9911796707
TMI Blog1990 (11) TMI 6X X X X Extracts X X X X X X X X Extracts X X X X ..... having textile mill in what was known as British India at the relevant time. The cloth manufactured at the mill of the assessee was sold in British India as well as in some of the former Indian States. Under section 42(3) of the Indian Income-tax Act, 1922 (hereinafter referred to as "the Income-tax Act"), out of the total business profit made by the assessee in the Indian States, a part was attributed to the assessee's manufacturing operations carried on in British India and it was deemed as income accruing and arising in British India. The remaining part of the profit arising in the. Indian States was attributed to its merchanting operations in the said States under section 14(2)(c) of the Income-tax Act and the same was exempted from in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... profits as computed in the said income-tax assessment. He, however, included the entire amount of Rs. 5,67,206 which was computed to be the amount of merchanting profits arising in the Indian States in that period for assessing the income of the assessee for the purpose of chargeability of business profits tax. The said assessment was upheld in appeal by the Appellate Tribunal. The assessee submitted an application before the Appellate Tribunal for reference of the questions of law arising out of the order dated May 13, 1958, passed by the Appellate Tribunal and, on that application, the Appellate Tribunal, by order dated February 13, 1959, referred the following question to the High Court for consideration under section 66(1) of the Incom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tificate from the High Court. Shri B. Sen, learned counsel for the assessee, has submitted that the income-tax authorities were in error in including the entire amount of Rs. 5,67,206, which has been computed to be the amount of merchanting profits arising in the Indian States as part of the taxable profits of the assessee for the purposes of business profits tax on the view that the said amount had been remitted to British India by the assessee during the chargeable accounting period. The submission of Shri Sen is that the said view is inconsistent with the orders passed by the authorities ill incometax assessment proceedings wherein, out of the total remittances to British India amounting to Rs. 9,01,363, a sum of Rs. 1,18,754 only was t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dia. The Income-tax Officer held that to the extent of Rs. 1,18,754, the said remittance should be treated to have come out of the income which accrued or arose in the Indian States in the same period and the remaining part, viz., Rs. 7,82,609, should be treated to have come out of the income which accrued or arose in the Indian States prior to that accounting period. He did not include these sums in his computation of the company's British Indian business profits but included the same in the company's total income under the head 'Other sources'." This would show that, in the proceedings for the assessment of income-tax for the assessment year 1947-48 covering the accounting period April 1, 1946, to March 31, 1947, out of the total amount ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w and hold that a larger amount, viz., Rs. 5,67,206, had been remitted by the assessee from the Indian States to British India out of the profits arising in the Indian States during the chargeable accounting period. The Appellate Tribunal was, in our opinion, not right in proceeding on the basis that there was no material showing that remittances were made out of profits made prior to the accounting period because in paragraph 6 of both the statements of case, the Appellate Tribunal has clearly stated : "The business profits tax assessment was considered subsequently. In making that assessment, the Income-tax Officer took into consideration all the materials and information contained in the corresponding income-tax proceedings and adopted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the same accounting period, which material was before the Appellate Tribunal, the finding recorded by the Appellate Tribunal is defective in law. The questions of law referred to the High Court cannot be answered in view of the defective finding recorded by the Appellate Tribunal without considering the relevant material on record. In these circumstances, we consider that the best course is for the Appellate Tribunal to rehear the appeal and, after considering all the relevant material including the orders passed in the proceedings for assessment of income-tax for the assessment year 1947-48 covering the same accounting period, record a finding with regard to the amount remitted by the assessee from the Indian States to British India out of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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