(Judgment of the Court was delivered by the Honble the Chief Justice).
In the statement of the case made by the Appellate Tribunal it is suggested that the Commissioner of Income-tax has misunderstood the findings of fact arrived at by the Tribunal and stated in its order of 9th February 1943. We do not think that there has been any misapprehension on the part of the Commissioner, but in any event the facts are clear.
Until the 28th March 1939 the assessee was joint with his father. The family carried on a money-lending business in the Federated Malay States. On separation, the assessee received as his share of the family assets the business which the family had carried on in the Federated Malay States. Between the 1st April 1933 and the date of partition this business had earned considerable profits, all of which accrued to the assessee under the partition. Between the 28th March 1939 and the 12th April 1939 the assessee brought to British India Rs. 40,742 of the accumulated profits and the Income-tax Officer decided that he was liable under Section 4(1) (b) (iii) of the Income-tax Act to pay the tax on this amount. The Appellate Assistant Commissioner disagreed with the Income-tax Officer and held that the assessee was not liable. The Appellate Tribunal agreed with the appellate Assistant Commissioner. At the request of the Commissioner of Income-tax, the Tribunal has referred for the opinion of this court following question :-
'Whether in the circumstances of the case the respondent is liable on the remittance of a sum of Rs. 40,742 brought by him into British India during the accounting year.'
Section 4(1) (b) (iii) reads as follows :-
'Subject to the provisions of this Act, the total income of any previous year of any persons includes all income profits and gains from whatever source derived which having accrued or arisen to him with out British India before the beginning of such year and after the 1st day of April, 1933, are brought into or received in British India by him during such year.'
In accepting the case for the assessee, the Tribunal laid stress on the word 'him' and considered that, as these profits had been earned by the joint family, he could not assessed in respect of them. We consider that this is not a correct reading of the section. Under it a persons is liable to pay the tax on income from whatever source derived which has accrued to him after the 1st April 1933 and has been brought by him into British India. It is true that the profits were actually earned by the joint family, a different entity for the purpose of taxation, but on the 28th March 1939 the assessee acquired the business and all the profits which had been earned between the 1st April 1933 and that date. According to the Oxford Dictionary a primary meaning of the word 'accrue' is 'to come by way of addition or increase, or as an accession or advantage.' By reason of the arrangement with his father the assessee instead of being a shares in the business became the absolute owner thereof. Thereby the profits accrued to him in his own right and it was he who brought them into British India. The acceptance of the assessees interpretation would mean, as Mr. Sesha Ayyangar has pointed out, that the tax could never be collected on profits earned by a person resident in this country but trading abroad if he transferred his profits to another before they were brought into British India. We cannot accept such a construction. We hold that the profits accrued to the assessee within the meaning of the section and as he brought them into British India he must pay the tax on them.
We answer the question by stating that the respondent is liable ton pay the tax on the sum of Rs. 40,742 brought by him to British India during the accounting year.
The Commissioner has succeeded and is entitled to his costs Rs. 250.
Reference answered accordingly.