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Chunilal Murarka Vs. Commissioner of Income-tax - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtKolkata High Court
Decided On
Case NumberIncome-tax Reference No. 55 of 1964
Judge
Reported in[1970]76ITR49(Cal)
ActsIncome Tax Act, 1922 - Section 14(2)
AppellantChunilal Murarka
RespondentCommissioner of Income-tax
Appellant AdvocateT.P. Das, Adv.
Respondent AdvocateB.L. Pal, Adv.
Cases ReferredParimisetti Seetharamamma v. Commissioner of Income
Excerpt:
- .....failed to discharge the onus, the amount, according to the assessee, could not be taxed under the indian income-tax act, 1922. the tribunal found that the assessee resides in india, that these fixed deposits were kept in the part b state, and that the assessee had failed to explain in spite of opportunity being given to him as to where and how the interest on these fixed deposits were utilised. the tribunal also pointed out that the income-tax officer in his order has found that the assessee took certain overdrafts in calcutta on the security of those very fixed deposits in the part b state. in those circumstances, the tribunal came to the conclusion that the income-tax department was justified in holding that interest received by the assessee in fixed deposits in the part b state had.....
Judgment:

Sabyasachi Mukharji, J.

1. The assessee is a resident and an ordinary resident within the taxable territories. The assessment year involved in this reference is 1949-50, for which the corresponding accounting year is the calendar year 1948. The assessee's business in Calcutta consisted of money-lending. During the assessment proceedings the Income-tax Officer found that the assessee had a number of fixed deposits in Hind Bank Ltd. at Jaipur, which was then in a Part B State. The assessee claimed that the interest due on such fixed deposits was not brought into the taxable territories during the accounting year. The assessee expressed his inability to bring any evidence to show the movement of these fixed deposits from year to year. The Income-tax Officer, after giving opportunity to the assessee, was of the opinion that, in the circumstances, the assessee has failed to establish that the interest was left behind in the native State itself. He, therefore, treated the amount of interest due on the fixed deposits as having been brought into the taxable territories during the accounting year and included the amount of such interest amounting to Rs. 52,000 in the assessee's total income.

2. There was an appeal before the Appellate Assistant Commissioner and the Appellate Assistant Commissioner confirmed the order of the Income-tax Officer.

3. There was a further appeal before the Tribunal and it was contended before the Tribunal on behalf of the assessee that the onus lay on the income-tax department to prove that the amount of interest earned in the Part B State was brought into the taxable territories and, since the department had failed to discharge the onus, the amount, according to the assessee, could not be taxed under the Indian Income-tax Act, 1922. The Tribunal found that the assessee resides in India, that these fixed deposits were kept in the Part B State, and that the assessee had failed to explain in spite of opportunity being given to him as to where and how the interest on these fixed deposits were utilised. The Tribunal also pointed out that the Income-tax Officer in his order has found that the assessee took certain overdrafts in Calcutta on the security of those very fixed deposits in the Part B State. In those circumstances, the Tribunal came to the conclusion that the income-tax department was justified in holding that interest received by the assessee in fixed deposits in the Part B State had been brought into the taxable territories. The Tribunal, therefore, dismissed the appeal of the assessee.

4. There was an application under Section 66(1) of the Indian Income-tax Act, 1922, and, on the game being refused, the assessee made an application to this court under Section 66(2) of the Indian Income-tax Act, 1922. This court directed under Section 66(2) to refer the following question to this court:

'Whether, on the facts and in the circumstances of the case, there was evidence or material before the Tribunal for its conclusion that the interest received by the assessee in the Part B State had been brought into the taxable territories ?'

5. Mr. T. P. Das learned counsel for the assessee, contended before us that, in order to make this interest taxable, the revenue has to establish that it was brought into the taxable territories. According to him the evidence adduced by the revenue or the facts found by the Tribunal do not warrant such a conclusion. It is important to bear in mind that the assessee is a person who is resident in the taxable territories during the relevant previous year.

6. Under Section 4(1)(b)(ii) of the Indian Income-tax Act, 1922, the interest that accrued to the assessee outside the taxable territories would be included in the income of the assessee for the purpose of taxation unless it is excluded by other provisions of the Act or exempted by any other provisions of the Act. At the relevant time under Clause (c) of Sub-section (2) Section 14 which was in force at that time if the income or profits or gains had arisen in the Indian State, if it was not shown that such income, or profits or gains were brought within the taxable territories, that would have been exempt from taxation under Section 14 of the Indian Income-tax Act, 1922. It is, therefore, clear that prima facie in respect of an assessee who was a resident within the taxable territories during the relevant previous year, interest income that accrued to him outside the taxable territories would be taxable, unless it is shown that it was not brought into the taxable territories. If it is shown or it is found that such interest was not brought into the taxable territories, then the said income would be exempt from taxation under Section 14 of the Indian Income-tax Act, 1922, In the case of Parimisetti Seetharamamma v. Commissioner of Income-tax, : [1965]57ITR532(SC) the Supreme Court held that by Sections 3 and 4 the Indian Income-tax Act, 1922, imposes a general liability to tax upon all income but the Act does not provide that whatever is received by a person must be regarded as income liable to tax. In all cases in which a receipt is sought to be taxed as income, the burden lies upon the department to prove that it is within the taxing provision. Where, however, a receipt is of the nature of income, the burden of proving that it is not taxable, because it falls within an exemption provided by the Act, lies upon the assessee. In the case of Commissioner of Income-tax v. Best & Co. Pvt. Ltd., : [1966]60ITR11(SC) the Supreme Court observed as follows:

'We may point out, as some argument was advanced on the question of burden of proof, that this court did not lay down that the burden to establish that an income was taxable was on the revenue was immutable in the sense that it never shifted to the assessee. The expression 'in the first instance' clearly indicates that it did not say so. When sufficient evidence, either direct or circumstantial, in respect of its contention was disclosed by the revenue, an adverse inference could be drawn against the assessee if he failed to put before the department material which was in his exclusive possession. This process is described in the law of evidence as shifting of the onus in the course of a proceeding from one party to other. There is no reason why the said doctrine is not applicable to income-tax proceedings.'

7. It is also well settled that a High Court in disposing of a reference under Section 66 of the Income-tax Act is not concerned with the sufficiency of the evidence before the Tribunal. If there is some evidence to support the conclusion of the finding arrived at by the Tribunal this court in its advisory jurisdiction will not interfere with such finding of fact.

8. In the premises, in our view there was evidence and material before the Tribunal, in the facts and circumstances of this case, to come to the conclusion that it did. In that view of the matter the question referred to this court must be answered in the affirmative and against the assessee, The assessee will pay the costs of this reference.

Deb, J.

9. I agree.


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