Rebuttable presumption of foreign remittance as profits failed where the funds came from a personal account and prior receipts.

A remittance received in Madras from an overseas business was held not to be taxable as profits earned or accrued abroad during the relevant period. Although an inward remittance from a foreign business may raise a rebuttable presumption that it represents profits, that presumption was displaced here because the profits had not been ascertained after the end of 1931, the July 1933 transfer was traced to the assessee's personal account, and the credited sums were shown to have been received before 1 April 1933. Salary standing in the account also could not be treated as taxable business profits, as it was outside the scope of the proviso to section 4(2).

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Issues: Whether the remittance of Rs. 22,837 received in Madras in August 1935 represented profits earned or accrued abroad during the relevant years and was therefore taxable.

Analysis: A remittance from an overseas business where profits have been made may raise a rebuttable presumption that the amount remitted represents profits. That presumption was rebutted here. The profits of the business had not been ascertained after the end of 1931, and the remittance from Tebing Tinggi in July 1933 was traced to the assessee's personal account rather than to current profits. The moneys credited as profits in that account represented amounts received before 1 April 1933. The amount standing as salary also could not be treated as taxable profits, because salary was not within the category of business income to which the proviso to section 4(2) applied.

Conclusion: The remittance was not a remittance out of profits earned or accrued abroad during the relevant period and was not taxable as such. The answer to the reference was in favour of the assessee.

Ratio Decidendi: The presumption that an inward remittance from an overseas business represents profits is rebuttable, and where the evidence shows that the remittance came from a personal account or from amounts accrued before the relevant taxing period, it cannot be assessed as taxable business profits.

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