TMI Blog1935 (1) TMI 23X X X X Extracts X X X X X X X X Extracts X X X X ..... unts as received, and taxed in the assessment . Now, in Main Feroz Shah v. Commissioner of Income Tax Punjab (at p. 692) Lord Blanesburgh, delivering the judgment of the Judicial Committee, observed: Too much emphasis has, they think, throughout the case been attached to the use by the Income tax Officer and the Assistant Commissioner of the term 'mercantile system'. The finding of both, in its essential substance, was that the appellant's system of accounting, by whatever name called, required the inclusion in his accounts of 1926-27 of the ₹ 90,618 referred to and the only question open to judicial determination is whether there was any evidence before these officers upon which they might so find . These ob ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ice was according to the provisions of Sections 13 as understood by this department. Accordingly, when the income tax officer came to make the assessees' assessment for 1933-1934, and found that they had omitted to include in their return ₹ 23,373, which represented interest for which fresh pro-notes had been taken from nonChettyar debtors and which was shown in their accounts as received, he included the amount in the assessment. His order was upheld on appeal. The Income Tax Officer in his assessment order stated : In the present case, however, the assessee, according to the custom of the Chettyar community to which he belongs, has always been treating interest included in the fresh pro-note or mortgage bond taken in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... debt may be repaid in kind as well as in bullion: Gresham Life Assurance Society v. Bishop; Raghunandan Prasad Singh v. Commissioner of Income Tax. Bihar and Orissa, and Commissioner of Income Tax, Bihar and Orissa v. Maharajadhiraj of Dharbhanga. In Gresham Life Assurance Society v. Bishop, Lord Lindley observed: My Lords, I agree with the Court of Appeal that a sum of money may be received in more ways than one, e.g., by the transfer of coin or a negotiable instrument or other document which represents and produces coin and is treated as such by business men. Even a settlement in account may be equivalent to a receipt of a sum of money although no money may pass; and I am not myself prepared to say that what amongst businessmen is e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd delivery of the fresh promissory notes by the debtors, and the interest is entered as having been received both in the interest account and in the personal accounts of the respective debtors, and the creditors accepting the obligations of the debtors under the fresh promissory notes in substitution for the old debts and the interest due thereon, and in past years being content that the interest accruing in this manner should be assessed to income tax. In these circumstances I am unable to hold that there were no materials before the Income tax Officer which would justify him in concluding that these sums, amounting in all to ₹ 23,373, represented interest liable to assessment in the year 1933-1934. The assessees rely upon two ju ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessees both in the interest account book and the books relating to the 0163 account of the respective debtors as being interest that had been received by the assessees from their debtors. The remedy for the difficulty in which the assessees find themselves in the present case lies with the assessees themselves: for I see no reason why in the future they should not so adjust their accounts as to make it clear that the acceptance of a fresh promissory note is not taken as effecting payment of the interest due under the old loan. In the circumstances obtaining in the present case, however, I would answer the question as amended in the affirmative. The assessees will pay the costs of the Commissioner's Advocate's fee, 10 gold moh ..... X X X X Extracts X X X X X X X X Extracts X X X X
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