Judgement

Appeal (No. 64 of 1942) from an order of the High Court (April 8, 1941) answering adversely to the appellant a question contained in a reference under s. 66, sub-s. 3, of the Indian Income-tax Act, 1922, made by the respondent and dated March 20, 1941.

The following facts are taken from the judgment of the Judicial Committee The year of assessment concerned was the year 1936-37, the relevant accounting year being the year ended December 31, 1935. Throughout the accounting year and the year of assessment the appellant was an unregistered and unincorporated association of individuals. Its activities consisted in the acquisition of yarn, and also raw cotton, which was then given out to various poor people to be spun by them into yarn, all of which yarn was then given out to other poor people for hand-weaving into cloth. The cloth so produced for the appellant was then sold by the appellant. During the relevant accounting year those activities resulted in a profit to the appellant. The appellant also had income from interest during the same year, and the appellant was assessed to income-tax and super-tax for the year 1936-37 on the whole of such profit and income.

The questio