Remittance taxation and set-off limits upheld where foreign-accrued income was brought into British India by a resident.

Remittances brought into British India by a resident during the accounting year were taxable under section 4(1)(b)(iii) of the Indian Income-tax Act, 1922, even though the income had originally accrued when the assessee was a non-resident, because the decisive fact was receipt or remittance into British India during the relevant year. The court rejected reading into the provision a requirement that the assessee be resident when the income first arose, as that would add words not found in the section and overlap with section 4(1)(b)(ii). A business loss incurred in an Indian State could not be set off against the remitted amount, since the remittance was assessed as income from other sources and the statutory proviso barred such set-off.

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Issues: (i) Whether remittances brought into British India by a resident during the accounting year were taxable under section 4(1)(b)(iii) of the Indian Income-tax Act, 1922, even though the income had originally accrued to the assessee when he was a non-resident. (ii) Whether a business loss incurred in an Indian State could be set off against such remittances.

Issue (i): Whether remittances brought into British India by a resident during the accounting year were taxable under section 4(1)(b)(iii) of the Indian Income-tax Act, 1922, even though the income had originally accrued to the assessee when he was a non-resident.

Analysis: The provision included in the resident assessee's total income income, profits and gains which had accrued or arisen to him without British India before the accounting year and after 1 April 1933 and were brought into or received in British India during the accounting year. The decisive fact was the receipt or remittance into British India during the relevant year. The court rejected the attempt to restrict the provision by reading in a requirement that the assessee must have been a resident when the income originally arose. Such a limitation would have added words not found in the section and would have made the provision largely redundant in light of section 4(1)(b)(ii).

Conclusion: The remittance was rightly taxable under section 4(1)(b)(iii), and the answer to the first question was in the affirmative.

Issue (ii): Whether a business loss incurred in an Indian State could be set off against such remittances.

Analysis: The remitted amount was taxed not as business profits but as income from other sources. A loss from business could not therefore be adjusted against it under section 10. Although section 24 permitted set-off of loss against income under another head, the proviso barred set-off of a loss incurred in a Native State against profits or gains in British India. On the facts, the loss claimed was a Native State business loss, while the remittance was assessed under the head of other sources.

Conclusion: The business loss was not allowable as a set-off against the remitted amount, and the answer to the second question was in the negative.

Final Conclusion: The reference was answered against the assessee on both substantive questions, and the Revenue's assessment was sustained.

Ratio Decidendi: For a resident assessee, remittances into British India of income accrued abroad after 1 April 1933 are taxable by reason of the remittance itself, and a loss under the business head cannot be set off against that amount when it is assessed under another head and the statutory proviso forbids such set-off.

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