COMMISSIONER OF INCOME-TAX Vs. CHUNILAL B MEHTA

JUDGEMENT

(1.) THIS is a reference made by the Commissioner of Income-tax under Section 66 (2) of the Indian Income-tax Act, 1922, and it raises a question of considerable importance, and not, I think, easy to answer.

(2.) THE facts out of which the question arises are not in dispute. THE assessee carries on business in Bombay as a broker in cotton, silver and other commodities, and he also as a regular business enters into contracts on his own behalf for the sale and purchase of such commodities with persons in British India and also with persons outside British India, particularly in New York and Liverpool; which are the places with which we have to deal on this reference,, During the year of assessment, which is the year terminating on March 31, 1934, the assessee made a profit of Rs, 11,54,830 from the business of buying and selling commodities outside British India, and the question is whether he r is liable to be assessed in respect of this sum.

(3.) IT is admitted that the profits arising from this class of business during the year of assessment have not been received in British India, and the question is whether these profits accrued or arose in British India. That question depends on the construction of Section 4 (1) of the Indian Income-tax Act, which provides : 4.(1) Save as hereinafter provided, this Act shall apply to all income, profits or gains, as described or comprised in section 6, from whatever source derived, accruing, or arising, or received in British India, or deemed under the provisions of this Act to accrue, or arise, or to be received in British India. There is no question here of the profits being deemed to accrue or arise in British India, the question is whether they did in fact accrue or arise in British India.