CHIDAMBARAM CHETTIAR Vs. COMMISSIONER OF INCOME-TAX, MADRAS

JUDGEMENT

(1.) The question referred to us by the Commissioner of Income-tax is : In what year was the remittance of Rs. 50,000 (Rupees Fifty thousand) received ? This question arises in connection with an additional assessment imposed upon the petitioner for the year 1930-31 with respect to this amount. The accounting year is the period from 13 April 1929, to 12 April 1930. The question is whether this amount may be considered to have been received by the assessee during this period in the following circumstances.

(2.) The assessee is a Nattukottai Chetti doing business in Burma, Klang, Kualalumpur, Penang etc. On 3 April 1929, a sum of Rs. 50,000 was debited to his account in his Klang books as having been paid on that date to S. A. Rm. Penang, a money-lending business owned by another Nattukottai Chetti. The entry does not say in what connection this amount was paid. But it is admitted that it relates to the purchase of house sites by the petitioner. He was negotiating for the purchase of certain house sites adjoining his house at Kanadukathan which belonged to S. A. Rm. An agreement to sell land was entered into between the petitioner and S. A. Rm. on 5 April 1929. The sale deed was executed on a later date, on 8 May 1929. The payment of Rs. 50,000 made on 3 April 1929 was, it may be mentioned, not shown in the accounts of the petitioner as remittance to him in that year. If that was so shown, we may take it that the Income-tax authorities would have assessed him for that amount for the year 1929-1930. On those facts, it was contended by the petitioner that he cannot be taxed under S. 4 (2) of the Income-tax Act for that sum of Rs. 50,000 on the ground that he has received that amount during the accounting period, his case being that he could be considered to have received that amount only on 3 April, 1929, and no at a later date. Of course, there is no transfer of money in this case, it being understood that the profits were received in the shape of two house-sites. The Income-tax authorities decided that the profits could be said to have been received only on 8 May 1929, when the sale deed was executed and not earlier.

(3.) The question for us to determine is whether the money could be said to have been received on 3 April 1929, or on 8 May 1929. An intermediate position was taken up by the petitioner before the Assistant Commissioner of Income tax who heard the appeal against the order of assessment. It was argued before him that, if the amount was not received on 3rd April 1929, at any rate it should be deemed to have been received on 5 April 1929, when according to him he obtained possession of the property which would be anterior to the date of the sale deed, 8 May 1929. If that argument is accepted, of course it will not be possible to assess him for the amount for the year 1930-1931. But the Assistant Commissioner refused permission to the assessee to raise that point as it was not raised before the Income tax authorities in the first instance. The point is now raised before us and it is pressed that an opportunity should be given to the petitioner to enable him to adduce evidence with a view to establish that he came into possession of the house-sites prior to 8 May, 1929.