Taxation of repatriated accumulated profits upheld where mixing of funds prevents rebuttal; belated new contentions may be refused.

Remittances of Rs.1,20,000 transmitted from Srinagar were held taxable as profits accumulated outside British India where the assessee admitted mixing profits with working funds and failed to rebut the presumption that the amounts remitted derived from prior profits; the finding of taxable accumulation was sustained. The Tribunal also validly exercised its discretion to refuse belated leave to raise a new ownership contention requiring additional evidence; late affidavits or bank certificates did not compel admission. Operatively, the taxability and refusal to admit new evidence were affirmed and the appeals dismissed.

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Issues: (i) Whether the appellant is liable under Section 4(1)(b)(iii) of the Income-tax Act to pay tax on Rs.1,20,000 remitted from Srinagar to British India as profits accumulated outside British India and brought into British India; (ii) Whether the Appellate Tribunal properly refused to permit the appellant to raise a new contention (that the remitted moneys were not the appellant's moneys) and to lead further evidence on that contention.

Issue (i): Whether remittance of Rs.1,20,000 to British India was taxable as profits accumulated outside British India under Section 4(1)(b)(iii) of the Income-tax Act.

Analysis: The Tribunal remanded for enquiry and on report upheld the Appellate Assistant Commissioner's finding that the profits transmitted amounted to Rs.1,20,000. The appellant admitted that profits in Srinagar were mixed with working funds and failed to demonstrate, on the materials before the Tribunal, that the remittances were not out of preceding years' profits. The Tribunal's finding that the appellant did not discharge the burden of rebutting the presumption that remittances were made out of profits was based on the available evidence and the admission of mixture of funds.

Conclusion: The remittance of Rs.1,20,000 is taxable as profits accumulated outside British India and brought into British India; decision is against the assessee.

Issue (ii): Whether the Tribunal rightly refused to permit the appellant to raise for the first time a contention that the remitted moneys were not the appellant's moneys and to lead further evidence on that point.

Analysis: The new contention was first raised before the Tribunal after remand and required further evidence. The Tribunal exercised its discretion to refuse leave to raise a new contention without further evidence. The Supreme Court found no illegality or jurisdictional error in the Tribunal's exercise of discretion, and observed that even if affidavits or bank certificates appeared in the record these did not compel acceptance of a belated new contention.

Conclusion: The Tribunal properly refused to permit the appellant to raise the new contention and to lead further evidence; decision is against the appellant.

Final Conclusion: The appeals are without merit on the decided issues; the Tribunal's determinations on taxability of the remitted amount and on refusal to admit a belated new contention stand affirmed, resulting in dismissal of the appellant's appeal.

Ratio Decidendi: Where an assessee admits that profits are mixed with working funds and fails to rebut the presumption that remittances are from profits, the remittances are taxable as accumulated profits on being brought into British India, and a tribunal has discretion to refuse to permit a belated new contention requiring further evidence.

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