Lordships of Privy Council that the proper legal effect of a proved fact is a question of law: Nafar Chandra Pal v. Shukur(7). In Ramgopal v. Shamskhaton(8), Sir Richard Couch has observed. The facts found need not be disputed. It is the so ..... X X X X Extracts X X X X X X X X Extracts X X X X
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