Foreign business profits allotted on partition and remitted into British India were held taxable under the income-tax provision.

Profits earned by a joint family business abroad, when allotted to an assessee on partition, were treated as income accruing to the assessee in his own right. On that basis, the later remittance of those profits into British India satisfied the statutory condition that income accruing outside British India after 1 April 1933 and brought into British India during the previous year formed part of total income. A narrower reading limiting the provision to profits personally earned by the assessee was rejected as inconsistent with the language and purpose of the section. The amount brought into British India was therefore taxable.

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Issues: Whether profits earned by a joint family business abroad, which were allotted to the assessee on partition and later brought into British India, were liable to tax under Section 4(1)(b)(iii) of the Income-tax Act, 1922.

Analysis: The provision brought within the total income of a person income accruing to him outside British India after 1 April 1933 and brought by him into British India during the previous year. The profits, though originally earned by the joint family, became the assessee's own property on partition, and on that footing they accrued to him in his own right. When he subsequently remitted the amount into British India, the statutory conditions were satisfied. A narrower reading confined to profits personally earned by the assessee was rejected as inconsistent with the language and purpose of the section.

Conclusion: The assessee was liable to tax on the sum of Rs. 40,742 brought into British India during the accounting year.

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