TMI Blog1957 (9) TMI 57X X X X Extracts X X X X X X X X Extracts X X X X ..... income of the assessee, or part of the income thereof, was received in British India (as it then was)? The assessees are T.M. Bhumraddi and B.M. Bhumraddi, two brothers, who were the proprietors of Shivanand Oil Mills. They had three oil mills in the Hyderabad State at Gulbarga, Yadgiri, and Zahirabad. The oil manufactured at Zahirabad was wholly sold in the Hyderabad State, but the oil manufactured at Gulbarga and Yadgiri was sold in British India; and it is in respect of these sales that the two questions have arisen. The relevant assessment years are 1940-41, 1941-42, 1942-43 and 1943-44. It appears that prior to the 7th of April, 1940, which fell within Samvat year 1996 being the previous year to the assessment year 1941-42, one P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m and some of these hundies were discounted by the assessees through Purshottam Surchand, who was in Bombay, that is, some of the hundies were discounted in British India. The Tribunal also considered in what respect there was any difference between the position that obtained prior to the 7th of April, 1940, and the position that obtained after the 7th of April, 1940; but that is an approach which appears to us to be irrelevant for the purpose of determining the question before us. Whether it was rightly or wrongly held that there was a business connection prior to the 7th of April, 1940, is not a question that arises before us for determination; and all that we are concerned with on this reference, so far as question No. (1) is concerned, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a year the uncle sent debit or credit notes to the assessee for any deficit or excess in weight, and for minus or plus colour allowance as adjusted between him and the Bombay buyers. There was no written agreement or contract between the uncle and the assessee for such adjustments which in effect meant that it was the assessee who had finally to bear losses or to receive profits on account of differences in weights and quality. We must confess our inability to understand what the Appellate Assistant Commissioner wishes to convey when he refers to the assessees bearing losses or receiving profits. There are no losses or profits involved when an adjustment is made in the price either by way of a rebate or an addition in respect of weight ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e not considering what income was received in British India and the contention of Mr. Amin on this reference is that the Department attempted to argue before the Tribunal that part of the profits from sales in India were received in British India and in that manner to support the taxation of those profits. The Tribunal, in the view that it took, has applied the provisions of section 42(1), but estimated that only fifty per cent. of the total income accrued in British India and subjected to tax fifty per cent. only of the profits. Now, the right of the Income-tax Commissioner to urge that part of the profits were received in India would depend upon whether this was the case of the Department at any stage in these proceedings, for, if i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... British India. We have already stated that the Income-tax Officer referred to the receipt of income in the assessment order only for the year 1942-43. When the case was remanded to the Appellate Assistant Commissioner no question of receipt of the profit in British India arose. It was in the remand report that the Appellate Assistant Commissioner tried to make out a case that the profit on the sale of oil in British India was received in British India. Therefore, apart from the reference in the order of the Income-tax Officer for the assessment year 1942-43, it was not the Department's case that any part of the income was received in British India; and apparently the reference by the Income-tax Officer for the assessment year 1942 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssees was received in British India either wholly or in part. In our opinion, it was not open to the Department to take up this contention before the Tribunal when it had not been raised either before the Income-tax Officer or before the Appellate Assistant Commissioner and the facts in respect of which had not been found until the stage that the assessees filed an appeal to the Income-tax Tribunal. There appears to be a somewhat unfortunate position as to whether the Department did in fact raise or attempt to raise this question before the Tribunal. In the statement of the case, the Tribunal, one of whose members was a party to the order out of which this reference arises, states that the matter was not argued at the hearing of the appe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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