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TMI Blog1964 (10) TMI 13X X X X Extracts X X X X X X X X Extracts X X X X ..... ritish Government re-occupied Malaya and introduced the Malayan currency as legal tender in place of Japanese currency. The Indian nationals, who were carrying on business in Malaya during the period of Japanese occupation, were bit adversely and suffered losses. The Government of India came to their rescue and by notification dated August 14, 1947, they propounded a scheme to give them relief by allowing them to set off the losses incurred by them during the 5 years relevant to the assessment years 1942-43 to 1946-47 against the profits of the assessment years 1942-43 and 1941-42. We shall consider the scheme in some detail at a later stage of the judgment. On December 16, 1948, the Malayan legislature passed the Ordinance declaring that payments made in Japanese currency by debtors to their creditors in respect of debts incurred prior to and during the Japanese occupation were to be valued and scaled down in accordance with the Schedule appended to the Ordinance. We shall deal with the Ordinance in some detail at the appropriate place but the broad effect of the Ordinance was that though a debt had been charged fully by paying the amount due in Japanese currency, the debt was rev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... R.C. No. Appellant Respondent ---------------------------------------------------------------- 722 to 735 33 of 1955 C.I.T. Madras O.RM. SP. S.V. Firm of 1963 & 52 of 1955 " V.MR.P. Firm, Maur ---------------------------------------------------------------- 55 of 1962 58 of 1955 " VR.AL.CT.Chidambaram Chettiar ---------------------------------------------------------------- 59 of 1955 " S.SV. Firm, Kampar -------------------------------------------------------------- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m (Penang) A.R.M.M. Arunachalam ---------------------------------------------------------------- 113 of 1956 " P.S.R.M. Annamalai @ Subramanian Chettiar ---------------------------------------------------------------- 115 of 1956 " M/S. L. AR. Firm ---------------------------------------------------------------- 518 to 520 of 1963 43 of 1956 O.V.R.SV. AR. CIT Madras ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sp; " ---------------------------------------------------------------- 1951-52 7,667 " ---------------------------------------------------------------- 1951-52 35,500 " ---------------------------------------------------------------- 1951-52 9,006 " ---------------------------------------------------------------- 1951-52 8,338 " -------- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sp; receipt is capital and not revenue. ---------------------------------------------------------------- The Income-tax Officers held that during the period of Japanese occupation the debts were discharged and that the receipt of additional amounts under the Ordinance was in fact assessable to tax. They also held that in the case of an assessee who was a debtor no deduction was permissible on the ground that the amounts paid represented only repayment of capital and not business expenditure. On appeal the Appellate Assistant Commissioner held that the receipts by the assessee in respect of the revived debts were only realization of the original amounts lent and, therefore, could not be regarded as income. In the case of the claim for deduction, he agreed with the view of the Income-tax Officer. On further appeal to the Tribunal, in the case of receipts it held that the assessee by claiming benefits under the scheme and in includin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned a condition that if any recoveries subsequently made would be taken as income, they are now precluded from contending that the amounts realized towards the revived debts are not taxable on the principle of approbate and reprobate. And (3) on a reasonable construction of the relevant sections of the Ordinance it should be held that there was no revival of the debts but only that the State had provided for compensation for the losses incurred during the occupation period by the assessees. The first question had not been raised at any stage of the proceedings before the Tribunal and the High Court. Nor does it find a place in the statement of case. We cannot, therefore, allow the learned counsel to raise it for the first time before us. Nor has the second question been raised in the High Court in the form in which it is presented before us. The scheme propounded by the Government of India, inter alia, contains the following provisions : (i) No assessee was under any obligation to accept the scheme. If he desired to opt for the scheme he was required to give option within one month after he was informed of the scheme. (ii) An assessee was permitted to include in his expense ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f it is not, the Income-tax Officer has no power to impose tax on the said income. The decision in Amarendra Narayan Roy v. Commissioner of Income-tax has no bearing on the question raised before us. There the concessional scheme tempted the assessee to disclose voluntarily all his concealed income and he agreed to pay the proper tax upon it. The agreement there related to the quantification of taxable income but in the present case what is sought to be taxed is not a taxable income. The assessee in such a case can certainly raise the plea that his income is not taxable under the Act. We, therefore, reject this plea. To appreciate the third argument it is necessary to notice the relevant terms of the Ordinance. The Ordinance was issued by the Malayan Government to regulate the relationship between the debtor and creditor in respect of debts incurred prior to and during the period of the enemy occupation of the territories comprising the Federation of Malaya. The relevant sections of the Ordinance read : SECTION 4.---Discharge during occupation period of pre-occupation debts.---(1) Subject to the provisions of sub-section (2) of this section, where any payment was made during ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... umber of dollars in occupation currency mentioned opposite such month or day in the second column of the scale set out in paragraph 3 of this Schedule as equivalent to one hundred dollars, Malayan currency, and so in proportion for any portion of such debt amounting, when revalued, to less than one hundred dollars, Malayan currency. (b) When any such debt or part of a debt fell due for payment on or after the thirteenth day of August, 1945, its value shall be taken to be nil. 3. Sliding scale of the value of occupation currency 1942-45. We have not allowed the Solicitor-General to contend that sub-section (2) of section 4 of the Ordinance does not apply to the debts in question as throughout the proceedings of this case it was assumed that it applies to the said debts. During the Japanese occupation both the Japanese currency and the Malayan currency were in vogue. In January, 1943, the Japanese currency began to depreciate and by August 13, 1945, it ceased to be of any value. During that proceess of devaluation debts were paid off and received in Japanese currency which resulted in loss to the creditors. To regulate the relationship between creditors and debtors during that ..... X X X X Extracts X X X X X X X X Extracts X X X X
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