Current-year business profits are not taxable as remittances until ascertained and available at year-end.

Current-year business profits cannot be treated as remittable profits within the same accounting year because they are not yet ascertained or available for remittance until the year ends. On the facts found, drafts received in India were treated as remittances of business profits accruing outside the taxable territories during the relevant previous year, but they did not fall within section 4(1)(b)(ii) read with the second proviso of the Indian Income-tax Act, 1922 for assessment year 1958-59. The sum was therefore not chargeable to tax, and the reference was answered in the negative.

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Issues: Whether the sum of Rs. 58,275 was chargeable to tax under section 4(1)(b)(ii) read with the second proviso of the Indian Income-tax Act, 1922 for the assessment year 1958-59.

Analysis: The relevant assessment year was 1958-59 and the assessee was a resident but not ordinarily resident. The Tribunal treated the drafts received in India as remittances of profits accruing outside the taxable territories during the same previous year. On the facts found, the word "profits" in the Tribunal's order was construed as business profits. The governing principle applied was that current year business profits cannot be remitted as profits within the very year in which they arise, because such profits are not ascertained and available for remittance until the year ends. On that basis, the remittances could not be brought to tax as profits of the same previous year.

Conclusion: The sum of Rs. 58,275 was not chargeable to tax under section 4(1)(b)(ii) read with the second proviso, and the answer to the reference was in the negative.

Ratio Decidendi: Remittances cannot be taxed as current year business profits when the finding is that they represent profits of the same accounting year, because such profits are not yet ascertained or available for remittance until the year is complete.

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