Law:

Section:

Section 29, read with section 256, of the Income-tax Act, 1961 (Corresponding to section 10(2), read with section 66, of the Indian Income-tax Act, 1922) - Business income - Computation of - Assessment year 1946-47 - Appellant-assessee, who was dealing in silver and gold, dispatched certain sovereigns from his Bombay branch to other branch at Karachi - Appellant claimed that sovereigns despatched to Karachi could not be sold but he made certain profit at local sales in Bombay - He showed that profit at 0.06% of total sales - ITO held that profit declared was too low and, hence, estimated profit at 0.5% of total sales and made additions, AAC as well as Tribunal upheld additions so made - Income-tax authorities had not found that on comparison of rates at which sovereigns were debited in Bombay branch and rates at which they were credited in Karachi branch, any profit was earned by Bombay branch - It was not suggested that commission earned by Bombay branch in sending sovereigns to Karachi branch was in nature of profits and not service charges - Whether, on facts, question of law did arise out of order of Tribunal - Held, yes FACTS The appellant-assessee carried on business of gold and silver and had his head office at Calcutta. It also had its branch offices at Bombay, Karachi and other places. During accounting year relevant to the assessment year 1946-47, out of 1,80,997 sovereigns purchased by the appellant in his Bombay branch, 1,66,188 pieces were despatched to Karachi and 14,309 pieces were sold locally in Bombay. The appellant contended that certain pieces of sovereigns were dispatched by him at cost price to his Karachi office, and were not sold and that by the sale of 14,309 pieces in Bombay, he had earned a profit of Rs. 6,462 which was 0.06% of total sales. The appellant produced before the ITO the journal of the Bombay branch showing the record relating to dispatch of 1,66,188 sovereigns to the Karachi branch, and the commission and the transport charges, etc., incurred in that behalf. The ITO held that the profit shown by the appellant was too low. He, therefore, estimated its profits at 0.5% of total sales value at Rs. 56,901 and added to income…

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