In pursuance of the order of the High Court dated the August 21, 1950, in Miscellaneous Civil Case No. 210 of 1949, the Income-tax Appellate Tribunal, Bombay Bench B, has submitted the statement of case under Section 66(2) of the Income-tax Act, 1922, (hereinafter called the Act), with reference to the following question :- "Whether in the circumstances of the case the amount of Rs. 16,650 remitted by the Sanawad shop of the assessee to Upleta (both out of British India), by a draft from the Imperial Bank, Khandwa, can be included in the total income of the assessee for the assessment year 1944-45." The assessee firm Haji Mohammad Usman and Sons has its main place of business at Khandwa. It has also a branch at Sanawad and the partners reside in Upleta. Both Sanawad and Upleta were at the relevant time out of British India and formed part of Indian States. In the accounting year 1943-44 the firm made a profit of Rs. 27,760 in the branch at Sanawad. Out of this amount of profit, a sum of Rs. 16,650 was brought to Khandwa for being sent to Upleta via Bombay. This amount was remitted to Bombay either by drafts on the Imperial Bank or by hundies between the June 21, 1943, to the August 4, 1943. In the assessment order, dated the November 27, 1946, of the Additional Income-tax Officer, Nagpur, it was stated that the money was sent to Upleta. This was also the assumption during the course of the appellate proceedings both in the office of the Commissioner of Income-tax, Nagpur, and the Income-tax Appellate Tribunal, Bombay Bench B. In the statement of the case the Tribunal, however, remarked in paragraph 5 that "the money never reached Upleta". It has further observed that from Khandwa the money went to Bombay and that "a mere credit entry was passed in Upleta under the instructions of the assessee". Since this was not the stand taken during the assessment proceedings, we assume that the money reached Upleta from Bombay.
This is a case of an assessee resident in British India within the meaning of Section 4B(c) of the Act. The relevant provisions of the Act as amended by Act VII of 1939, which governs the case, are set out below :- "Section 4(1)(b)(iii) - Subject to the provisions of this Act, the total income of any previous year of any person includes all income, profits and gains from whatever source derived which, if such person is resident in British India during such year, having accrued or arisen to him without British India before the beginning of such year and after the April 1, 1933, are brought into or received in British India by him during such year.
Section 14(2)(c) - The tax shall not be payable by an assessee in respect of any income, profits or gains accruing or arising to him within an Indian State, unless such income, profits or gains are received or deemed to be received in or are brought into British India in the previous year by or on behalf of the assessee, or are assessable under Section 42." It is admitted that this is not a case of income etc., "received" in British India and unless the money can be said to be brought into British India, it would not be liable to assessment.
The words "brought into" did not occur in the corresponding Section 3(1) of the Income-tax Act, 1918, and have not been the subject of any judicial interpretation so long. It is, however, contended that the term "received" has been given a restricted meaning in Rai Bahadur Sundar Das v. collector of Gujrat which was followed in Board of Revenue v. Ripon Press and Sir Saiyid Ali Imam v. The Crown and accordingly the words "brought into" should be given a similar limited interpretation. It is also contended that the words "brought into" denote an element of permanency, and, therefore, the money which only touches the soil of British India during its onward journey cannot be deemed to be brought into British India for purpose of assessment.
Lastly it is contended that since the purpose of the Act is to assess only income, profits or gains, the money which is not brought into British India for this purpose cannot be liable to assessment.
In Rai Bahadur Sundar Das v. Collector of Gujrat profits had accrued in British Baluchistan which was exempt from the operation of the income-tax except as to salaries, and were transmitted to the Punjab in British India, where the assessee was residing. In Board of Revenue v.Ripon Press the income had accrued in Raichur in the Nizams Dominions and was received in Belari in British India for payment of dividend to shareholders residing there. In Sir Saiyid Ali Imam v. The Crown the money was transferred by the Hyderabad branch of the Imperial Bank to the account of the assessee in the Patna branch. In all these cases. It is urged, although the money was transmitted to British India for permanent retention, it was not held to be liable to tax. However, this decision was reached on the ground that the money was actually received in a non-taxable territory and since it was already once received it could not be deemed to be further received in British India. It was further observed in Rai Bahadur Sundar Das v. collector of Gujrat at page 355 : "It seems to be that the word receive implies two persons, namely, the person who receives and the person from whom he receives. A person cannot receive a thing from himself." It will thus be observed that these cases were decided only on the interpretation of the term "received" which was held on be referable only to the first act of receipt. In the present case, however, we are not concerned with the term "received" but with the words "brought into", for whose interpretation these rulings are no guide. All that can be urged on the basis of these rulings is that if the money is deemed to be brought into British India, the relevant place where it would be deemed to be brought would be khandwa where the first act of bringing it was completed and not any other place in British India where it was taken subsequently in transit. This, however, is not the question in the present case.
In Pondicherry Railway Company, Limited v. Commissioner of Income-tax, Madras, which is also relied on by the learned counsel for the assessee, the facts as summarised in the head not were these : "The appellant company was incorporated in the United Kingdom in 1869 with a registered office in London, and under a convention with the French Colonial Government constructed a railway in the French Colony of Pondicherry making junction at the frontier of British India with the South Indian Railway Company. By the convention, the appellant company was to pay to the French Colonial Government half its net profits calculated as therein provided. In 1879 the appellant company entered into a working agreement with the South Indian Railway Company, whereby that company was to work the Pondicherry Railway as an integral part of its own line, and out of the receipts make certain payments to the appellant company in India in rupees. For each of the financial years 1925-26 and 1926-27 the South Indian Company paid sums due under the agreement to their agent at Trichinopoly, who was also agent for the appellant company, admittedly, for certain purposes, under instructions from the appellant company he calculated and paid to the French Colonial Government the sums due under the convention, and remitted the balance to the appellant company in London by a bank draft payable there." "The sums paid by the South Indian Railway Company had been received in British India (namely, at Trichinopoly) by the appellant company within Section 4, sub-section (1), of the Indian Income-tax Act, 1922, and constituted the profits and gains of a business carried on by them within Section 2(4) and Section 6(iv) of the Act, so as to render them chargeable to tax in respect thereof; further that the appellant company was not entitled to deduct the payments made under the convention as being expenditure incurred solely for the purpose of earning such profits or gains within Section 10, sub-section (2)(xi), of the Act." It was contended on behalf of the appellant company in that case that their agent at Trichinopoly, Mr. Rothera, had acted as "a mere channel for communication", and accordingly it is the company in London which should be deemed to have "received" payment and not their agent at Trichinopoly. This contention was rejected by Lord Macmillan, who delivered the judgment, in these terms : "The attempt to present Mr. Rothera as an animated post office fails when it is realised that his functions far transcend the mere mechanical act of transmitting a sum to its recipient." In this view their Lordships were of opinion "that the income derived by the Pondicherry Company from the payments made to it by the South Indian Company is, on the facts stated, received in British India, within the meaning of the Act, by the agent of the Pondicherry company there on their behalf." This view was followed by the Supreme Court in Turner Morrison & Co. Ltd. v. Commissioner of Income-tax, West Bengal.
These rulings, however, deal with the question whether the sums paid to the agent of the assessee company should be deemed to have been "received" in British India within the meaning of Section 4(1) of the Act. They also, therefore, do not deal with the question of the interpretation nof the words "brought into" with which alone we are concerned in the case.
The purpose for which money was brought into British India is not material for purposes of taxation under the Act if it initially accrued or arose as income, profits or gains. It is not disputed in the present case that the money represented profits which accrued to the assessee in Sanawad. This condition being fulfilled, it would become taxable in British India provided it can be deemed to be brought into British India within the meaning of Sections 4(1) and 14(2) of the Act. Nor do we think that the words "brought into", per se, connote any permanent retention in British India. The term "bring" has been defined in Chambers Twentieth Century Dictionary as "to fetch; to carry; to procure; to occasion; to draw or lead." It is similarly defined in other dictionaries also. The term, therefore, denotes only a physical act of shifting a thing from one place to another. The words "brought into" are not qualified or limited under the Act and have, therefore, no reference to the purpose for which the money is brought into British India or to the period for which it is intended to be retained in British India. To read into them any such qualification or limitation would be to ignore the plain words of the statute, which, in fiscal enactments, is not permissible. In Sundar Das v. Collector of Gujrat the following rule of interpretation of fiscal statutes, enunciated by Lord Cairns in Partington v. Attorney-General, was cited with approval : "As I understand the principle of all fiscal legislation, it is this : If the person sought to be taxed comes within the letter of the law, he must be taxed, however great the hardship may appear to the judicial mind to be. On the other hand, if the Crown, seeking to recover the tax, cannot bring the subject within the letter of the law, the subject is free, however apparently within the spirit of the law the case might otherwise appear to be. In other words, if there be admissible, in any statute what is called an equitable construction certainly such a construction is not admissible in a taxing statute where you should simply adhere to the words of the statute." Adverting to the words "from whatever source derived" occurring in Section 4(1) of the Act, it was observed by Iqbal Ahmad, J., in Lala Indra Sen, In re that "taxation under the Act is the rule, and exemption the exception". The test in such cases is whether the case comes within the provision of law, as the object of the Act is clearly not to exclude from taxation income whenever it is found within the taxable territory. We are, therefore, of opinion that once money representing income, profits or gains is brought into any part of British India, the department is entitled to assess it to income-tax even though it is not meant for retention or investment at that place.
As the case comes within the letter of the law, it is not within out province to enquire into the intention of the legislature in enacting it or speculate on its underlying spirit. The answer to the reference should, therefore, be in the affirmative.
We hold that, in the circumstances of the case, the amount of Rs. 16,650 remitted by the Sanawad shop of the assessee to Upleta by a draft on the Imperial Bank, Kbandwa, can be included in the total income of the assessee for the assessment year 1944-45. Costs shall be paid by the assessee. Counsels fee Rs. 100.