LexPR. AL. M. M. ANNAMALAI CHETTIAR versus COMMISSIONER OF INCOME-TAX, MADRAS
Open in Lexace · Ask the AI about this caseJudgment (excerpt)
A B c D E F PR. AL. M. M. ANNAMALAI CHETTIAR v. COMMISSIONER OF INCOME-TAX, MADRAS October 26, 1964 (K. SUBBA RAo, J. C. SHAH ANDS. M. SIKRI JJ.) Income Tax-Purchase and sale of property in Mal.aya-Purchase in Japanese currency and sale in J,,falayan Currency-Method of coniputing profit and loss. · The assessee whose head office was in India was also carrying on busi- nciS in the Federated Malaya States. In respect of the assessment year 1951-52, the assessee claimed that a loss Vt'as incurred as a result of the sale of house properties and rubber gardens. Those properties were pur- chased by the assessee, in Malaya, during the Japanese occupation, in Japanese currency, but sold in Malayan currency after enemy occupation had ceased. The Income-tax Officer scaled down the purchase prices in accordance with the Schedule of rates contained in the Debtor and Creditor (Occupation l'eriod) Ordinance, 1948, of the Federated Malaya States. The result was that the assessee was shown to have made a profit instead of suffering any loss. On appeal by the assessee, the Appellate Assistant Commissioner and the Appellate Tribunal confirmed the order of the Income-tax Officer. The Tribunal also refused to state a case to the High Court and the High Court rejected the assessee's application to direct the Tribunal to do so. The assessee appealed to the Supreme Court. HELD : The Income-tax Officer was justified in adopting the schedule appended to the Ordinance for the purpose of ascertaining the cost price of the properties in Malayan Currency, [831 A-BJ When a property is purchased in one currency and sold in another, the profit or loss can be ascertained only when the conversion rate of the two currencies is known. The only material available to the officer for determining that common standard was the Schedule in the Ordinance. Though the Ordinance does not in terms apply to the scaling down of the coet price-it was enacted for the purpose of scaling dov./n payments made by debtors to creditors during the occupation period-still, it was the result of a careful enquiry made by appropriate and responsible autho- rities in Malaya. Even if he had adopted some other method in the previous years it did not prevent him from utilizing the' correct method for the assessment year. [830 C; 830 G-831 A; 831 B-C] S. L. N. Sathappa Chettiar Y. Comn1issioner of l11conze-tax, Madras, (1959) 35 LT.R. 641, approved. G CIVIL APPELLATE JURISDICTION : Civil Appeal No. 131 of H 1963. Appeal by special leave from the order dated July 31, 1961 of the Madras High Court in Tax Case Petition No. 44 of 1961. K. Snnivasan and R. Gopalakrishnan, for the appellant. C. K. Daphtary, Attorney-General, S. V. Gupte, Solicitor- General, N. D. Karkhanis, R. H. Dhebar and R. N. Sachthey, for 828 SUPREME COURT REPORTS [1965] I S.C.R. The Judgment of the Court was delivered by A Subba Rao J. This appeal by special leave is directed against the order of the High Court of Madras in Tax Case Petition No. 44 of 1961. The appeliant is a Hindu undivided family carrying on business with its head office at Pageneri in Ramanathapuram District, B Madras State, and also business at Paritpuntar in the Federated Malaya States. In respect of the assessment year 1951-52, the appellant showed in the return filed on his behalf a total world income of Rs. 2,13,079, which included a sum of $ 21,350 as profit from the business at Paritpuntar. In computing the said profit from the business ~t Paritpuntar the appellant claimed an c aggregate loss of $ 68,405 incurred on the sale of house property and rubber gardens QS detailed below : - --------··---·---·· ···---·· SI. No. Date of Purchase Cost price Sale price D 1. 2. 3. 4. 5. 6. 28 of Ani, Angirasa-14 Silama House. 28 Ani, Angirasa-No. 2) Silama House. 23rd A\ani, Angirasa-No. 23 Silama House. 4t54 2333 5th Avani, Subhanu-(21-8-43) Siradan House. 25453 24th Avani, Tharana (t5-9-44)-38 Garden. 53686 8th Purattasai Tbarana (23-9-44)-35 Garden. 2668 TOTAL 88294 (In doTiaro) 500 3920 1425 7000 5880 1164 19880 In respect of items Nos. I, 2 and 3 above the Income-tax Officer accepted the claim of the appellant, but in regard to the remain- mg three items, namely, items Nos. 4, 5 and 6, he held that as E F the said purchases of property and the outlay thereon were all G made during the Japanese occupation of Malaya and in Occupa- ti
Excerpt shown. Read the full judgment & AI analysis in Lexace.