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Issues Involved:
1. Taxability of remittance of Rs. 2,01,000 under Section 4(1)(b)(iii) of the Indian Income-tax Act. 2. Entitlement to set off the loss of Rs. 73,779 against the remittance of Rs. 2,01,000. Issue-Wise Detailed Analysis: 1. Taxability of Remittance of Rs. 2,01,000 under Section 4(1)(b)(iii): The primary issue is whether the remittance of Rs. 2,01,000, which was earned by the assessee in the years preceding the Maru year 1999-2000 as a non-resident, could be included under Section 4(1)(b)(iii) of the Indian Income-tax Act in the total income of the year of account when the assessee was a resident in British India. The assessee argued that this amount was part of a large fortune inherited from his uncle and brought into British India. The Appellate Assistant Commissioner and the Tribunal found that the sum represented remittances and profits received in British India and taxed it under Section 4(1)(b)(iii). The court emphasized that its jurisdiction is advisory, confined to questions referred by the Tribunal, and cannot raise new questions not referred by the Tribunal. The Advocate-General contended that since the question regarding Section 4(1)(b) was not argued before the Tribunal, it should not have been referred to the High Court. However, the court disagreed, stating that the plain grammatical construction of the section allows for questions of law apparent on the order or arising from the facts found by the Tribunal to be considered. The court noted that Section 4(1)(b)(iii) taxes remittances brought into British India by a resident, regardless of whether the income was earned as a non-resident. The court rejected the assessee's argument that the word "him" in the section should be interpreted to mean "provided that he was a resident in British India." The court clarified that the section taxes remittances, not income, and the fact that the remittance represents income earned by a non-resident is irrelevant. The court concluded that the remittance of Rs. 2,01,000 was rightly taxed under Section 4(1)(b)(iii) and answered the first question in the affirmative. 2. Entitlement to Set Off the Loss of Rs. 73,779 Against the Remittance of Rs. 2,01,000: The second issue is whether the assessee is entitled to set off the loss of Rs. 73,779 suffered in his business at Indore against the remittance of Rs. 2,01,000. The court noted that the assessee can only succeed if both amounts fall under the same head of income. The loss of Rs. 73,779 falls under the head of business income, while the remittance of Rs. 2,01,000 falls under the head of "Income from other sources" as it represents remittances brought into British India. Therefore, the proviso to Section 24, which restricts the setting off of losses incurred in a Native State against profits or gains in British India, applies. The court concluded that the assessee cannot set off the loss of Rs. 73,779 against the remittance of Rs. 2,01,000 and answered the second question in the negative. Conclusion: The court affirmed the taxability of the remittance of Rs. 2,01,000 under Section 4(1)(b)(iii) and denied the entitlement to set off the loss of Rs. 73,779 against the remittance, thereby answering the first question in the affirmative and the second question in the negative. The assessee was ordered to pay the costs of the reference.
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