TMI Blog1942 (3) TMI 13X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee, Raja Bahadur Kamakhya Narain Singh of Ramgarh, was assessed by the Income-tax Officer on his income from different sources comprising among others royalties received from various lessees for working the coal mine located on his estate. When these leases were granted the assessee was a minor and his estate was being administered by the Court of Wards. Upon the assessee attaining majority he took charge of his estate during the accounting year 1937-38. One of the lessees is the well-known firm of Messrs. Bird Co., who paid to the assessee during the accounting year a total royalty of ₹ 1,38,955. Out of this sum, ₹ 50,209-14-3 was paid by them during the first portion of the previous year 1937-38 when the estate was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Bank; but the account was operated upon not in the previous year but in the following year. Upon these facts Mr. P.R. Das, who appears for the assessee, contends that the assessee has never received the sum in question because he has kept it in a suspense account and also because the sum had been received by the bank who is debtor to the assessee for this sum and the receipt, if at all, was a receipt by the bank and not by the assessee. Reliance is placed upon the case of this Court in Maharajadhiraja of Dharbhanga v. Commissioner of Income-tax [1930] I.L.R. 9 Pat. 240, where Kulwant Sahay J., observed at page 289: It is clear from the method of accounting adopted by the assessee that no appropriation was made by the assessee on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... end of the year 1332 is ₹ 3,09,281. Out of this sum only ₹ 30,091 which was the amount received in the year 1331, was assessed to income-tax in that year. The Income-tax Officer has given a credit for this sum of ₹ 38,091 and has held that as the payment in the year 1332 exceeded the balance of the total interest tax should be assessed upon the whole of the balance of the interest . Upon these facts it is clear that the dispute in that case was how much was to be treated as interest and how much was to be treated as principal in a sum which had been received by the assessee. The assessee had not made any appropriation in the earlier years because he kept the sums received in suspense account. When he made the appropriatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come-tax Department has a right to go into the account books and find out whether a particular item has been properly treated by the assessee as income or not . A little later on at the same page (page 13) he states: It is quite immaterial from the income-tax point of view, that the assessee chose to treat the money received as deposit and kept it in 'Suspense' in his account books and did not take it to the 'Royalty' account in the accounting year in question. He had some dispute with the lessee with regard to the question of the quantum of royalty. His claim was to get more royalty from them. There was no doubt at all in the mind of the lessees (Bird Co.) who had treated the sum as payment of 'royalty'. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ker from or on account of his customer constitutes him merely a debtor of the customer although the obligation to repay only arises upon demand and repayment need only be made at the branch at which the account is kept. He is not a trustee for the customer and the latter has no right to enquire into or question the use made of the money by the banker . But this rule only deals with the situation which arises between a banker and his customer and has nothing to do with the situation which arises when a debtor pays money to the account of his creditor in a bank at the request of the creditor, as in this case. It has been found that by an arrangement with the Court of Wards the lessee used to pay money to the Imperial Bank to the account o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f a sum of money, although no money may pass; and I am not myself prepared to say that what amongst business men is equivalent to a receipt of a sum of money is not a receipt within the meaning of the Statute which your Lordships have to interpret. But to constitute a receipt of anything there must be a person to receive and a person from whom he receives and something received by the former from the latter, and in this case that something must be a sum of money. A mere entry in an account which does not represent such a transaction does not prove any receipt whatever else it may be worth . Can it be doubted that amongst business men the payment by Messrs. Bird Co., to the account of the assessee in the Imperial Bank at the request of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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