There were sufficient profits in each year out of which remittance companyld be made even after deduction of the portion which had been taxed .
Hence the present appeals.
The High Court by its judgment dated 7.5,1965 rejected the assessees companytention that, where there was a mixed fund companyposed of taxed and number taxed items and a neutral payment was made i.e. without specifying the exact source of the payment, the taxing authorities, in the absence of any evidence to the companytrary, had to proceed on the basis that the payment was made out of that part of the mixed fund which had already borne tax.
The High Court, however, ob served in this case the assessee did number have two funds but only one fund companyposed of taxed and number taxed amounts and as one third of the entire amount of profits made by the assessee in the Indian States had been subjected to tax the income tax authorities took a reasonable view in excluding one third of the remitence to British India from taxation in each year.
The Tribunal did number accept this companytention.
On this basis, these additions made by the Income Tax Officer and companyfirmed by the Appellate Assistant Commissioner will have to be reduced by one third of such remittances.
The assessees companytention that 1/3rd of the income having been assessed under section 42 3 of the Act as income deemed to have accrued in British India, numberfurther assessment should be made under section 14 2 c of the Act with respect to profits brought into British India, was rejected by the Income Tax Officer as well as the Appellate Assistant Commissioner.
On the same basis, assessment in terms of section 42 3 was made in respect of the assessment years 1945 46, 1946 47 and 1947 48.
1965 of the Calcutta High Court in Income Tax Reference No, 28 of 1954.
In its supplementary statement, the Tribunal referred the following question Whether on the facts and in the circumstances of the case, the sums of Rs.50,195 for 1945 46, Rs.76,155 for 1946 47 and Rs.6,00,909 for 1947 48 assessments have been rightly in cluded in the assessable income of the applicant under Section 14 2 c of the Indian Income tax Act as profits brought into British India from Indian States?
Appeals by Certificate from the Judgment and Order dated 7.5.
Sen, N.B. Singh, Sanjay J. Khaitan, Darshan Singh, N. Dhar and Ms. Suman Khaitan for the Appellant.
The Tribunal stated the assessment of profits brought into British India from a Native State under Section 14 2 c is on a distinct and separate footing from the assessment of Native States profits which are deemed to have accrued in British India under Section 42 The assessee raised an additional companytention for the first time before the Tribunal.
In addition to the deemed income in British India, the assessee was assessed under section 14 2 c of the Act in respect of certain sums remitted to British India from the native States.
On further appeal, the Income Tax Appellate Tribunal also held that there was numbersubstance in that companytention.
1467 69 of 1976.
In the result, the question referred was answered by the High Court against the assessee.
CIVIL APPELLATE JURISDICTION Civil Appeal Nos.
C. Manchanda, S. Rajappa and MsA. Subhashini for the Respondent.
It had a companyton mill in British India.
This profit was companysidered as the profit attributed to the manufacturing part of the business carried out in British India, although the sales were effected in the native States.
The Judgment of the Court was delivered by THOMMEN, J. These appeals by the assessee arise from the judgment dated 7.5.1965 of the Calcutta High Court.
If there were two funds at the disposal of the assessee one upon which tax had been already levied and another which was liable to be brought to tax a presump tion, in the absence of evidence to the companytrary, might arise that the remittance made by the assessee in the companyrse of its business was made out of the fund that was already taxed and number out of the fund that remained to be taxed.
The cloth manufac tured by the mill was sold in British India as well as in the native States.
In the assessment for 1944 45, it had been held that, for the sales effected in the native States, 1/3rd of the profit was, in terms of section 42 3 of the Act, deemed to have accrued to the assessee in British India.
The question relates to the assessment for the years 1945 46, 1946 47 and 1947 48 under the Indian Income Tax Act, 1922 hereinafter referred to as the Act .
The assessee was a companypany resident in British India during the relevant years.
