COMMISSIONER OF INCOME TAX Vs. S KM SP MEYYAPPA CHETTIAR KARAIKUDI

JUDGEMENT

(1.) THE assessee is a Nattukottai Chettiar whose headquarters are in Karaikudi. He is a partner with two other Chettiars in a money-lending business carried on in Teluk Anson and at Kambar in the Federated Malay States. THE Kambar business had resulted in considerable profits before the Teluk Anson business was started on the 12th December 1936. On the 14th December 1936, the partners borrowed from another Chettiar firm doing business in Teluk Anson the sum of Rs. 27,500. This money was divided between the partners and the assessee received as his share, Rs. 7,500, which his agent in Teluk Anson then remitted to Karaikudi. To pay off the lender, the assessee and his partners transferred profits from the Kambar branch to Teluk Anson branch and out of the remittance of profits, they fully discharged the loan. In the circumstances the Income-tax authorities have treated this remittance of Rs. 7,500 by the assessee as a remittance of profits in respect of the year of assessment, 1937-38. THE assessee contended that the order of the Income-tax authorities was wrong and asked the Commissioner of Income-tax to refer for the decision of this Court the following question :

(2.) THE Commissioner of Income-tax complied with the assessees request for a reference, and the Court is now called upon to give the answer.