HEERA B S Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THE Tribunal has held that a sum of Rs. 58,275 in the hands of the assessee was chargeable to tax under s. 4(1)(b)(ii) r/w its second proviso. At the instance of the assessee the Tribunal has made this reference under s. 66(1) of the Indian IT Act, 1922.

(2.) THE assessee is an individual. THE assessment year relevant to this reference is 1958-59, the corresponding previous year being the year ended on 31st March, 1958. During this previous year the assessee was "resident but not ordinarily resident". THE assessee had no business in India during this previous year. During this previous year the assessee had two accounts in India. One of the accounts was with his son, Mulchand Heera, and the other was with M/s Heera Traders Private Ltd. Between 20th April, 1957, and 17th December, 1957, various amounts aggregating to Rs. 39,575.25 were credited to the assessee's account with Mulchand by various drafts from Singapore. On 16th January, 1958, a sum of Rs. 18,700 was credited in the assessee's account with M/s Heera Traders Private Ltd., being a draft received from Singapore. THE aggregate of these two amounts being Rs. 58,275.25 has been brought to tax under the order of the Tribunal.

(3.) WE will summarise the contentions of the assessee urged before the Tribunal and also before us. The contentions arose in view of the provisions of s. 4(1)(b)(ii) r/w its second proviso. There is no dispute that the assessee being a resident the provisions of s. 4(1)(b)(ii) would apply and he also being not ordinarily resident, the provisions of the second proviso are also capable of applying. The provisions of s. 4(1)(b)(ii) would apply in this case to the assessee if the said amount sought to be brought to tax was his income, profits or gains which accrued or arose to him without the taxable territories during the said previous year ending on 31st March, 1958. The provisions of the second proviso would be available in this case to the assessee for excluding the said amount even if it was includible under s. 4(1)(b)(ii) if they were brought into or received in the taxable territories by the assessee during the said previous year ending on 31st March, 1958. Now the contention of the assessee was and is that the amounts of the said drafts were not remittances out of any income or profits of his business carried on in any non-taxable territories, that even if they be held to be out of the profits of such business they were not the profits of the said previous year and that in any event such remittances could not be said to be profits of such business of the said previous year because the remittances were in the previous year itself and therefore they could not be said to be any profits of his business till after the year had ended. The second contention of the assessee was and is that the amounts of the drafts which aggregate to the said sum of Rs. 58,275.25 were not brought into or received in the taxable territories by the assessee himself.