Full Judgment Text
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PETITIONER:
THE COMMISSIONER OF INCOME-TAX, BOMBAY
Vs.
RESPONDENT:
DHARAMDAS HARGOVINDAS.
DATE OF JUDGMENT:
03/02/1961
BENCH:
WANCHOO, K.N.
BENCH:
WANCHOO, K.N.
GAJENDRAGADKAR, P.B.
SARKAR, A.K.
CITATION:
1961 AIR 921 1961 SCR (3) 731
ACT:
Income Tax--Income already received outside taxable
territory--Brought into or received in taxable
territory--Liability to tax--If must be first receipt in
taxable territory--Income-tax Act, 1922 (11 ,of 1922), s. 4
(1) (b) (iii).
HEADNOTE:
The assessee, resident in British India, had some money in
deposit with a concern in Bhavnagar, outside British India.
On April 7, 1947, he transferred part of it to a concern in
Bombay. He was assessed to tax on this amount under s.
4(i)(b)(iii) of the Income-tax Act. The assessee contended
that to attract the application of S. 4(i)(b)(iii) the
receipt in the taxable territory must be the first receipt
of income.
Held, that the assessee was liable to tax on this amount.
Per Gajendragadkar and Wanchoo, JJ.-Where a person, resident
in the taxable territories, has already received, outside
the taxable territories, any income etc. accruing or arising
to him outside the taxable territories before the previous
year brings that income into or receives that income in the
taxable territories he would be chargeable to income-tax
thereon. Though for the purposes of cl. (a) of s. 4 the
receipt must be the first receipt of income in the taxable
territories, for the purposes of cl. (b)(iii) the receiving
in the taxable territories need not be the first receipt.
Keshav Mills Ltd. v. Commissioner of Income-tax [1953] S.C.R
950, referred to.
Per Sarkar, J.-The income could not be said to have been
"received" in the taxable territory within the meaning of
cl. (b)(iii) as income could be received only once. But it
is clear that the assessee " brought into " Bombay that
income. It was immaterial in what shape he received the
income in Bhavnagar and in what shape he brought it in
Bombay.
Keshav Mills Ltd. v. Commissioner of Income-tax [1953]
S.C.R. 950, Board of Revenue v. Ripon Press (1923) I.L.R. 46
Mad. 706 and Sundar Das v. Collector of Gujrat (1922) I.L.R.
3 Lah. 349, applied.
Gresham Life Assurance Society Ltd. v. Bishop [1902] A.C.
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287 and Tennant v. Smith [1892] A.C. 150, referred to.
JUDGMENT:
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 240 of 1955.
732
Appeal by special leave from the judgment and order dated
September 3, 1953, of the Bombay High Court in Income-tax
Reference No. 15 of 1953.
Hardayal Hardy and D. Gupta, for the appellant.
G....S. Pathak, S. P. Mehta, S. N. Andley, J. B. Dadachanji,
Rameshwar Nath and P. L. Vohra, for the respondent.
1961. February 3. The Judgment of Gajendragadkar and
Wanohoo, JJ. was delivered by
WANCHOO, J.-In this matter by our order made on April 24,
1958, we had referred the case back to the Tribunal to
submit a further statement of case on certain questions.
That statement of case has now been drawn up by the Tribunal
and sent to this Court. The matter is now ready for
decision.
This is an appeal by the Commissioner of Incometax, Bombay,
against the judgment of the High Court at Bombay given on a
reference under s. 60(2) of the Income-tax Act answering the
question referred, in the negative. That question was, "
Whether, in any event, on the facts found by the Tribunal,
there was any remittance by the petitioner to Bombay within
the meaning of and assessable under s. 4(1) (b) (iii) of the
Income-tax Act,." The assessment year concerned was 1948-49,
the accounting year being 2003 Sambat.
The facts found may now be stated. At the relevant time,
Bhavnagar was a ruling State and therefore outside British
India. There was a mill there which we shall, for brevity,
call the Bhavnagar Mills. The assessee and his brother
Gordhandas had large sums in deposit with the Bhavnagar
Mills. These sums were profits earlier earned by the
assessee and his brother in Bhavnagar. The amounts
deposited belonged to the assessee and his brother in equal
shares, The Bhavnagar Mills kept an account of these
deposits. This account showed that on April 7, 1947, a sum
of Rs. 50,000/- had been paid out to Harkisondas Ratilal and
another sum of the same amount to Dilipkumar Trikamlal.
There is another mill in Bombay which we shall call the
Bombay Mills. The account of the Bombay Mills showed that
on April 3,
733
1947, Rs. 50,000/- had been received from each of
Harkisondas Ratilal and Dilipkumar Trikamlal. Harkisondas
Ratilal and Dilipkumar Trikamlal were the benamidars for the
assessee and his brother and the entries indicated that the
moneys had been withdrawn from the Bhavnagar Mills by the
assessee and his brother and advanced to the Bombay Mills.
The assessee and his brother were in full control of both
the Bhavnagar Mills and the Bombay Mills.
On these facts the Tribunal had come to the conclusion that
there had been a remittance of the assessee’s profits from
Bhavnagar to Bombay, namely, Rs. 50,000/- being half of the
amounts mentioned above, on account of his share and such
remittance was taxable tinder s. 4(1) (b) (iii). The
assessee raised the question with which we are concerned in
view of this decision.
The High Court held that under the section income is taxable
only when it is brought into or received in the taxable
territory by the assessee himself and not when it is so
brought into or received on behalf of the assessee and that
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all that the facts found by the Tribunal showed was that the
assessee disposed of his accumulated income in Bhavnagar by
directing his debtor, the Bhavnagar Mills, to pay an amount
not to himself but to a third party, namely, the Bombay
Mills. According to the High Court, , " The result was that
only one debtor was substituted for another. This did not
amount to a receipt of the money by the assessee himself in
Bombay or to a bringing of it into Bombay by him." In this
view of the matter, the High Court answered the question
referred in the negative.
When the appeal was heard by us on the earlier occasion, the
learned Advocate for the appellant contended that even on
the basis on which the High Court had proceeded, namely,
that there was only a substitution of one debtor for
another, it has to be said that the money was received by
the assessee himself in Bombay. The contention was that the
respondent could not become a creditor of the Bombay Mills
unless he advanced the moneys to them.
734
His point was that even assuming that the receipt of the
cheque by the Bombay Mills drawn in its favour by the
Bhavnagar Mills did not amount to receipt of moneys by the
respondent, as soon as the Bombay Mills credited the amount
of it to the respondent, there was nationally a receipt of
the money by the assessee and an advance of it by him to the
Bombay Mills to create the debt. The learned advocate for
the assessee said in answer to this contention that there
was nothing to show that the agreement for the advance of
the money by the assessee to the Bombay Mills had not been
made at Bhavnagar. He also said that there was nothing to
show as to how the money or the cheque came from Bhavnagar
to Bombay and that it might have been that it was agreed
between the assessee and the Bombay Mills at Bhavnagar that
the money would be deposited in the Bombay Mills to the
credit of the assessee and the cheque or the money might
have been delivered to the Bombay Mills or its agent at
Bhavnagar. His contention was that if such was the case-and
on the evidence it could not be said that it was not-then
the notional receipt of the money by the assessee and its
advance by him to the Bombay Mills, if any, would have taken
place in Bhavnagar and when the money was thereafter brought
to Bombay, it was the Bombay Mills’ own money. In this view
of the matter, according to the learned advocate for the
assessee, the moneys could not be subject to tax under the
section.
In this position of the arguments then advanced, we observed
as follows :-
" It seems to us that this contention of the learned
advocate for the respondent has to be dealt with before this
appeal can be finally disposed of. We therefore think it
fit to refer the case back to thaT Tribunal to submit a
further statement of case, after taking such evidence as may
be necessary, as to show how the cheque was brought from
Bhavnagar to Bombay and what agreement had been made between
the parties concerned as a result of which the amount of the
cheque was credited in the names
735
of Harkison Ratilal and Dilipkumar Trikamlal in the accounts
of the Bombay Mills. The Tribunal will submit its report
within four months.
In view of this order we refrain from expressing any opinion
on any of the points argued at the bar."
It is pursuant to this order that the further statement of
case has been submitted by the Tribunal. In its statement
of case now submitted the Tribunal found the following
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facts: The Bhavnagar Mills had an account in the Bank of
India Limited at one of its Bombay Branches. A cheque book
in respect of this account was with the assessee who had
power to operate it on behalf of the Bhavnagar Mills. The
assessee acting on behalf of the Bhavnagar Mills drew a
cheque on the Bhavnagar Mills aforesaid account in the Bank
of India Limited on April 3, 1947, in favour of self. This
was done in Bombay. This cheque was handed over by the
assessee to the Bombay Mills in Bombay for being credited in
the account of the Bombay Mills in the names of Harkison
Ratilal and Dilipkumar Trikamlal which were really the
benami names of the assessee and his brother. The Bombay
Mills on the same date presented this cheque to another
branch of the Bank of India Ltd. in Bombay where they had an
account, for deposit in that account. The actual entries in
the books of the different branches of the Bank were made on
April 5, 1947. The Bombay Mills also made entries in their
own books crediting the moneys received on the cheque, to
Harkison Ratilal and Dilipkumar Trikamlal. The assessee in
his turn instructed the Bhavnagar Mills to debit the joint
account of himself and his brother with it in the sum of Rs.
1 lac as having been paid to Harkison Ratilal and Dilipkumar
Trikamlal. This entry was actually made a little later,
namely on April 7, 1947. The facts now found would show
that nothing had been done at Bhavnagar. It was also found
that as the Bombay Mills needed moneys and the assessee had
money with the Bhavnagar Mills, he utilised these latter
moneys for an advance being made by him out of it to the
Bombay Mills,
94
736
As will appear from our earlier order hereinbefore set out,
none of the points arising in the appeal had been decided
by us on that occasion. The question that we have to decide
is whether on these facts it can be said that income had
been brought into or received in Bombay by the assessee.
The relevant portion of the section is in these terms :-
" 4. (1) Subject to the provisions of this
Act, the total income of any previous year of
any person includes all income, profits and
gains from whatever source derived which-
(a)...are received or are deemed to be
received in the taxable territories in such
year by or on behalf of such person, or
(b)...if such person is resident in the
taxable territories during such year,-
(i)...accrue or arise or are deemed to accrue
or arise to him in the taxable territories
during such year, or
(ii) accrue or arise to him without the
taxable territories during such year, or
(iii).having accrued or arisen to him without
the taxable.territories before the beginning
of such year and after the 1st day of April,
1933, are brought into or received in the
taxable territories by him during such year,
or
(c)...if such person is not resident in the
taxable, territories during such year, accrue
or arise or are deemed to accrue or arise to
him in the taxable territories during such
year."
In the present case we are concerned with cl. (b). In order
however to understand what the words " brought into or
received in the taxable territories by him " mean we have to
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consider the whole scheme of this subjection. The
subjection mainly deals with the total income of any
previous year which is chargeable to income-tax under s. 3
of the Act. It is divided into three parts. The first
part, which is el. (a) provides that all income, profits and
gains received or deemed to be received in the taxable
territories in such year by or on behalf of such person will
be included in the taxable income. So far as el. (a) is
737
concerned, it is immaterial whether the person is resident
in the taxable territories or is not resident therein; as
long as income etc. is received in the taxable territories
by or on behalf of such person in the previous year, it is
liable to be included in the computation of total income.
Under this clause therefore it is the receipt in the
previous year that is material and the residence of the
person to be taxed is immaterial. It has been held under
this clause that receipt must be the first receipt in the
taxable territories and if income etc. has been received
elsewhere in the same year and is then brought into the
taxable territories it should not be considered to be income
etc. received in such year in the taxable territories: (see
Keshav Mills Ltd. v. Commissioner of Income-tax The basis of
this decision obviously is that cl. (a) is dealing with the
receipt of income etc. in the taxable territories in the
year in which it has accrued or arisen and in those
circumstances it is the first receipt of such income in the
taxable territories that gives rise to liability of the
charge of income-tax. If such income etc. accruing or
arising in the previous year has already been received
outside the taxable territories it cannot be said to be
received again as such in the taxable territories, if it is
brought from the place where it was received as such into
the taxable territories.
The second part which is cl. (b) deals with the case of a
person Who is resident in the taxable territories during
such year. In his case all income which accrues or arises
or is deemed to accrue or arise to him in the taxable
territories during such year is chargeable to income-tax;
besides, all income etc. which accrues or arises to him
without the taxable territories during such year is also
chargeable to income-tax.
Then comes the part with which we are directly concerned and
which provides that all income etc. which having accrued or
arisen to such person without the taxable territories before
the beginning of such year and after the first day of April
1933 is brought
(1) [1953] S.C.R. 950.
738
into or received in the taxable territories by him during
such year will be chargeable to income-tax. This is a
special provision relating to income etc. which has accrued
or arisen not in the previous’year but in years previous to
that though after April 1, 1933. This special provision
relating to a person resident in the taxable territories
must-be distinguished from the provision in el. (a) in
connection with which it has been held that the receipt
there meant must be the first receipt, for cl. (a) applies
irrespective of whether the person is resident in the
territories or not to income etc. of the previous year
received in the taxable territories in-the same year.
Clause (b)(iii) on the other hand refers to income etc.
which accrued before the previous year and is brought into
or received in the taxable territories in such year by a
person resident therein, and obviously the considerations
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which led this Court to hold in Keshav Mills case(1) that
the receipt in el. (a) means the first receipt would not
apply to this special provision in cl. (b)(iii).
Mr. Pathak for the respondent however argues that the words
in cl. (b)(iii) are the same as in cl. (a), namely, " are
received " and therefore the receipt in cl. (b)(iii) must
also be the first receipt. These words however are not
terms of art and in our opinion their meaning must receive
colour from the context in which they are used. In the
context of cl. (a) these words could only refer to the first
receipt; but it does not follow from this that in the
context of el. (b)(iii) also they refer only to the first
receipt.
Let us see what el. (b)(iii) is meant to provide for. It
will be noticed that el. (a), cl. (b)(i) and (ii) and cl.
(c) deal only with income etc. which has arisen in the
previous year while el. (b)(iii) deals with a special class
of cases where a person resident within the taxable
territories had income etc. accruing or arising to him
without the taxable territories and which he did not bring
in the taxable territories as and when it arose but does so
many years later. In such a case it stands to reason that
the income etc. having arisen to such person, may be years
before the previous year, must
(1) [1953] S.C.R. 950.
739
have been received by him outside the taxable territories ;
but it is urged that cl. (b)(iii) does not speak of receipt
outside the taxable territories but only speaks of income
etc. having accrued or arisen to him without the taxable
territories and that it is possible that though the income
etc. might have accrued long ago it might not have been
received even outside the taxable territories. This is
theoretically possible; but in our opinion it is clear that
when el. (b)(iii) speaks of income etc. having accrued or
arisen, without the taxable territories it is implicit in it
further that such income etc. having accrued or arisen
without the taxable territories had already been received
there. Considering that el. (b)(iii) applies to all income
having accrued or arisen after the first day of April 1933
(that is more than 27 years ago now) it does not seem
reasonable to hold that the words " having accrued or arisen
" used in that clause have no reference to its receipt also
outside the taxable territories. It seems to us therefore
that what cl. (b)(iii) provides is that if any income etc.
had arisen or accrued outside the taxable territories and
had been received there sometime before the previous year
and if such income etc. is brought into or received in the
taxable territories by such person in the previous year it
will be liable to be charged under s. 3. In the
circumstances, looking to the special pro. vision of el.
(b)(iii) it would be reasonable to infer that what it
contemplates is bringing into or receipt in the taxable
territories in the previous year of income etc. which had
already accrued or arisen without the tax. able territories
earlier than the previous year and may have also been
received there. Any other interpretation would really make
that part of cl. (b)(iii) which refers to," received in the
taxable territories " more or less useless, for it is not
likely that income having accrued or arisen outside the
taxable territories before the previous year should not have
been received also outside the taxable territories.
Therefore, the reason. able interpretation of el. (b)(iii)
is that if a person resident in the taxable territories has
already received without the taxable territories any income
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etc. accruing or arising to him without the taxable
territories
740
before the previous year brings that income into or receives
that income in the taxable territories he would be
chargeable to income-tax under s. 3. Therefore, for the
purpose of cl. (b)(iii) the receiving in the taxable
territories need not be the first receipt. We shall later
consider what will be the effect of this interpretation on
the facts of this case.
Then there is cl. (c), which deals with the case of a person
resident outside the taxable territories to whom income etc.
has accrued or arisen or is deemed to have accrued or arisen
in the taxable territories during the previous year. It
will thus be seen that cl. (a) deals with a person who may
or may not be a resident in the taxable territories and
makes the income etc. accruing or arising to him in the
previous year liable to income-tax if it is received or
deemed to be received by him in the taxable territories also
within the same year ; cl. (b) deals with the case of a
person who is resident in the taxable territories and gives
a wider definition of the total income and cl. (c) deals
with a person not resident in the taxable territories and
makes only such of his income as accrues or arises or is
deemed to accrue or arise in the previous year in the
taxable territories liable to income-tax in addition to what
is provided in el. (a).
Let us now see on the facts of this case whether the
respondent can be said to have received this sum of Rs.
50,000/- in the taxable territories during the previous
year. The statement of the case shows that this sum was
income etc. of the respondent which accrued to him outside
the taxable territories and had been received by him there
and deposited in the Bhavnagar Mills in his account. It is
also clear from the facts which we have set out already that
this money which was lying to the credit of the respondent
in the Bhavnagar Mills was received by him by means of a
cheque on the Bank of India Ltd., Bombay, in which the
Bhavnagar Mills had an account and on which the respondent
had the authority to draw. Having thus drawn the money by a
cheque on the said bank, the respondent advanced it to the
Bombay Mills and the cheque was cashed by the Bombay Mills
and the
741
money was credited into the account of the respondent’s
benamidars in the Bombay Mills. There was thus clearly
receipt in the previous year of income etc. which had
accrued to the respondent outside the taxable territories
before the previous year and he would therefore be
chargeable under s. 3 of the Act with respect to this
amount.
The High Court has held that the income would be taxable
only when it is brought into or received in the taxable
territories by the assessee himself and not when it was so
brought or received on behalf of the assessee. The relevant
words of el. (b)(iii) with which we are concerned are these:
"are brought into or received in the taxable territories by
him during such year." We have held that this is a case of
receipt by the respondent in the taxable territories; it is
therefore unnecessary to consider in the present case
whether the words " brought into the taxable territories by
him " mean that the income must be brought in by the person
himself as held by the High Court. This being a case of
receipt, there can be no doubt that income etc. was received
by the respondent and the indirect, method employed in this
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case for receiving the money would none the less make it a
receipt by the respondent himself Reference in this
connection may be made to Bipin Lal Kuthiala v. Commissioner
of Income-tax, Punjab (1), where it was held that the money
was received by the assessee even though in fact what bad
happened there was that the assessee directed his debtor in
Jubbal which was outside the taxable territories to pay
money to his creditor in British India. It was held that in
the circumstances there was receipt of income in British
India, though the method employed was indirect. We are
therefore of opinion that the respondent is liable to pay
incometax on the sum of Rs. 50,000/- under s. 4(1)(b)(iii)
of the Act and the question framed therefore must be
answered in the affirmative. The result is that the appeal
is allowed and the order of the High Court set aside. The
appellant will get the costs of this appeal and in the court
below.
(1) A.I.R. 1956 S.C. 634.
742
SARKAR, J.-The facts necessary for this appeal are few and
simple. The assessee, who is the respondent in this appeal,
was a resident of Bombay. He had certain in-come in
Bhavnagar, a place without the taxable territories, which he
had kept in deposit with a concern there. This concern had
an account in a bank in Bombay. The assessee, presumably as
one of the officers of the concern, could operate this
account. He drew, in Bombay, a cheque on this account which
cheque eventually found its way into the account of a.
concern in Bombay in a bank there and was credited in that
account. The Bombay concern thereafter made entries in its
own books of account in respect of the amount of the cheque
in favour of two persons of the names of Harkison Ratilal
and Dilipkumar Trikamlal. The Bhavnagar concern, in its
turn, a few days later debited the account that the assessee
had with it in respect of the deposits, with the amount of
the cheque as moneys paid to these two persons. These two
persons however were only benamidars for the assessee. The
transactions, therefore, showed that the assessee had
withdrawn the money from the concern at Bhavnagar out of its
accumulated income and advanced it to the concern in Bombay.
The Tribunal found it as a fact that the assessee had
utilised in Bombay his income lying at Bhavnagar for making
an advance in Bombay. These transactions took place in
April 1947.
I have simplified the facts a little for clarity. Actually
the account in the concern at Bhavnagar was in the joint
names of the assessee and his brother and the advance to the
concern in Bombay was really in their joint names. The
assessee’s share was half of the amount of the cheque and
with that share alone we are concerned in this case.
On these facts half the amount of the cheque as representing
the assessee’s share of the accumulated income, was included
in his total income, for assessment to income-tax for the
year 1948-49 under s. 4(1)(b)(iii) of the Income-tax Act,
1922. That section so fair as is material is in these terms
743
S.....4. (1) Subject to the provisions of this
Act, the total income of any previous year of
any person includes all income, profits and
gains from whatever source derived which-
(a)...are received or are deemed to be
received in the taxable territories in such
year by or on behalf of such person, or
(b)...if such person is resident in the
taxable territories during such year,-
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(iii).having accrued or arisen to him without
the taxable territories before the beginning
of such year and after the 1st day of April,
1933, are brought into or received in the
taxable territories by him during such year,
or
The only question is whether the assessee can be said to
have " brought into " or " received " this income in Bombay
within the meaning of sub-cl. (iii) of s. 4(1)(b). No other
objection to the assessment was raised.
The respondent first contends that he cannot be said to have
" received " the income in Bombay. He contends that on the
facts found it must be held that he had already " received "
the income in Bhavnagar and he could not " receive " it
again in Bombay or anywhere else. It seems to me that this
contention is well founded. This Court has held that " Once
an amount is received as income, any remittance or
transmission of the amount to another place does not result
in I receipt’, within the meaning of this clause, at the
other place ": Keshav Mills Ltd. v. Commissioner of Income-
tax, Bombay (1). No doubt, the observation was made with
regard to el. (a) of s. 4(1). But I am unable to find any
reason why the word should have a different meaning in sub-
cl. (iii) of a. 4(1)(b). On the contrary, the words "
brought into " in subel. (iii) would furnish a reason, if
one was necessary, for the view that the word "’ received "
there means received for the first time.
I venture to think that this Court did not in Keshav Mills
case (1), hold that that word in s. 4(1)(a) meant,
(1) [1953] S.C.R. 959, 962,
95
744
" the first receipt after the accrual of the income ",
because of anything in the context in which the word
occurred but because, in the nature of things, income can be
" received " only once and not more than once, and a
subsequent dealing with income after it has been received,
can never be a " receipt " of income. It seems to me that
what was said in connection with the Act as it then stood,
in Board of Revenue v. Ripon Press(1), namely, "that you
cannot receive the same sum of money qua income twice over,
once outside British India and once inside it " expresses
the inherent nature of receipt of income and still holds
good and unless the context compels a different meaning,
which I do not find the present context to do, income can be
received only once. As, in the present case, it seems
fairly clear that the assessee had received the income in
Bhavnagar, I do not think he can be taxed on it on the basis
that he " received " it in Bombay over again.
If, however, the assessee did not " receive " the income in
Bombay, it seems clear to me that he "brought into" Bombay
that income. He got in Bombay an amount which he had
earlier received in Bhavnagar as income, for he advanced it
to a concern in Bombay and this he could not do if he had
not got it. The getting of the income in Bombay may not have
been the receipt of it but how could he got it if he did not
bring it in ?
After the assessee received the income in Bhavnagar, it
remained all the time under his control and that is why he
could not receive it again: see Sundar Das v. Collector of
Gujrat (2). An assessee might however, change the shape of
the income received. Section 4(1) (b)(iii) does not require
that in order that income may be brought into the taxable
territories it is necessary, that the shape of the income
should not have been changed since it was first received.
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Indeed, it has not been contended to the contrary. Sub-
clause (iii) of s. 4(1)(b) would have completely defeated
itself if it required that the income had to be kept in the
same ,shape in which it had been received. Whatever shape
(1) (1923) I.L.R. 46 Mad. 706 711.
(2) (1922) I.L.R. 3 Lah. 349.
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the income had assumed, the assessee had it with him all the
time as income and for the purpose of sub-cl. (iii) it could
be brought into the taxable territories in that shape.
Now what the assessee had done with the income in this case
was to put it with a party in Bhavnagar. The income then
took the shape of a debt due to him. It became a right to
receive money or moneys worth. When he had that debt
discharged in Bombay, he must have had it brought into
Bombay. Therefore he had brought the income into Bombay.
Suppose he had received the income in the shape of coins and
had kept it in his safe at Bhavnagar and brought the coins
into Bombay. There would have been no doubt that he had
brought the income into Bombay. Suppose again, he had put
the income originally received by him at Bhavnagar in a bank
there and then he obtained a draft from the bank payable in
Bombay and brought the draft from Bhavnagar to Bombay and
cashed it there. Again, there would be little doubt that he
had, by this process, brought the income into Bombay. It is
well known that though income in income-tax law is generally
contemplated in terms of money, it may be conceived in other
forms. In fact anything which represents and produces money
and is treated as such by businessmen, would be income: see
per Lord Lindley in Gresham Life Assurance Society Ltd. v.
Bishop (1) and per Lord Halsbury L.C. in Tennant v. Smith
(2). If the bringing of the bank draft would be bringing of
income, I am unable to see why the bringing of a right to
receive the money would not be bringing of income when that
right has been exercised and turned into moneys worth. Such
a right would be based on a promise by the debtor to pay and
though verbal, would be considered by businessmen to
represent money. The assessee in Bombay used that right and
obtained moneys worth. He accepted the Bhavnagar concern’s
cheque in Bombay, gave it a pro tanto discharge for the debt
owing by it to him. He used the cheque in acquiring a new
asset, namely, a promise by the
(1) [1902] A.C. 287. 296,
(2) [1892] A.C. 150, 156.
746
Bombay concern to pay money. Therefore, in my view, the
respondent assessee was liable under s. 4(1)(a), (b)(iii) to
be taxed ON the amount of the cheque as income which he had
brought into the taxable territories.
I would hence allow the appeal and answer the question
referred, in the affirmative.
Appeal allowed.
747