ANNAMALAI Vs. COMMISSIONER OF INCOME-TAX MADRAS

JUDGEMENT

(1.) THE question referred to this Court under Section 66 (1) of the Income-tax Act, "whether the payment of Malayan Estate Duty of Rs. 3,29,746 is a proper deduction out of the earlier unassessed profits of the assessee from 1-4-1933", arose out of the assessment proceedings for the year 1949-50, the corresponding previous year having ended on 12-4-1949.

(2.) THE headquarters of the business which the assessee's family carried on was at paganeri in Ramanathapuram district, and it had branches in Burma and Singapore among other places. The accepted basis for assessing the Hindu undivided family, of which the assessee Annamalai was a member, was that it was resident and ordinarily resident. In the year of account that ended on 12-4-1949 the assessee received as remittances from abroad a total sum of Rs. 1,25,238 of which Rs. 1,25,034 came from Singapore and the balance of Rs. 204 from Burma. Rs. 80,652 represented the profits that had accrued to the assessee at Singapore in the year of account. There was no dispute about the liability of the assessee to be assessed to tax on that sum under Section 4 (i) (b) (ii) of the Act. The Income-tax Officer upheld the claim of the assessee that the balance of the remittance, Rs. 44,586 fell outside the scope of Section 4 (l) (b) (ii ). The Income-tax Officer recorded : "the representative raised the question of availability of profits. This has been examined. It is found that there are no prior unassessed and unremitted profits available, Hence this will be treated as from capital. "

(3.) TO appreciate the finding of the Income-tax Officer it. Is necessary to set out some more facts. The figures themselves were never in dispute. Annexure-A to the statement of the case showed that the balance of the unassessed and unremitted profits of the assessee between the years 1933 and 1839 at Singapore amounted to Rs. 3,38,576. The claim of the assessee was that this sum had been expended at Singapore itself, and no portion 6f that was available to him for the remittances made in the year of account. That was the claim the Income-tax Officer upheld. The assessee's grandfather died on 4-13-1931, and the assessee's adoptive father died on 10-12-1945. Estate duties were payable at Singapore, and a total sum of Rs. 3,29,746 was paid by the assessee's family at Singapore. Though the question as framed by the Tribunal is only limited to this amount, the further claim of the assessee was, that there were two other items of expenditure to be taken into account in deciding whether any portion of the profits that had accrued to the assessee's family between 1933 and 1939 was available for remittance in the year of account. The assessee claimed that a sum of Rs. 89,053 had been expended abroad, though this expenditure would not have been allowable had there been a computation under Section 10 (2) of the Act. The assessee also claimed that Rs. 73,249 represented un-absorbed losses covered by the special scheme sanctioned by the Central Board of Revenue.