1. On 24th September, 1951, the assessee purchased a motor car in Singapore, and on 1st October, 1951, he purchased a radio which was fitted into the car. The total cost computed in terms of Indian curency came to Rs 11,691. Subsequently, in November, 1951, the assessee brought the car with the radio to India. In the assessment year 1952-53 the Department held that the assessee had brought this sum of Rs. 11,691 as a remittance into the taxable territory. The appeal to the Assistant Commissioner failed. The further appeal to the Tribunal also failed, the Tribunal rejecting the assessee's claim with the observation;
the cost of car and radio purchased out of foreign profits and brought into India clearly represents money or money's worth brought over.
2. The question referred to this Court under Section 66 (i) of the Income-tax Act was,
whether the cost of the car and radio purchased out of foreign profits and brought into the taxable territory can constitute remittance of foreign profits within the meaning of Section 4(1)(6)(iii).
3. The assessee was resident, and ordinarily resident in the taxable territory for the assessment year in question. It was agreed to by both the parties that how this amount of Rs. 11,691 was treated, that is, whether it was treated as a remittance or not, did not, affect the tax liability of the assessee in the year of assessment. None the less the question having been raised as a question of law, it has to be answered.
4. Both before the Income-tax Officer and before the Assistant Commissioner the assessee relied on the principle laid down by the Privy Council in Commissioner of Income-tax v. Ahmedabad Advance Mills, Ltd. I.L.R. (1940) Bom. 332 : L.R. 67 IndAp 115 : 8 I.T.R. 95. But they purported to distinguish the claim of the assessee on the facts. The Tribunal itself made no reference to Commissioner of Income-tax v. Ahmedabad Advance Mills, Ltd. I.L.R. (1940) Bom. 332 : L.R. 67 IndAp 115 : 8 I.T.R. 95
5. What their Lordships of the Privy Council approved of was the principle laid down earlier in Gresham Life Assurance Society, Ltd.v. Bishop2, that to constitute a receipt of money it should be remitted in specie or in any form known to the commercial world for the transmission of money from one country or place to another. In that case, what the assessee did was to purchase machinery from out of the profits that had accrued abroad and send the machinery for use by the assessee in India. Their Lordships of the Privy Council pointed out that
it cannot be suggested in the present case that the mill stores and machinery were purchased in England and shipped out to India as a method of bringing over the sterling interest that had been received in this country. No one in his senses would think of employing such a method of transmitting money.
6. Their Lordships considered the hypothetical case of a man purchasing a car and clothes in England for 500 and using them there and taking them over to India subseqently after a laspe of say two years. Their Lordships proceeded:
If upon his return to India the question were put to him,' How much have you left of the 500?' his answer would be ' none ', and the answer would be a true one whether addressed to a casual enquirer or to the Income-tax Officer. What he has taken back to India are some much worn clothes and a car much depreciated in value. But these things can in no sense be described as income; and it is only income that can be taxed under the Indian Income-tax Act.
7. We do not think that there could be any difference to the application of the principle laid down by the Privy Council, if the articles purchased abroad had been used only for two months instead of two years.
8. If the principle laid down in Ahmedabad Advance Mills case1, is applied to the facts of this case, it would be found that what the assessee did was to spend a part of the profits that had accrued to him and had been received by him abroad fo the purchase of a car which he brought over to India, obviously for his use. It was not suggested that he brought the car with the idea of selling it, and that it was a device resorted to by him for bringing in money or money's worth. That the assessee had the benefit of the car in India in no way affects the question at issue. What was it that he brought to India, was it money or money's worth? Money's worth has to be given the meaning which was accorded to it by Lord Brampton in Gresham Life Assurance Society, Ltd. v. Bishop L.R. (1902) A.C. 287, was it a case of transmission of money in any form known to the commercial world? As their Lordships of the Privy Council pointed out, mill machinery was certainly not a normal means of transmission of money or money's worth. No more is the purchase of a car abroad which is brought into this country for personal use. The Departmental Oncers took the view, that if any person purchases abroad personal effects and brings them over to India, it would be a case of bringing in money's worth and would constitute a remittance. That is a fallacious line of reasoning. As we said, that the assessee had the benefit of what he had purchased abroad and brought into India is not a test at all in deciding whether there was a remittance. The claim of the assessee, in our opinion, falls squarely within the scope of the rule laid down in Ahmedabad Advance Mills case. 1
9. learned Counsel for the Department pointed out that the statement of the case recorded that on 7th November, 1951, the assessee made an entry in his books, showing the value of the car and the radio, 718 ,50 dollars, as having been transferred to the ' Ooranuppu account ' of the assessee, that is, the headquarters account. learned Counsel urged that the assessee himself treated it as money remitted to his credit in the headquarters account. That may not be a correct way of interpreting that entry. There was no question of the liability of the assessee being reduced in any way by the adjustment entry as between the foreign books and the headquarters books. He could not be a debtor to himself. Further, how a particular transaction is recorded in the books of the assessee is not conclusive of the nature of the transaction. What had to be established in this case was that there was a remittance of money or money's worth. What was brought into India was a car. We have rejected the contention that that represented money's worth The fact that the assessee debited his headquarters account with the cost of the car really does not affect the position in answering the question, whether there was a remittance, or rather, whether money's worth was brought into India. That question has still to be answered by the application of the principle laid down in Ahmedabad Adavance Mills case.1
10. We have no hesitation in holding that there was no remittance. It was not money or money's worth that the assessee brought into the taxable territory when he brought the car which he had purchased abroad for his use in the taxable territory.
11. The question is answered in the negative and in favour of the assessee. The assessee will be entitled to the costs of this reference. Counsel's fee Rs. 250.