Judgement

Consolidated Appeals and Cross-appeal (No. 75 of 1931) from a judgment of the High Court (November 25, 1929) on questions referred to the Court under s. 66, sub-s. 2, of the Indian Income-tax Act, 1922.

The questions referred related to an assessment under the above Act made upon the Maharajadhiraja of Darbhanga, since deceased and represented by his eldest son, for the year 1926-7. With two exceptions the questions were as to profits from money-lending transactions, tax being chargeable thereon under s. 12, as income from " other sources." The year in which the profit was assessable was that ending September 30, 1925. Two main matters for determination were (1.) whether, having regard to the manner in which the assessee had kept his books, the method adopted by the income-tax officer in assessing the interest received in the year was lawful; (2.) as to appropriation between principal and interest where (a) sums had been received in running account against principal and interest, and (b) where realizable assets and promissory notes of the debtor had been taken in satisfaction of principal and interest. A further question which arose was &s to the profits chargeable under