THE CHIEF JUSTICE. - In this reference the facts are shortly as follows : The assessee is the manager of an undivided Hindu family and, inter alia, owns a money-lending business in Penang which is outside British India. This business had dealings in current account with M. RM. VL., Penang, the proprietor of which was resident in British India. On the August 13, 1931, it was found on settlement of this account that there was a sum of 11,700 dollars owing to the assessee. In discharge of this amount M. RM. VL. executed a promissory note in favour of the assessee. Later, the assessee obtainted a decree against the debtor in the Devakottah Sub-Court for the sum due on this promissory note. In the year of account this decree against the debtor in the Devakottah Sub-Court for the sum due on this promissor note. In the year of account this ecree was satisfied by the debtor selling to the assessee in British India Jewels value at Rs. 7,842-12-0 and agrring to pay Rs. 15,962-12-0 to A.M. A. Kallal in consideration of which A.M. A. Kallal assigned in favour of the assessee a decree obtained by him in British India against R.M.M.R.M., who is in fact the brother-in-law of the assessee. These amounts of Rs. 7,845-12-0 and Rs. 15,962-12-0, a total of Rs. 23,805-8-0 were credite in the assessees heaquarters accounts at Karaikudi of the year of account towards the decree debt due by M.RM.VL. and corresponding debits were made against (1) jewel purchase account and (2) R.M.M.R.M., the judgment debtor in the decree assigned in favour of the assessee. No amount was collected by the assessee in respect of the assigned decree in the year of account in respect of the assigned decree in the year of account but the assessee admitted before the Commissioner of Income Tax that a receipt in kind may amount to receipt of money provied what is received is equivalent to money or moneys worth. He did not contend that the assigned decree was unrealisable or was not worth the amount for which it was assigned to the assessee.
The Income Tax Officer held that the above transactions amounte to a receipt by the assessee in British India of Rs. 23,895-8-0 out of funds in his Penage business. Out of this sum the Income Tax Officer computed the taxable profits to be the sum of Rs. 10,900 and accordingly this amount was included in the assessment made upon the assessee for the tax year 1934-35. The assessee appealed to the Assistant Commissioner and contended that no monies had so far been realised in respect of the assigned decree and that the mere assignment of the decree within the meaning of Section 4(2) of the Act. The Assistant Commissioner dismisse the appeal. The Commissioner has now referred to us for out decision the following question : 'Whether the assignment in British India of a British Indian ecree is discharge of a debt of Rs. 15,962-12-0 due to the petitioners foreign business will amount to an actual receipt in British India at the time of the assignment of moneys worth from the foreign debtor even though no money has been realised by the petitioner from the judgment debtor under the decree assigned'.
Money can be receive in more ways then one and when the assessee accepted the jewels and took the assigned decree the debt due to the Penang business was completely discharged and the assets of that business were diminished by, and there was an increase in the assessees assets in British India of, the sum of Rs. 25,805-8-0. It was argued before us that as the amount of th assigned decree had not been received from the judgement debtor, the amount of decree should not be taken into consideration when arriving at a sum for assessment. Assuming that no such moneys had been received, even then the assessee had by the transactions mentioned transferred into British India assets which he could, and in respect of the jewels in fact did, realise and he could have realised the assigned ecree at any time. In our view, these transactions amount to remittance into British India of moneys or moneys worth. Several cases were cited to us by the assessees counsel - amongst them Californian Copper Synicate (Limited and Reduced) v. Harris; Raja Rghunandan Prasad Singh v. Commissioner of Income Tax, Bihar an Orissa and St. Lucia Usines and Estates Co. v. St. Lucia (Colonial Treasurer). None of these authorities in any way assist the assessees contention. On the a contrary, in the first of the above cases, LORD TRAYNER at page 167 says : 'A profit is realised when the seller gets the price he has bargained for. No dount here the price took the form of fully paid shares in another company, but, if there can be no realised profit except when that is paid in cash, the shares were realisable and could have been turned into cash, if the appellants had been pleased to do so. I cannot think that income-tax is due or not according to the manner in which the person making the profit pleases to deal with it.' This is directly opposed to the assessees contention; and our answer to the question referred to is 'yes'. The Income Tax Commissioner will get Rs. 250 costs.