LexSMT. INDERMANI JATIA versus COMMISSIONER OF INCOME-TAX, U.P., LUCKNOW
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(1) S.C.R. SUPREME COURT REPORTS 45 is applied solely to the purpose of the institution and x95B the business is carried on in the manner provided. It The Commissioner is enough to say that the scheme, considered as a of Income-tax. business, was not carried on on behalf of any religious Madhya Pradesh or charitable institution. Once it is held that the and Bhopal assessees made the profit, bow they use it would not v. matter. Messrs. Vyas c;. In the result, we would answer both parts of the Doliwula question framed, in the affirmative. We bold that the Sarkar J. profits were the income which accrued to the a.ssessees and such income is assessable to income-tax and is not exempt from taxation under s. 4(3)(i-a). The appeal is allowed with costs here and below. Appeal allowed. SMT. INDERMANI JATIA v. COMMISSIONER OF INCOME-TAX, U.P., LUCKNOW (VENKATARAMA AIYAR, P. B. GAJENDRAGADKAR and A. K. SARKAR, J J) Income-tax-Mercantile system of accounts-Accounts in India showing credit entry of receipt of interest from Indian State-If such amount liable to tax-New point-Indian Income-tax Act. z9:z:z (XI of z9:z:z), s. 4 (I)(a). The assessee, who was ordinarily resident in British India, carried on ·business at Khurja and Aligarh in India and at Chistian in the Indian State of Bahawalpur. He kept a central set of accounts of the business at Khurja, which were maintained on the mercantile system. Under the said system credit entries are made in respect of amounts due immediately they become legally due and even before they are actually received. In his account books the income received by the assessee froll\ all sources was ~ shown, and the interest · account showed credit entries of amounts received as interest on capital invested in the shop at Chistian. The assessee conceded that as creditor he had the right to enforce the payment of interest in British India and that liability of the Chistian shop had been extinguished to the October 3. Smt. lndermani jatia v. ·· Commissioner of Income-lax. U.P., LucAnow 46 · . SUPREME COURT REPORTS [1959] Supp. extent of the interest paid by it to the head office. The Income- tax Authorities included these amounts in the assessee's taxable income in India and levied tax on them. The assessee contend- ed that the entries in respect of the receipt of interest were merely book entries and that the authorities had wrongly treated these amounts as having been actually received. Held, that the relevant entries in the books of account did justify the inference that the assessee had actually received the amounts by way of interest. Where an assessee keeps accounts according to the mercantile method of book-keeping the effect of making a credit entry in the interest account would be to treat that amount as income or profits received by the assessee or treated by him as received for the purposes of the tax. . Commissioner of Income-tax v. A.T.K.P.L.S.P. Subramaniam Chettiar, (1927) I.L.R. 50 Mad. 765, approved. Gresham Lif.e Assurance Society Ltd. v. Bishop, (1902) A.C. 287 ; K eshav M •lls Ltd. v. Commissioner of Income-tax, Bombay, . [1953] S.C.R. 950; Sunder Das v. The Collector of Gujrat, (1922) I.L.R. 3 Lah. 349, refetred to. The assess~e sought to raise a new point that it was a rule of universal application that no person could trade with himself and that accordingly the interest alleged to have been received ftom his own shop at Chistian could not amount to receipt of any income by him, and referred to: Dublin Corporation v. M'Adam, (1887) 2 Tax Cas. 387; Ostime v. Pontypridd and Rhondda Joint Water Board, (1944) 28 Tax Cas. 261; Carlisle and SiUoth Golf Club v. Smith, (1913) 6 Tax Cas. 198; New York Life Insurance Company v. Styles, (1889) 14 App. Cas. 381; Sir Kikabhai Premchai1d v. Commissioner of Income-tax (Cent- ral) Bombay, [1954] S.C.R. 219 and Ram Lal Bechairam v. Commis- sioner of Income-tax, A.LR. (1946) All. 3. The respondent contended that the principle was not inflexible or universal and that the new point having been raised for the first time in appeal i ought not to be permitted to be raised. Sharkey v. Wernher, (1956) A. C. 58, referred to. Held that, the new point could not be allowed to be raised as that would mean the re-opening of the whole enquiry into the question as to the remittances from Chistian to Khurja as well as the rates at which the tax were to be levied on the assesse
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