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THRONHILL v. THE COMMISSIONER OF INCOME TAX
NLR41V313
1940 Present:
Soertsz and Keuneman JJ.
THORNHILL v. THE COMMISSIONER OF INCOME TAX.
IN THE MATTER OF
AN APPEAL UNDER SECTION 74
OF
THE INCOME TAX ORDINANCE. S. C. No. 131.
Income Tax-Profits or income-Proceeds of sale of
tea and rubber coupons- Income Tax Ordinance, ss. 6 (1) (a) and 6
(1) (h) (Cap. 188). Income tax is payable on proceeds of the sale of
coupons issued under the Tea and Rubber
Control Ordinances.
Where an assessment is made under the wrong category the assessor
is not precluded from claiming that it comes under any other category in 6 (1)
of the Income Tax Ordinance.
THIS was a case
stated to the Supreme Court by the Board of Review under section 74 of the
Income Tax Ordinance.
The question stated to the Supreme Court was whether a sum
of Rs. 19,622.19 realized by the sale of rubber and tea coupons constitutes
profit or income within the meaning of section 6 (1) (a) or alternatively under
section 6 (1) (h) or whether the said sum represents a realization of
capital and is therefore not liable to tax; and also whether the assessor was
wrong in describing and assessing the amount in question as agricultural
income, and, if so, whether the assessment is null and void or whether the
irregularity or mistake, if any, is covered by section 68 of the Ordinance.
H. V. Perera, K.C. (with him S. Nadesan
and C. Renganathan), for assessee, appellant.-The price realized by
the sale of the coupons is not taxable. The coupons themselves are not income
but are mere documents entitling the holder to export a certain amount of
rubber and tea. The coupon in the hands of an exporter cannot be regarded as
income from any tea or rubber estate belonging to him. It is a right of export
given to a person irrespective of whether he actually produces rubber or not.
" Profits " and " income " are defined
in section 6 of Income Tax Ordinance. Income is not the same thing as receipt
of money or money's worth. It must come from some economic source like capital
or labour. The relation of income to its source should be similar to that of
the fruit to a tree or of the crop to a field-Pool v. the Guardian
Investment Trust Co., Ltd. 1 The meaning of " source of
income " has been considered in the following cases:-Fitzgerald v. The
Commissioners of Inland Revenue2; Commissioner of Income Tax,
Bengal v. Shaw Wallace & Co.3; In re Jyoti Prasad Singh
Deo of Kashipur4; Leeming v. Jones5; Brown
v. National Provident Institution6; Scoble et al. v.
Secretary of State for India 7
Income, to be taxable, should be derived from the use of
the economic source and not from the conversion of it into money-F. H. Page
v. W. Butterworth 8; A. G. Shingler v. P. Williams &
Sons 9.
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Foot Notes |
H. H. Basnayake, C.C., for
Commissioner of Income Tax
