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TMI Blog1966 (10) TMI 33X X X X Extracts X X X X X X X X Extracts X X X X ..... the bank realised any profit in the carrying out of its business. We accordingly hold that Mr. Hazarnavis is unable to make good his argument on this aspect of the case and the High Court was right in reaching the conclusion that the exchange difference of ₹ 1,70,746 was not assessable to income-tax. Appeal dismissed. - - - - - Dated:- 13-10-1966 - Judge(s) : V. RAMASWAMY., J. C. SHAH., V. BHARGAVA JUDGMENT The judgment of the court was delivered by RAMASWAMI J.---This appeal is brought, by certificate, from the judgment of the High Court of Mysore dated December 11, 1961, in Income-tax Reference Case No. 13 of 1959. The respondent (hereinafter referred to as the " bank ") is a public limited company carrying on business of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -tax Officer rejected the claim holding that the said amount of Rs. 1,70,746 was a revenue receipt. The order of the Income-tax Officer was affirmed by the Appellate Assistant Commissioner in appeal. The bank took the matter in further appeal to the Income-tax Appellate Tribunal which rejected the appeal by its order dated November 23, 1956. At the instance of the bank the Income-tax Appellate Tribunal referred the following question of law for the determination of the High Court : " Whether the aforesaid exchange difference of Rs. 1,70,746 is assessable under any of the provisions of the Indian Income-tax Act ?" By its order dated December 11, 1961, the High Court reversed the finding of the Appellate Tribunal and held that the excha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ying idle in the Karachi branch and it was not utilised in any banking operation and the Karachi branch was merely keeping that money with it for the purpose of remittance to India and awaiting permission of the State Bank of Pakistan. The State Bank of Pakistan granted the permission on July 1, 1953, and the remittance actually took place two days later, i.e., on July 3, 1953. It has been found by the Appellate Tribunal that the sum of money was at no material time employed, expended or used for any banking operation or for any foreign exchange business. In the supplementary statement of the case the Appellate Tribunal stated that " during the period April 3, 1951, to April 25, 1953, there were dealings between India and Pakistan offices o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Appellate Tribunal were not challenged on behalf of the Commissioner of Income-tax. On the other hand, it appears that it was conceded by the appellant before the High Court that there was no evidence that the " blocked " balance was, in fact, employed by the Karachi branch for the internal banking operations in Pakistan or for its business in Pakistan and other foreign currencies. It is therefore not permissible for the appellant at this stage to go behind the two statements of the case and to challenge the findings of fact contained therein. The argument was also stressed by Mr. Hazarnavis that the money was " stock-in-trade " of the bank and an increment of Rs. 1,70,746 due to the fluctuation in the exchange rate must therefore be treate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... turing company in England, with a view to buying tobacco leaf in the U. S. A. during the leaf season, used to provide itself with dollar currency in advance by purchasing the same beforehand. On the outbreak of war, owing to Governmental restrictions, the company had to suspend its buying operations in the U. S. A. Later, the British Treasury requisitioned the accumulated dollars and paid the company sterling in exchange. The dollars in the meantime having appreciated in value, the company got more sterling than what it originally laid out. It was held by the Court of Appeal that the excess receipts were profits assessable to income-tax and the acquisition of the dollars was the first step in the commercial transaction of the company. The d ..... X X X X Extracts X X X X X X X X Extracts X X X X
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