9911796707
TMI Blog1949 (4) TMI 26X X X X Extracts X X X X X X X X Extracts X X X X ..... s is a capital account which has not been operated upon for a considerable period and is being carried forward from year to year. There is thirdly an account in the name of Arjan Singh-Kirpa Ram which seems to have been opened during the accounting period, the account being of a new branch established under the above-mentioned name and style at Rewari. The fourth account is in the name of Kirpa Ram Rewariwala, in which a sum of ₹ 26,115 was credited to the said Kirpa Ram Rewariwala on account of the assessees done-half share of the profits in the Sambar Lake business. The first account showed remittances of sums aggregating to ₹ 1,34,590 from the Sambar Lake firm to the Rewari firm as against sundry receipts amounting to ₹ 1,05,632. The third account showed remittances aggregating to ₹ 24,770 against cash receipts aggregating to ₹ 121,42-1-6. In the first account in addition to the sundry receipts ₹ 25,895 were credited to the Rewari firm on account of the old balance and ₹ 272 on account of interest. The remittances in the first account were ₹ 2,791 in excess of the total amount of the items shown to the credit of the Rewari firm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ad to be presumed that the remittances received from Sambar Lake in so far as they did not exceed the amount of the assessees share of the profits of the business carried on there consisted of and represented his share of the profits and that the onus was on the assessee to show that the remittances to that extent were not on account of his share of the profit. It was urged that in the absence of any rebuttal of the presumption the assessee was liable to be taxed on the sum of ₹ 43,531 out of the remittances received by him. It was contended lastly that in any case it ought to have presumed that the sum of ₹ 7,162 representing the excess of the remittances to the assessee over the receipts from him had been remitted to him out of his share of the profit and that in the absence of any rebuttal of this presumption the assessee was certainly liable to be taxed on the remittances to the extent. The facts of Ramaswami Pillai v. Commissioner of Incomes-tax, Madras, were that the assessee who was a partner in a money-lending firm carrying on business in Tebing Tinggi (Sumatra) had a personal account in the account books of that firm opened on the September 5, 1931, with a c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to be a live ground by reason of the rastic change in the provisions of the Incomes-tax Act. However, the first ground still remains land we cannot see any reason to differ from the view taken by the learned Judges as to the presumption arising from the fact of a remittance as to the same being out of profits being a rebuttable one. Whether the learned Judges were right in holding that in the particular case the presumption had been fully rebutted is not a question on which it is necessary for us to express any opinion. The presumption adverted to in the above-mentioned judgment in certainly not a presumption of law but is quite obviously a presumption of fact such as is contemplated by Section 114 of the Indian Evidence Act. Where an assessee having business connections abroad which any result in profit has received remittances from out of the funds of the business carried on by him or on him behalf in the foreign country and he is unable to show or explain that the remittance was not out of his share of the profit, a presumption may will be made that it represented wholly or in part such share. Section 106 of the Indian Evidence Act provides that the on us of proving a fact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... business outside British India represents profits made in such branch, sin spite of the fact that the total amount of such remittances is less than what has been sent from British India to such branch. This decision was give by their Lordships in view of the peculiar circumstances of the case before them. The assessee in that case failed to produce his books. He led no other evidence to show that the amount received by him did not represent the profit. From the mere circumstance of the remittances made by him being very much in excess of the amount received by him no necessary inference could be drawn that the latter was not the profit earned by him in the business carried on by him abroad. It might well be that the exigencies of the business required capital far in excess of the profits earned. It might further be that either this discovery was made by the foreign representatives or agents of the assessee after having remitted to him the amount of the profits, or otherwise, on grounds of convenience or for the clarity of accounts, they preferred to keeps the profits separate from the capital and remitted the former to him although at the same time asking for more capital. The asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... den of proof was cast upon the assessee to show the contrary, seems to be amply warranted by the authority of that case. As the Commissioner did not misdirect himself the only questions in the case that remain are purely questions of fact and so long as he has approached them without any misconception in his mind as to how they should be dealt with, his findings are conclusive. In Scottish Provident Institution v. John Allan also the remittances were only one way. The facts of the case as given in the judgment were that a large amount of money had been sent to England from investments made by the assessee in Australia. The surveyor of taxes in the absence of any evidence to show that the remittances were out of the capital or could be appropriated to the capital held them to be assessable to tax. Earl of Halsbury, L.C., delivering the judgment of the House of Lords, observed :- I cannot appropriate, nor do I think the parties probably could appropriate, without the assistance of an actuary, the exact amount earned by each particular investment, and say what should be properly applied to capital and what to income. The Commissioners had the matter before them, and they hav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the report, are worth quoting in extenso :- In any case, I cannot accede to the contention that, even when it is shown that the assessee, who has borrowed in British India and carried on a business with such borrowed capital in foreign parts, wants to return his borrowed capital and for that purpose remits that capital to British India and has deliberately and honestly maintained his books in the usual course to show what he has done, there is still a presumption that the source from whence he repays his debt in his foreign profit and not the borrowed capital. So long as it is open to a man to keep his foreign profits abroad, it is not for the Commissioner or any one else to compel him to do what he is not bound to do by law. After all, a man can remit any particular amount of capital form foreign parts into British India only once and further remittances unless there were fresh capital sent out which could be returned must be from profits. The order in which a man must dispose of his capital and profits is for himself to determine, and where, as in this case, he has determined that order, and there is nothing to suspect his bona fides or to show that his books are intended t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ins derived from property abroad at the material time was that the annual profits or gains arising or accruing to any person residing in the United Kingdom from any kind of property whatever were to be taxed if received within the United Kingdom. The position initially taken on behalf of the Crown in that case was that the measure of liability to Income Tax in respect of income arising form possessions out of the United kingdom was the full amount actually received in the United Kingdom. It was contended that the relevant rule enabled the Crown to charge to tax the full amount of the sums received form a capital source but remitted to and received in the United kingdom and that it was not necessary to enquire whether that was income; it being money received in the country the full amount received was to be taxed. This contention, however, was negatived by the Commissioner and was not pressed before the Kings Bench Division. The contention of the Attorney-General there was that in as much as in the particular case there was money received in the United Kingdom an enquiry had to be made as to the income that arose to the assessee in America and was available for remittances and that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order to support an otherwise untenable, although most ingenious, argument, and the observation of Slesser, L. J., made incidentally with reference to that argument cannot be regarded as otherwise than obiter dicta. Certainly, these observation do not embody the considered opinion of the Bench. The next judgment relied on by the learned counsel was the judgment of the High Court of Rangoon in V. P. R. P. L. Family v. Commissioner of Income Tax. All that was held in that case was that in every case when the question is whether a particular sum is profit or capital the question is a question of fact to be determined upon the material before the Income Tax authorities and that if an assessee foreign business remits money to him in a country in which his profits form his business in that country are assessed to Income Tax, the question whether the remittance is a from out of the profits of the foreign business or out of capital is a question of fact, to be determined with reference to the circumstances of each particular case. There can be no quarrel at all with this proposition. However, this judgment cannot be taken as any authority for the view that in appreciating the facts dis ..... X X X X Extracts X X X X X X X X Extracts X X X X
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