1915 (9) TMI 1 - HC - Income Tax

Receipt in British India: annuity instalments collected by an agent and remitted to the principal are taxable as income.

Whether annuity instalments collected by an agent outside British India but remitted to the appellant amount to income received in British India was ... Definition of 'income' under Part IV of Schedule II - 'received in British India' within section 3(5) - taxable situs of receipt - receipt by agent versus principal's receiptDefinition of 'income' under Part IV of Schedule II - 'received in British India' within section 3(5) - taxable situs of receipt - receipt by agent versus principal's receipt - Whether annuity instalments collected by the appellant's agent in Mysore and thereafter remitted to the appellant while she resided in British India constituted 'income' received in British India and were taxable. - HELD THAT: - The Court agreed with the Subordinate Judge that the annuity instalments fell within the scope of 'income' as envisaged by Part IV of Schedule II. The contention that the sums ceased to be income once collected by the agent, or that the agent's receipt in Mysore amounted to an act of the principal so as to prevent subsequent receipt in British India, was rejected. The Court held that 'income' means 'what comes in' and includes sums derived from an annuity; further, the amounts were 'received in British India' within the meaning of section 3 clause (5) of the Income-tax Act and were therefore subject to tax. [Paras 1]The annuity instalments were 'income' received in British India and taxable; the appeal is dismissed.Final Conclusion: The Second Appeal is dismissed with costs; the sums remitted by the agent to the appellant while she was resident in British India are held to be income received in British India and taxable. Issues: Whether annuity instalments collected by an agent in Mysore and thereafter remitted to the appellant in British India constitute 'income' received in British India within the meaning of the Income-tax Act, 1886 and are taxable.Analysis: The payment to the appellant derives from an identifiable source (an annuity) and falls within the ordinary meaning of 'income' as 'what comes in'. The instalments, though collected by an agent in Mysore, were subsequently received by the appellant in British India; such receipt is captured by the statutory definition of receipt in section 3(5) of the Income-tax Act, 1886. The agent's act of collection in Mysore does not convert the sums into non-income for tax purposes or prevent them being treated as received in British India when remitted to the principal. The provisions of Part IV of Schedule II of the Income-tax Act, 1886 apply to such remittances.Conclusion: The sums received by the appellant are taxable as income received in British India; the appeal is dismissed in favour of the revenue.