AI Drafter 
TaxTMI 
TaxTMI 
1930 (1) TMI 18
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....f India in British India, and is dated September 15, 1928. The principal and interest were both payable at Calcutta, the former between 1955 and 1960, and the latter half-yearly at four and a half per cent, per annum. The Promissory Note was then assigned to the assessee by the bank and was duly endorsed in his favour. It was also " enfaced "- as it is called-by a direction that the interest was payable at Hyderabad (Deccan), This enfacement was effected under certain statutory rules framed by virtue of the Indian Securities Act 1920. It had the effect of making the interest thenceforth payable at the Hyderabad Residency Treasury, which, though an office of the Government of India, has now been expressly found by the Commissioner to be situate outside British India. No point has been taken that the date of enfacement, viz., August 7, 1928, is prior to that of the Promissory Note itself. Admittedly, Exhibit P is only a specimen, as the original Promissory Notes have since been sold by the assessee and parted with. So I pass that by. Accordingly, we have to deal with a case where at the material dates the debt was contracted in British India, and the principal was repayable in Britis....
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....eed in this very Clause 4(1), we have the earlier words " income...from whatever source derived." 7. Now the interest we have to deal with clearly arose or sprang from principal moneys invested in British India and repayable in British India. Its amount was calculated as a percentage on those principal moneys, and its source was those principal moneys. And if this interest had also been payable in British India, then normally it would have been caught by Section 4(1) as being " received " there, quite apart from any other words. But the argument of the assessee to be successful must take this vital step, viz., that because the interest was in fact payable outside British India, and received outside British India, therefore it did net accrue or arise in British India. In my judgment that argument is unsound. It in effect confines the words " accruing or arising " to " payable ", and inheres the fact that income payable in British India is normally caught by the word " received ". It also ignores what I have already mentioned as to the origin or source of the interest. In short this argument treats the sole test as being where is the income payable. 8. The matter does not, howe....
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.... of India issued and contracted in British India and repayable there, accrued or arose in British India within the meaning of Section 4(1) of the Act, notwithstanding that it was actually payable and paid outside British India. I would, therefore, uphold the opinion of the Commissioner, and answer the questions submitted to us as follows, viz., (1) The interest in question is income accruing or arising in British India within the meaning of Section 4(1) of the Act. (2) The said interest is liable to be assessed to Spartan. I would also direct the assessee to pay the Commissioner's costs of this reference, to be taxed by the Taxing Master on the Original Side scale. C.P. Blackwell, J. 11. The answers to the questions submitted on this reference depend upon the meaning to be attributed to the words in Section 4(1) of the Indian Income Tax Act 1922 " income, F profits or gains, as described or comprised in Section 6, from whatever x source derived, accruing or arising, or received in British India." 12. The learned counsel for the assessee drew our attention to the ' judgments of the Court of Appeal in Colquhoun v. Brooks (1883) 21 Q. B. D. 52. Dealing with the true c....
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....annot, therefore, in my opinion, be relied upon as an expression of opinion that profits or gains do not arise or accrue in the place where they are made. 17. Turning to the Indian authorities to which our attention was drawn, not much assistance can, in my opinion, be derived from them, the facts in each case being so different from those in the present. There are, however, certain passages in some of the judgments in those cases, to which I will briefly refer, which appear to me to be opposed to the contentions raised on behalf of the assessee in the present case. 18. In Board of Revenue, Madras v. Mamanadhan Chetty ILR (1919) Mad. 75 Abdur Rahim, Offg. Chief Justice, said at page 81 with reference to Section 3(1) of the Indian Income Tax Act of 1918 (which corresponds in substance with Section 4(1) of the present Act) :-" The tax is leviable with reference to the place where the income accrues or arises or is received and not, with reference to the residence of the person who is entitled to receive the income." In the same case at page 88 Sashagiri Ayyar J. refers to " the situs of personal pro-party for the purposes of taxation " as being " of the utmost importance in det....