Law:

Section:

Section 9 of the Income-tax Act, 1961 (Corresponding to section 4(1)(b)(ii) of the Indian Income-tax Act, 1922) - Income - Deemed to accrue or arise in India - Whether revenue is concerned with income, gains or profits earned during year of account, and even if all assets of business had not been sold, assessee can still be taxed on such of those profits as computed under provisions of Act in year of account - Held, yes - Whether it could not be said that legislature intended to exempt income or profits or gains accrued to a resident but not ordinarily resident from tax in respect of amounts accrued in year of account and to impose tax only on income earned or accrued in prior years - Held, yes - Whether clause (b)(ii) of section 4(1), is to be taken as covering income of a resident accrued and remitted during year and clause (b)(iii) covering cases of accrual of income in previous years but remitted in taxable territories during relevant year - Held, yes FACTS The assessee was a "resident but not ordinarily resident" person. He carried on business in real properties in foreign country. In the previous year ending on 31-12-1957, he sold two rubber estates leaving certain surplus. He made certain remittance to the taxable territories during the year. The assessee contended that those remittances were not taxable, as they were not remitted out of profits and that the profit on sales of the estate could be ascertained only when all the estates purchased by him had been completely sold. The ITO rejected these contentions holding that in terms of the second proviso to section 4(1) of the Indian Income-tax Act, 1922, the entire sum brought into or received in the taxable territories was taxable. The AAC held that the remittances were not taxable as there was no surplus available as revenue profits for remittance if the deductions claimed by the assessee had been allowed. He, however, did not accept the assessee's other contention that no amount could be considered as profits on the sale of the estates in the year of account. According to the Tribunal in working out the available surplus the AAC had wrongly deducted the outgoings incurred after the various dates of…

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