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TMI Blog1956 (5) TMI 1X X X X Extracts X X X X X X X X Extracts X X X X ..... consolidated balance-sheet and profit and loss account had been drawn up for all the four years. In the appellant's income-tax returns, the income from the forest business was calculated and shown by applying the rate of ten per cent. net on the sales made in the relevant years. In course of the assessment proceedings for the assessment year 1943-44, it transpired that the appellant, who was resident and ordinarily resident in British India, had in the relevant accounting year 1942-43 sold in Jubbal a quantity of timber in one lot to a single party named Sukh Dial Jagat Ram, a firm carrying on business in Abdullapore in the district of Ambala, for a sum of Rs. 1,91,000 (rupees one lakh ninety-one thousand). By his assessment order dated the 2nd February, 1948, the Income-tax Officer held that on the sale of timber of the value of Rs. 1,91,000 during the relevant accounting period 1942-43, the appellant had made a profit of Rs. 20,967. As, however, no part of the sale proceeds was received during the relevant accounting period, the income from the forest business, less the statutory exemption of Rs. 4,500 was taken into consideration only for the purpose of fixing the rate. The p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the appellant and were consequently tantamount to constructive remittances of those amounts from Jubbal State to British India and that the profits, in the absence of any evidence adduced by the appellant to the contrary, must be regarded as remittances of profits. Being aggrieved by the decision of the Appellate Tribunal, the appellant applied to the Appellate Tribunal under section 66(1) of the Indian Income-tax Act, 1922, praying that the Appellate Tribunal might state a case and refer to the High Court the following questions of law : (i) Whether, in the circumstances of the case, there is any material for the finding that instead of direct remittance the assessee has chosen to instruct a debtor in Jubbal State to discharge a part of his debt by making the payment of Rs. 32,000 in British India ? (ii) Whether, in the circumstances of the case, the receipt of Rs. 32,000 has been correctly held to be a constructive remittance from Jubbal State to British India ? (iii) Whether, in the circumstances of the case, it has been correctly held that the assessee remitted the entire profits of the account year 1942-43 in the sum of Rs. 32,000 ? (iv) Is there any evidence to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al outlay. It is contended that profit is the excess receipt over the aggregate amount spent in the business and therefore no profit can be said to have been received unless and until the entire outlay is recouped. At the date of the receipt of the two sums in British India the entire outlay had not been recovered and, therefore, no profit had been received by the appellant and consequently no profit could be remitted to British India. We are unable to accept this argument. There can be no getting away from the fact that profit accrues or arises on the sale, which in this case took place in 1942-43. Whatever profit there was, it certainly accrued or arose in that year. The profit on the sale of timber in 1942-43 has since been ascertained at Rs. 18,758. This finding is final and the appellant cannot go behind it. There being this profit, as eventually ascertained, the presumption, according to the cases referred to in the judgment under appeal, will be that the remittances of money from foreign business to British India must be of profits, unless the contrary were shown by the appellant. Learned counsel for the appellant does not seriously dispute the correctness of the decisions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nstead of receiving the money from the purchaser in Jubbal and remitting the money in his turn to his office in British India and directing his British Indian office to pay to his creditor in British India, the appellant directed his purchaser, who was indebted to him, to pay the amount direct to the appellant's creditor in British India. For this purpose the purchaser was nothing but the appellant's agent. Therefore, the Tribunal was quite correct in saying that, in the circumstances, the payment was undoubtedly a constructive remittance of money by the appellant from Jubbal to his British Indian office. Similar considerations apply to the payment of Rs. 29,000 by the purchaser to the assessee himself in British India. The purchaser bought the timber in Jubbal and floated them down to its place of business at Abdullapore in the district of Ambala. The price was payable in Jubbal. In fact it made the bulk of payment, namely, Rs. 1,25,000 in Jubbal and ordinarily, left to itself, the purchaser would have also paid Rs. 29,000 at Jubbal. Why then, did the purchaser pay that amount to the assessee in British India ? Obviously because it was instructed to do so by the appellant. An affi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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