9911796707
TMI Blog1961 (2) TMI 3X X X X Extracts X X X X X X X X Extracts X X X X ..... 948-49, the accounting year being 2003 Samvat. The facts found may now be stated. At the relevant time, Bhavnagar was a ruling State and therefore outside British India. There was a mill there which we shall, for brevity, call the Bhavnagar mills. The assessee and his brother Gordbandas had large sums in deposit with the Bhavnagar mills. These sums were profits earlier earned by the assessee and his brother in Bhavnagar. The amounts deposited belonged to the assessee and his brother in equal shares. The Bhavnagar mills kept an account of these deposits. This account showed that on April 7, 1947, a sum of Rs. 50,000 had been paid out to Harkisondas Ratilal and another sum of the same amount to Dilipkumar Trikamlal. There is another mill in Bombay which we shall call the Bombay mills. The account of the Bombay mills showed that on April 3, 1947, Rs. 50,000 had been received from each of Harkisondas Ratilal and Dilipkumar Trikamlal. Harkisondas Ratilal and Dilipkumar Trikamlal were the benamidars for the assessee and his brother and the entries indicated that the moneys had been withdrawn from the Bhavnagar mills by the assessee and his brother and advanced to the Bombay mills. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Bhavnagar to Bombay and that it might have been that it was agreed between the assessee and the Bombay mills at Bhavnagar that the money would be deposited in the Bombay mills to the credit of the assessee and the cheque or the money might have been delivered to the Bombay mills or its agent at Bhavnagar. His contention was that if such was the case--and on the evidence it could not be said that it was not then the notional receipt of the money by the assessee and its advance by him to the Bombay mills, if any, would have taken place in Bhavnagar and when the money was thereafter brought to Bombay, it was the Bombay mills' own money. In this view of the matter, according to the learned advocate for the assessee, the moneys could not be subject to tax under the section. In this position of the arguments then advanced, we observed as follows : "It seems to us that this contention of the learned advocate for the respondent has to be dealt with before this appeal can be finally disposed of. We therefore think it fit to refer the case back to the Tribunal to submit a further statement of case, after taking such evidence as may be necessary, as to show how the cheque was brought from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ether on these facts it can be said that income had been brought into or received in Bombay by the assessee. The relevant portion of the section is in these terms : " 4. (1) Subject to the provisions of this Act, the total income of any previous year of any person includes all income, profits and gains from whatever source derived which-- (a) are received or are deemed to be received in the taxable territories in such year by or on behalf of such person, or (b) if such person is resident in the taxable territories during such year,-- (i) accrue or arise or are deemed to accrue or arise to him in the taxable territories during such year, or (ii) accrue or arise to him without the taxable territories during such year, or (iii) having accrued or arisen to him without the taxable territories before the beginning of such year and after the 1st day of April, 1933, are brought into or received in the taxable territories by him during such year, or (c) if such person is not resident in the taxable territories during such year, accrue or arise or are deemed to accrue or arise to him in the taxable territories during such year ; . . ." In the present case we are concerned wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng such year is also chargeable to income-tax. Then comes the part with which we are directly concerned and which provides that all income etc. which having accrued or arisen to such person without the taxable territories before the beginning of such year and after the first day of April, 1933, is brought into or received in the taxable territories by hime during such year will be chargeable to income-tax. This is a special provision relating to income etc. which has accrued or arisen not in the previous year but in years previous to that though after April 1, 1933. This special provision relating to a person resident in the taxable territories must be distinguished from the provision in clause (a) in connection with which it has been held that the receipt there meant must be the first receipt, for clause (a) applies, irrespective of whether the person is resident in the territories or not, to income etc. of the previous year received in the taxable territories must be distinguished from the provision in clause (a) in connection with which it has been held that the receipt there meant must be the first receipt, for clause (a) applies, irrespective of whether the person is residen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it does not seem reasonable to hold that the words " having accrued or arisen " used in that clause have no reference to its receipt also outside the taxable territories. It seems to us therefore that what clause (b)(iii) provides is that if any income etc. had arisen or accrued outside the taxable territories and had been received there sometime before the previous year and if such income, etc., is brought into or received in the taxable territories by such person in the previous year it will be liable to be charged under section 3. In the circumstances, looking to the special provision of clause (b)(iii) it would be reasonable to infer that what it contemplates is bringing into or receipt in the taxable territories in the previous year of income, etc. which had already accrued or arisen without the taxable territories earlier than the previous year and may have also been received there. Any other interpretation would really make that part of clause (b)(iii) which refers to " received in the taxable territories " more or less useless, for it is not likely that income having accrued or arisen outside the taxable territories before the previous year should not have been received als ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respondent advanced it to the Bombay mills and the cheque was cashed by the Bombay mills and the money was credited into the account of the respondent's benamidars in the Bombay mills. There was thus clearly receipt in the previous year of income etc., which had accrued to the respondent outside the taxable territories before the previous year and he would therefore be chargeable under section 3 of the Act with respect to the amount. The High Court has held that the income would be taxable only when brought into or received in the taxable territories by the assessee himself and not when it was so brought or received on behalf of the assessee. The relevant words of clause (b)(iii) with which we are concerned are these are brought into or received in the taxable territories by him during such year." We have held that this is a case of receipt by the respondent in the taxable territories ; it is therefore unnecessary to consider in the present case whether the words " brought into the taxable territories by him mean that the income must be brought in by the person himself as held by the High Court. This being a case of receipt, there can be no doubt that income etc. was received by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... I have simplified the facts a little for clarity. Actually the account in the concern at Bhavnagar was in the joint names of the assessee and his brother and the advance to the concern in Bombay was really in their joint names. The assessee's share was half of the amount of the cheque and with that share alone we are concerned in this case. On these farts half the amount of the cheque as representing the assessee's share of the accum ulated income, was included in his total income, for assessment to income-tax for the year 1948-49 under section 4(1)(b)(iii) of the Income-tax Act, 1922. That section so far as is material is in these terms : " 4. (1) Subject to the provisions of this Act, the total income of any previous year of any person includes all income, profits and gains from whatever source derived which-- (a) are received or are deemed to be received in the taxable territories in such year by or on behalf of such person, or (b) if such person is resident in the taxable territories during such year,-- ... (iii) having accrued or arisen to him without the taxable territories before the beginning of such year and after the 1st day of April, 1933, are brought into or r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e in Bombay, it seems clear to me that he " brought into " Bombay that income. He got in Bombay an amount which he had earlier received in Bhavnagar as income, for he advanced it to a concern in Bombay and this he could not do if he had not got it. The getting of the income in Bombay may not have been the receipt of it but how could he get it if he did not bring it in ? After the assessee received the income in Bhavnagar, it remained all the time under his control and that is why he could not receive it again : see Sundar Das v. Collector of Gujrat. An assessee might, however, change the shape of the income received. Section 4(1)(b)(iii) does not require that in order that income may be brought into the taxable territories it is necessary that the shape of the income should not have been changed since it was first received. Indeed, it has not been contended to the contrary. Sub-clause (iii) of section 4(1)(b) would have completely defeated itself if it required that the income bad to be kept in the same shape in which it had been received. Whatever shape the income had assumed, the assessee had it with him all the time as income and for the purpose of sub-clause (iii), it could b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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