THE COMMISSIONER OF INCOME-TAX, BOMBAY versus DHARAMDAS HARGOVINDAS.

Citation: [1961] 3 S.C.R. 731 · Decided: 03-02-1961 · Supreme Court of India · Bench: P.B. GAJENDRAGADKAR · Disposal: Appeal(s) allowed

Judgment (excerpt)

3 S.C.R. 
SUPREME COURT REPORTS 
THE COMMISSIONER OF INCOME-TAX, 
BOMBAY 
v. 
DHARAMDAS HARGOVINDAS. 
(P. B. GAJENDRAGADKAR, A. K. SARKAR and 
K. N. WANCHOO, JJ.) 
731 
Income Tax-Income already recehed outside taxable territory-
Brought into or received in taxable territory--Liability to tax-If 
must be first receipt in taxable territory-Income-tax Act, I922 (II 
of I922). S. 4 (I)(b){iii). 
The assessee, resident in British India, had some money in 
deposit with a concern in Bhavnagar, outside British India. On 
April 7, r947, he transferred part of it to a concern in Bombay. 
He was assessed to tax on this amount under s. 4(1)\b)(iii) of the 
Income-tax Act. The assessee contended that to attract the 
application of s. 4(1)(b)(lii) the receipt in the taxable tefritory 
must be the first receipt of income. 
Held, th•t the assessee was liable to tax on this amount. 
Per Gajendragadkar and Wanchoo, JJ.-Where a person, 
resident in the taxable territories, has already received, outside 
the taxable territories, any income etc. accruing or arising to him 
outside the taxable territories before the previous year brings 
that income into or receives that income in the taxable territories 
he would be chargeable to income-tax thereon. Though for the 
purposes of cl. (a) of s. 4 the receipt must be the first receipt of 
income in the taxable territories, for the purposes of cl. (b)(iii) 
the receiving in the taxable territories need not be the first 
receipt. 
Keshav Mills ltd. v. Commissioner of Income-tax [1953] S.C.R 
9 50, referred to. 
Per Sarkar, J.-The income could not be said to have been 
"received" in the taxable territory within the meaning of cl. (b)(iii) 
as income could be received only once. But it is clear that the 
assessee "brought into" Bombay that income. It was immaterial 
in what shape he received the income in Bhavnagar and in what 
shape he brought it in Bombay. 
Keshav Mills Ltd. v. Commissioner of Income-tax [1953] S.C.R. 
950, Board of Revenue v. Ripon Press (1923) I.L.R. 46 Mad. 706 
and _Sundar Das v. Collector of Gujrat (1922) l.L.R. 3 Lah. 349, 
applied. 
Gresham Life Assurance Society ltd. v. Bishop [1902] A.C. 2 87 
and Tennant v. Smith [18<)2] A.C. 150, referred to. 
CIVIL APP]jJLLATE JURISDICTION: 
Civil Appeal No. 
240 of 1955. 
196r 
February 3· 
732 
SUPREME COURT REPORTS 
[1961] 
r96r 
Appeal by special leave from the judgment and 
C 
--:--
"order dated September 3, 1953, of the Bombay High 
ommissioner o1 C 
. I 
R c 
Income-tax, 
ourt Ill ncome-tax 
eierence No. 15 of 1953. 
Bombay 
Hardayal Hardy and D. Gupta, for the appellant. 
Dha:·mdas 
G. S. Pathak, S. P: Mehta, S. N. Andley, J.B. Dada-
H••govindas 
chanji, Rameshwar Nath and P. L. Vohra, for the 
respondent. 
1961. February 3. The Judgment of Gajendragadkar 
and Wanohoo, JJ. was delivered by 
Wanehoo J. 
WANCHOO, J.-In this matter by our order made on 
April 24, 1958, we had referred the case back to the 
Tribunal to submit a further statement of case on 
certain questions. That statement of case has now 
been drawn up by the Tribunal and sent to this Court. 
The matter is now ready for decision. 
This is an appeal by the Commissioner of Income-
tax, Bombay, against the judgment of the High Court 
at Bombay given on a reference under s. 60(2) of the 
Income-tax Act answering the question referred, in 
the negative. That question was, "Whether, in any 
event, on the facts found by the Tribunal, there was 
any remittance by the petitioner to Bombay within 
the meaning of and assessable under s. 4(1) (b) (iii) of 
the Income-tax Act." The assessment year concerned 
was 1948-49, the accounting year being 2003 Sambat. 
The facts found may now be stated. At the relev. 
ant time, Bhavnagar was a ruling State and therefore 
outside British India. There was a mill there which 
we shall, for brevity, call the Bhavnagar Mills. The 
assessee and his brother Gordhandas had large sums 
in deposit with the Bhavnagar Mills. These sums 
were profits earlier earned by the assessee and his 
brother in Bhavnagar. The amounts deposited belong-
ed to the assessee and his brother in equal shares. 
The Bhavnagar Mills kept an account of these 
deposits. This· account showed that on April 7, 1947, 
a sum of Rs. 50,000/- had been paid out to Harkison-
das Ratilal and another sum of the same amount 
to Dilipkumar Trikamlal. There is another mill in 
Bombay which we shall call the Bombay Mills. The 
account of the Bombay Mills showed that on April 3, 
3

Excerpt shown. Read the full judgment & AI analysis in Lexace.