LAKSHMANAN A Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THE assessee left India for Fiji Islands in 1922. He remained there till 1948. During that period, he engaged himself as an employee for some time and later had an independent business. He acquired certain properties, one of which was a house which he constructed in 1939. On his return to India in 1948, he brought with him the cash that was available. Subsequently, through his friends and others at Fiji, the other assets left behind were sold and the sale proceeds were remitted to India. Such remittances amounted to Rs. 9,300, Rs. 24,074 and about Rs. 31,000 in the account years relevant to the assessment years 1949-50, 1951-52 and 1952-53. THE Income-tax Officer started proceedings under S. 34 in the view that these amounts brought into the taxable territories came out of the profits form business carried on in the Fiji Islands. THE contention of the assessee was that these amounts represented remittances out of capital. But this contention was repelled and assessments were made. An appeal was taken to the Appellate Assistant Commissioner, before whom the assessee pleaded that it was impossible for him to furnish particulars of his income from 1932 onwards. He claimed that he had converted the profits into capital assets and that what he brought into the taxable territories was only the sale proceeds of such capital assets.

(2.) ON the application of the assessee under S. 66(1) of the Indian Income-tax Act, being rejected, this Court directed the Tribunal to state a case and submit the following question for the determination of this Court-

(3.) GIVING the matter careful attention we are satisfied that he undisputed facts in the present case can lead to only one conclusions. The assessee had capitalised whatever surplus income was in his hands. The view of the Tribunal that such capitalisation was not effective or it was only of passing nature is entirely opposed to the facts proved. There was no material upon which the Tribunal could reach such a conclusion. Though there may exist cases where a such capitalisation is only a ruse to overcome the tax liability, in the present case, we see no vitiating feature of that kind. The receipt of these moneys in our opinion represented only the receipt of capital and not of income. The question is answered in favour of the assessee, who will be entitled to his costs. Counsel's fee Rs. 250.