1940 (2) TMI 15

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....otal income of Rs. 62,599. This amount included a sum of Rs. 62,006 which the Income Tax Officer held represented a remittance to British India of profits made in Saigon during the year of account. The assessee objected to the assessment. He contended that he had been over assessed to the extent of Rs. 60,000. For the two years which ended with 31st March 1936 the assessees profits in Saigon amounted to Pounds 59,290. Of this he remitted Pounds 39,834 during the year of account to the Bank of Mysore, Mysore City and there purchased Mysore Government Bonds of the face value of Rs. 60,000. The actual price paid for these bonds was Rs. 69,416. The whole of this amount was paid out of the moneys remitted from Saigon. For two months the bonds re....

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.... was postponed until the Privy Council had decided an appeal which was then pending from the Judgment of the Bombay Presidency v. Ahmedabad Advance Mills Limited of Bombay (1938 I.T.R. 31). The Judicial Committee has now delivered Judgment does not decide the question which arises for decision in the present case, but there are observations in it which are helpful to the Court. In the case referred to the assessee was a limited company and had lying in London a sum of Rs. 18,000 which it had received as income on certain sterling in London. The assessee company invested this income in the purchase of stores and machinery which it shipped to Bombay and utilized in its business in British India. The question was whether the stores and machine....

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....n income into some form of capital, for instance bonds, and having realized the assets in this country had applied the proceeds as income the Court would hold that what had been brought into this country was in fact income and not capital. The decision of the Bombay High Court was approved by the Judicial Committee and in delivering the Judgment of the Board Lord Romer quoted the remarks of Lord Lindley in Gresham Life Assurance Society Limited v. Bishop (1902 A.C. 287) where he said : "A sum of money may be received in more ways than one, for example, by the transfer for a coin or a negotiable instrument or other document which represents and produces coin, and is treated as such by business men." The Privy Council however retained from....

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....e, is one of the known forms of remittance". Later on, the Lord President went on to say : "Although the bearer bonds are marketable securities, that is of course, surely neither here nor there, because in one sense everything is a marketable security at a price. The fact that a bearer bond is a marketable security and easily marketable, and therefore a negotiable instrument, does not seem to me to touch for one moment the question whether it is an ordinary form of remittance. Nobody ever heard of remitting money by means of a bearer bond, for this very good reason, you could not possibly remit money by it and know exactly what you are doing, because the price of bearer bonds fluctuates in the market every day, and a bond might ....