TMI Blog1948 (4) TMI 7X X X X Extracts X X X X X X X X Extracts X X X X ..... 8213;The assessees are residents and ordinarily residents in British India having arhat and gram business at Mokamah in British India and also money-lending business at Mandraila in Jaipur State, an Indian State. The previous year for the assessment is the year 1998-99 Sambat corresponding to the 21st October, 1941, to the 7th November, 1942. The Income-tax Officer found from the examination of the personal account of Jaliram Ramchandra in the books of the British Indian business at Mokamah that a sum of ₹ 5,810-2-0 was remitted from British India to Mandraila, and in the same period a sum of ₹ 5,522-15-3 was remitted from Mandraila to British India. The Income-tax Officer called upon the assessees to explain the source and natu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... refore, that only the difference between the remittances from British India and those from outside British India could be brought under assessment, but as the sum sent out to Mandraila was more than the sum received from Mandraila, nothing could be taxed in this year. The Income-tax Tribunal relying upon the case of Multanchand Johurmul v. Commissioner of Income-tax, Bengal [1930] 5 I.T.C. 154. , accepted this contention. At the instance of the Commissioner of Income-tax the following question has been referred to us for our opinion:― Whether, in the circumstances of the case, the Tribunal could properly come to the conclusion that no amount of profits of the Mandraila business was brought into British India so as to be ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cil case of Maharaja of Darbhanga [1933] 12 Pat. 318, at p. 327; 1 I.T.R. 94 ). The real question then is whether the amount sent from Mandraila to British India is the profit or income of the assessees from the foreign business. It has been clearly pointed out in the case of Govind Ram Tansukh Rai [1944] 12 I.T.R. 450 that the profits of a foreign business cannot be determined till the expiration of the year, and, therefore, they cannot be included, in law, in the remittances which were made during the pendency and in the course of the year. The learned Judges of the Allahabad High Court drew attention to Section 3, Section 2 sub- clause (11), and Section 4 sub-clause (2), of the Income-tax Act, and observed that it is obvious t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , and the amount received from Mandraila in the same period was ₹ 11,002-13-0. The Income-tax Officer added the whole amount of ₹ 11,002-13-0 in the assessable income of the assessees, and this finding was affirmed by the Appellate Assistant Commissioner. The Appellate Tribunal in accordance with the view which they had expressed for the assessment year of 1943-44 ordered that only the difference of the sum received from Mandraila and the sum sent out to Mandraila, that is to say, ₹ 2,002, can be deemed to be the profit of the money-lending business brought into British India. At the instance of the Commissioner of Income-tax, who was aggrieved by the decision, the following question has been referred to us for our opin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enough to refer to M. Murugappa Chettiar v. Commissioner of Income-tax, Madras [1926] 2 I.T.C. 139 where it was held that the money remitted to the headquarters of a firm in British India from its branch outside British India is prima facie to be presumed as having come out of profits rather than a remittance of capital and is assessable to income-tax as profits until the contrary is shown by the assessee; the same view was taken in the case of Ramanathan Chettiar [1927] 2 I.T.C. 348 . (See also the case of Subbiah Iyer [1930] 4 I.T.C. 360 , the case of Meyyappa Chettiar [1933] 1 I.T.R. 37 , and Tarachand Pohumal [1936] 4 I.T.R. 312 ; 9 I.T.C. 256 ). This view of the law was not and could not be seriously challenged on behal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ations made of the remittances from and to Kabul it is proved that the assessee made a profit in the Kabul business. The assessing authority has made an assumption of this from the fact that the assessee has been carrying on business since 1929, and in spite of several opportunities having been given to him, has failed to produce his account books. He has also inferred that, assuming that the business in Kabul has been run on profit, the amount remitted to Peshawar represented profit also and that it was not wholly capital. In P.L.S.K.R. Firm v. Commissioner of Income-tax [1930] 5 I.T.C. 55 , it was held that under certain circumstances it is open to the Income-tax Officer to assume that the amount remitted to British India from a branch o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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