GURDAS SINGH Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THE Tribunal, Delhi Bench, by its order dated the 29th June 1961, has referred the following question of law for our opinion :

(2.) THE learned counsel for the assessee has raised the argument that the mere possession of the draft is not possession of money. It is merely a document to receive money. The assessee could have changed his mind and either gone back to New Zealand or may have desisted from getting the money from New Zealand to this country. His inaction in not bringing in the foreign exchange to this country may or may not have brought liability on him under the Foreign Exchange Regulation Act but it could not bring into play the provisions of S. 4(1)(b)(iii) of the Act. It is only when the drafts were actually encashed that the money could be said to have been brought to India. Learned counsel for the Department, on the other hand, contends that the bringing in the drafts is tantamount to bringing in the money into the taxable territories. In any case it is contended that on principle there is no difference between a draft and a cheque and in law as the encashment of a cheque relates back to the date of the receipt of the cheque, similarly the encashment of the draft would really relate to the date of the receipt of the draft. And, in this view of the matter the assessee was carrying the money constructively with himself when he entered India. For this contention, reliance has been placed on the decisions of the Supreme Court in CIT vs. Ogale Glass Works Ltd. (1954) 25 ITR 529 (SC) and CIT vs. Dharamdas Hargovandas (1961) 42 ITR 427 (SC). Before examining these contentions, it will be proper to set out the relevant provisions of S. 4(1)(b) (iii) of the Act. These are as follows :

(3.) IN the present case, either the money was received or was brought in and the only question that we are called upon to determine is : At what point of time it was received or brought in? On the analogy of the decision of the Supreme Court in Ogale Glass Works' case(supra), the receiving in the present case would be during the asst. year 1948 49, though in fact the actual receipt was during the asst. year 1949 50. In Ogale Glass Works' case (supra) the question was whether the delivery of the cheque was payment of money ? It was held that delivery of the cheque was conditional payment and as soon as the cheque is cashed the payment dates back to receipt of cheque. Mr. Justice Sarkar in Dharamdas Hargovandas's case (supra) also dealt with it, on the alternative footing, namely, that "if the assessee did not receive the income in Bombay, it seems clear to me that he brought into Bombay that income" . While dealing with this question the learned Judge observed as follows :