TMI Blog1956 (5) TMI 1X X X X Extracts X X X X X X X X Extracts X X X X ..... 9. The facts are shortly as follows : The appellant, who is a resident of Simla, is a forest contractor and had taken certain forests on lease in 1942-43 in the erstwhile Indian State of Jubbal for exploitation. The work of felling of trees and extraction of timber continued up to 1945-46. No profit or loss account had been prepared for each of the aforesaid four years separately, but a 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 th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... On appeal by the appellant the Appellate Assistant Commissioner upheld the decision of the Income-tax Officer. On further appeal by the appellant the Income-tax Appellate Tribunal took the same view and dismissed the appeal. The Appellate Tribunal, in agreement with the Income-tax authorities, held that the two payments in British India had been made by the purchaser according to the instructions 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. 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the appeal has urged that the decision of the Tribunal had been arrived at as a result of its overlooking the fact that at the dates when the two sums were received in British India no profit had been made at all. The timber had been sold in the accounting year 1942-43, but no payment had been received during that year. In 1943-44 a total sum of Rs. 1,57,000 had been received but that sum was much below the total 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 fina ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plication to this case. Learned counsel then contends that there was no remittance by the appellant from Jubbal to British India. It may be recalled that the sum of Rs. 3,000 was paid by the purchaser to a creditor of the appellant. This circumstance itself clearly indicates that the purchaser must have been directed by the appellant to pay the amount to his creditor in British India. What did this amount to ? Instead 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 floate ..... X X X X Extracts X X X X X X X X Extracts X X X X
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