RAMACHANDRA MARDARAJ DEO Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THIS is a reference by the Income -tax AppellateTribunal, Madras Bench 'B', under Section 66(1), IndianIncome -tax Act. The question of law that has beenreferred to this Court for decision is as follows;

(2.) SECTION 2(6AA) was introduced into the Income -tax Act by ordinance No. 9 of 1945. For the purpose of the present reference, the relevant portion of the definition of 'earned income' as given in Section 2(6AA) may be quoted as follows:

(3.) I now pass on to the order of the Income -tax Appellate Assistant Commissioner. In the appeal relating to the assessment year 1946 -47, the Appellate Assistant Commissioner held that there was no evidence before him to show that the income from other sources was immediately derived from the assessee's personal exertion. In the appeal relating to the assessment year 1947 -48, the Appellate Assistant Commissioner pointed out the difference between Clause (b). and Clause (c) of Section 2(6AA) and held that the Legislature prescribed that in the case of businessman the test was the lightest because the businessman is given the allowance only where the business is carried on by him. In the case of income derived from other sources the strictest test is applicable and it must be proved that the income is immediately derived from personal exertion of the assessee.