Foreign profits tax and trading loss timing: remittance must be assessee's own money, and loss is deductible on final completion.

A remittance is taxable as foreign profits only where the assessee remits its own money; here, the transfer was made from funds credited to a creditor and under her express instructions, so it was not the assessee's remittance and was not taxable. Where a money-lending business takes over property in satisfaction of a debt and sells it piecemeal, the resulting trading loss is properly ascertained only when the final sale completes the transaction; the loss was therefore deductible in the accounting year of completion. The reference was answered for the assessee and the assessment had to be recomputed accordingly.

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Issues: (i) Whether the sum of Rs. 10,000 remitted from the Taiping branch to the Ngathainggyaung branch at the request of a creditor was a remittance of the assessee's foreign profits taxable under Section 4(2) of the Burma Income-tax Act; (ii) Whether the loss arising on the sale of lands and a house taken over in satisfaction of a debt was deductible only in the year in which the final sale was completed.

Issue (i): Whether the sum of Rs. 10,000 remitted from the Taiping branch to the Ngathainggyaung branch at the request of a creditor was a remittance of the assessee's foreign profits taxable under Section 4(2) of the Burma Income-tax Act.

Analysis: The remittance was made out of the creditor's own credited funds and under her express instructions, with the Taiping branch acting as her agent in purchasing and transmitting the draft. A remittance can be treated as foreign profits only when it is a remittance by the assessee of money belonging to the assessee. On the facts, the money remitted did not belong to the assessee and the movement of funds was not a remittance of the assessee's income or profits.

Conclusion: The question is answered in the negative, and the amount was not taxable as a remittance of the assessee's foreign profits.

Issue (ii): Whether the loss arising on the sale of lands and a house taken over in satisfaction of a debt was deductible only in the year in which the final sale was completed.

Analysis: Property taken over in repayment of a debt in a money-lending business forms part of the trading assets of the business. Where such property is sold piecemeal and no complete ascertainment of profit or loss is possible until the last sale, the loss is properly determined only when the whole transaction is completed. The earlier sales could not require speculative year-by-year estimates where the final result was still uncertain.

Conclusion: The loss was an admissible deduction in the accounting year in which the transaction was completed.

Final Conclusion: The reference was answered in favour of the assessee on both questions, and the assessed income had to be recomputed accordingly.

Ratio Decidendi: A remittance is taxable as foreign profits only if it is a remittance by the assessee of its own money, and a trading loss on piecemeal disposal of business assets is deductible when the transaction is finally completed and the loss can be ascertained.

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