INDERMANI JATIA Vs. COMR OF INCOME-TAX

JUDGEMENT

(1.) This is a reference Under Section 66 (1), Income-tax Act by the Income-tax Appellate Tribunal, Allahabad Bench. The assessee, Rai Bahadur Seth Ganga Sagar Jatia, was assessed to Income-tax as an individual. The sources of income were from house property, dividends & business. The business was carried on in Khurja under the name & style of Ram Dayal Mahali Ram & at Khurja, Aligarh & Chistian, in Bhawalpur State, under the name and style of Lachhman Das Ganga Sagar. In the Khurja books of the assessee, which were the central set of account & in which incomes from all sources were incorporated, interest account showed credits of Rs. 17,132 for the assessment year 1943-44 & Rs. 47,029 for the assessment year 1944-45. The assessee was 'resident & ordinarily resident' in British India.

(2.) The case of the assessee was that the amount of interest mentioned in the books had not been remitted in cash from the Bhawalpur State to British India & the entries were merely book adjustments in the head office books.

(3.) The Dept., however, reld. on the fact that the system of accounting followed by the assessee was mercantile system & when the assessee had himself treated the amount as interest which had accrued due to the assessee & had not excluded them on the ground that they had not been received, they were liable to pay Income-tax on these sums.