The main legal point established in the judgment is that the assessee could not raise a question of law before the High Court that was not referred by the Commissioner of Income-tax or refused to be referred by him. Additionally, the court established that the presumption as to foreign remittances being out of profits could be rebutted by the assessee, and the onus of doing so was upon the assessee.

Beasley, C.J.

1. In accordance with order of the High Court dated 24th April 1929 three questions have been referred to the High Court under Section 66 (3), Income-tax Act by the Commissioner of Income-tax, Madras. Those questions are: (1) whether a sale and conveyance by a debtor of the assessee in respect of a money lending business carried on by the assessee out of British India in discharge of the principal and interest of debt due to such business of lands situate in British India amounts to a remittance into British India of profits of the assessee made in that foreign business; (2) whether the presumption as to foreign remittances being from out of the profits is applicable or available in a case where the dealings between the British and the foreign business consist of large sums of money being more or less regularly repaid by remittances by the foreign business and (3) whether the said presumption is applicable or available in a case where the moneys remitted are in the current dealings account and debited to such account and not to the personal or profits account of the assessee and where interest earned every year by the British Indian business in respect of such dealings is included in the assessment of the British Indian business.

2. Question (1) was not submitted to the Commissioner of Income-tax for reference to the High Court when the assesses under Section 66 (2), Income-tax Act, required the Commissioner to refer the other two questions to the High Court; and the High Court in directing the Commissioner of Income-tax to refer all the three questions reserved to the Commissioner the right to contend that the reference on the first point did not lie at all by reason of the fact of its not haying been submitted to him under Section 66 (2) of the Act. That question was fully argued on the reference. The Commissioner by his order on the petitioners application dated the 23rd February 1928 stated that his request could not be granted, that Section 66 (1) had no application and that the petitioner could have preferred an application under Section 66 (2) but did not so. Admittedly, the petitioner did not prefer an application under Section 66 (2) but Mr. V.V. Sreenivasa Ayangar contends that the High Court can nevertheless require the Commissioner to refer the question under Section 66 (1) if the question raises an important point of law for decision. He further contends that, even if Section 66 (1) has no application, then under Section 45, Specific Relief Act, the High Court can decide the question. On the former question he relies upon a decision of the Privy Council in Alcock Ashdown and Co, Ltd., v. Chief Revenue Authority of Bombay A.I.R. 1923 P.C. 138. In that case it was held that it is the duty of the Chief Revenue Authority under Section 51, Income-tax Act, 1918, to state a case and refer it to the High Court when in the course of an assessment a serious question of law arises. On page 752 (of 47 Bom.) Lord Phillimore stated In their Lordships view, always supposing that there is a serious point of law to be considered, there does lie a duty upon the Chief Revenue Authority to state case for the opinion of the Court, and if he does not appreciate that there is such a serious point, it is in the power of the Court to control him and to order him to state a case.

3. It was argued the Section 51, Income-tax Act of 1918, is similar to Section 66 of the present Act namely, the Income-tax of 1922. Section 51, Income-tax Act of 1918 is as follows:

If in the course of any assessment under this Act or any proceeding in connection therewith other than a proceeding under Chapter 7 a question has arisen with reference to the interpretation of any of the provision of this Act or of, any rule there under, the Chief Revenue authority may, either on its own motion or on reference from any revenue officers subordinate to it, draw up a statement of the case and refer it, with its own opinion thereon, to the High Court, a