RAJA R M Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THIS is a reference under s. 66(2) of the IT Act, 1922. It concerns the asst. yrs. 1946-47 and 1948-49, the corresponding accounting years being Samvat year 2001 (18th October, 1944, to 4th November, 1945), and Samvat year 2003 (25th October, 1946, to 12th November, 1947). In these two assessment years the sums of Rs. 1,70,000 and Rs. 4,80,000 have been brought to tax under the provisions of s. 4(1)(b)(iii) of the IT Act, 1922, under the order of the Tribunal out of which this reference arises. These two amounts have been brought to tax on the basis of their having been received in the taxable territories, being British India, as it then was, from the accumulated profits from the then native State of Junagadh by the Tribunal by its judgment which is common to both the said assessment years.

(2.) TWO questions have been referred, but question No. 2 has not been pressed and, as a matter of fact, was not argued at all. Only question No. 1, therefore, survives for determination. Question No. 1 reads :

(3.) BY its judgment the Tribunal found that the assessee was not carrying on only banking business, but was carrying on the business of an oil mill at Veraval as well as in Bombay. The Tribunal also found that there were frequent transfers of funds from the several bank accounts of the assessee not only inter se the banking accounts, but also in the business of Raja Oil Mills. It also found that a perusal of the account of the assessee in the Raja Oil Mills, Bombay, showed that the assessee had utilised the funds standing to his credit in that account for many other purposes, such as, making deposits in the assessee's own banks in Bombay, in paying life insurance premia, income- tax, etc., in purchasing prize bonds and in connection with the payment for goods and bills presumably connected with the assessee's business at Veraval and Shahpur. The Tribunal also found that the assessee did not charge interest to the Raja Oil Mills on the sums standing to his credit in the books of account of the latter. From these facts the Tribunal concluded that the assessee's account with the Raja Oil Mills was not one exclusively relating to his banking business.