Judgment :- VEERASWAMI J. The assessee, at the relevant time, was a working partner in the firm of V. T. V. Dharmaperumal Pillai, which carried on business at No. 72, Fourth Cross Street, Colombo. He was also a partner in another firm, S. K. Kanagasabapathi Pillai and Company, having its head office at Dindigul and branch offices at Tuticorin and Colombo. He has been assessed in the status of an individual and as a resident and ordinarily resident. For the assessment year 1955-56, corresponding to the accounting year ended February 1, 1955, he was assessed on a total income which included Rs. 10, 253 as foreign income after deducting the statutory allowance under the third proviso to section 4(1) of the Income-tax Act, 1922. The total foreign income consisted of Rs. 2, 400 as salary and the balance as working share of the assessee's share of profits. In the firm of V. T. V. Dharmaperumal Pillai, the Income-tax Officer noticed that a sum of Rs. 15, 000 had been credited to the assessee's personal account in the books of the Tuticorin branch of S. K. Kanagasabapathi Pillai and Company by debit to the Colombo branch account, which was traced to a credit entry for that sum received from V. T. V. Dharmaperumal Pillai and Company through the other firm at Colombo. This was taken to be a remittance on the view that it was an accretion to the assessee's balance arising out of the debit in the books of V. T. V. Dharmaperumal Pillai and Co. Nevertheless, as there was a large accumulation of taxed profits referable to a period prior to the accounting year, the computation of the foreign income for the assessment year was restricted to Rs. 10, 253 after deducting the statutory allowance. It is thus clear that the assessment of the foreign income was on accrual basis under section 4(1)(b)(ii), the Income-tax Officer being of the view that the assessee would be entitled to the benefit of the third proviso. The proceedings before the Appellate Assistant Commissioner of Income-tax as well as the Tribunal, however, concentrated on the question whether, in view of the book entries, there was a remittance of Rs. 15, 000 of the assessee's foreign income to India during the assessment year. The proceedings before the Appellate Assistant Commissioner of Income-tax as well as the Tribunal, however, concentrated on the question whether, in view of the book entries, there was a remittance of Rs. 15, 000 of the assessee's foreign income to India during the assessment year. The Appellate Assistant Commissioner, with whom the Tribunal concurred, found that the effect of the book entries was that the assessee acquired a right to draw the sum of Rs. 15, 000 in India against a loan given by him at Colombo and he having thus secured the right to draw the amount in India from S. K. Kanagasabapathi Pillai and Company at his own will at Tuticorin, this was a remittance. The Tribunal added that this was not a case of mere book entries treated as remittance, but a clear-cut case of transfer of assets to India. It was of the view that, so far as this remittance was concerned, it was not different from a clear-cut case of transfer of a foreign bank account of an assessee to a branch of the bank in India. The Tribunal made its order on August 17, 1957, dismissing the assessee's appeal. On December 28, 1956, as is seen from the statement of the case submitted to this court, there was an order under section 35, the effect of which was the whole of Rs. 14, 753 was treated as fully remitted and the statutory allowance that had been granted was withdrawn. It does not appear, in fact the Tribunal says so, that this fact was brought to its notice while it disposed of the appeal. At the instance of the assessee, the following question has been, under section 66(2), referred to this court "Whether, on the facts and in the circumstances of the case, there was material to sustain the finding of the Tribunal that the amount of Rs. 15, 000 constituted a remittance of profits to India made by the assessee in the relevant year of account ?" * In our view, the question so framed does not precisely bring out the real point in issue. In fact, it is nobody's case that the assessee, during the accounting year, made a foreign profit of Rs. 15, 000. As we mentioned, the entire basis of the assessment was under section 4(1)(b)(ii). This was but right, as the assessee's system of account was mercantile. In fact, it is nobody's case that the assessee, during the accounting year, made a foreign profit of Rs. 15, 000. As we mentioned, the entire basis of the assessment was under section 4(1)(b)(ii). This was but right, as the assessee's system of account was mercantile. This was the basis also on which he had been assessed in the previous years, and in each of the years, he was granted statutory allowance under the third proviso to section 4(1). On what basis the original order of the Income-tax Officer granting such allowance for the assessment year in question was revised under section 35, is not clear. But we are of the view that so far as Rs. 10, 253, which was brought to tax by the Income-tax Officer, is concerned, there can be no doubt that the charge should in any case be sustained on the accrual basis. The controversy, therefore, must necessarily centre round the grant of the statutory allowance. We would, therefore, reformulate the question for our consideration as under "Whether, on the facts and in the circumstances of the case, the sum of Rs. 4, 500, originally allowed as statutory deduction, was liable to be included in the total foreign income chargeable to tax ?" * On that question, counsel for the assessee has first addressed himself to the point as to whether at all there was a remittance. On April 30, 1954, in the day book of S. K. Kanagasabapathi Pillai and Co., Colombo, there was a credit in favour of the assessee through V. T. V. Dharmaperumal and Company with a sum of Rs. 15, 000. On the same day, there was a debit against V. T. V. in the name of S. K. Kanagasabapathi Pillai and Co. of a sum of Rs. 15, 000. On January 31, 1955, a sum of Rs. 15, 000 was debited in the Colombo day book of S. K. Kanagasabapathi Pillai and Co. in favour of its branch at Tuticorin, and this sum was credited in the Tuticorin accounts in favour of the assessee. The assessee would appear to have contended before the revenue at different stages as well as the Tribunal that these entries were but book adjustments and eventually had no significance and that there was actually or constructively no remittance at all of any foreign income of the assessee to India during the assessment year. The assessee would appear to have contended before the revenue at different stages as well as the Tribunal that these entries were but book adjustments and eventually had no significance and that there was actually or constructively no remittance at all of any foreign income of the assessee to India during the assessment year. This view of the entries has not been accepted by the department as well as the Tribunal, and as we think quite rightly. That the credit in favour of the assessee from V. T. V. Dharmaperumal and Company was a real one, can admit of no doubt, as seen from the fact that S. K. Kanagasabapathi Pillai and Co., as distinguished from the assessee as an individual, made use of it by debiting it against V. T. V. So far as the assessee was concerned, there was no question of adjustment in the account, and the real position was that ultimately the credit of Rs. 15, 000 in his favour in the Colombo books of S. K. Kanagasabapathi Pillai and Company was transferred to its Tuticorin branch account to his credit. The Tribunal was, therefore, right that, although no cash actually was transmitted, the effect of the credit entry in favour of the assessee in the Tuticorin branch account was that he had the right to operate upon it and draw the entire amount covered by the credit entry at Tuticorin. "Remittance" is an elastic word and is not a term of art. It is not merely where cash or value in kind physically passes or is transferred, there is a remittance. Even where there is transfer by credit entries in the books of account, and the credit entry so transferred is such that the person in whose favour it is made has a right to operate upon and draw the amount, there is remittance. Counsel for the revenue attempted to distinguish between actual remittance and constructive remittance. In the circumstances of this case, we need not go into this question. All that is necessary to say is that a transfer by book entries, without actual cash being handled, may as much result in remittance as by the physical transfer of cash. This proposition is supported by authority. In the circumstances of this case, we need not go into this question. All that is necessary to say is that a transfer by book entries, without actual cash being handled, may as much result in remittance as by the physical transfer of cash. This proposition is supported by authority. Commissioner of Income-tax v. A. T. K. P. L. S. P. Subramaniam Chettiar, decided by a Full Bench of this court, held that credit entries made on account of interest due by debtors in foreign places to the assessee must be treated as payments, though that interest was not actually paid in British India. This decision was approved by the Supreme Court in Indermani Jatia v. Commissioner of Income-tax. In taking that view the Supreme Court observed "This decision (in Commissioner of Income-tax v. A. T. K. P. L. S. P. Subramaniam Chettiar) would show that the effect of making a credit entry in the interest account would be to treat that amount as income or profits received by the assessee or treated by him as received for the purposes of the tax provided the assessee keeps the accounts according to the mercantile method of book-keeping." * The same view prevailed in Commissioner of Income-tax v. Dharamdas Hargovandas. Sarkar J. expressed his opinion "If the bringing of the bank draft would be bringing of income, I am unable to see why the bringing of a right to receive the money would not be bringing of income when that right has been exercised and turned into money's worth." Earlier the same learned judge stated " In fact anything which represents and produces money and is treated as such by businessmen, would be income." * In this case the effect of the credit entry made in the Tuticorin branch in favour of the assessee was, he had the right to operate on it and receive the entire cash, and that is, in our opinion, a receipt But we do not see how the receipt of Rs. 15, 000 will, in any way, assist the revenue so far as the third proviso to section 4(1) is concerned. Section 4 is not a charging section. That only relates to computation of total income chargeable to tax. 15, 000 will, in any way, assist the revenue so far as the third proviso to section 4(1) is concerned. Section 4 is not a charging section. That only relates to computation of total income chargeable to tax. When the assessment, as we already mentioned, of the foreign income was admittedly on accrual basis, and this is not disputed by learned counsel for the revenue, we do not see how the receipt will enable the revenue to include it in the chargeable total foreign income. The revenue could only bring it to tax on the basis of receipt. But that is not the case here. The receipt, in the circumstances, will have only relevance in the context of the assessment on the accrual basis to the grant of statutory allowance under the third proviso. The proviso says that, if the foreign income, profits and gains which accrue or arise to an ordinary resident in India without the taxable territories is more than the amount brought into the taxable territories in the relevant year, there shall not be included in the assessment of the income of such year, so much of the excess as does not exceed Rs. 4, 500. If the remittance exceeds the foreign income, profits and gains, obviously no question of granting statutory allowance can arise, for the allowance is in respect of the foreign income not remitted. But, for the revenue, the receipt of Rs. 15, 000 has been pressed into service in order to deny the assessee the benefit of the third proviso. We do not think that the stand taken by the revenue can be sustained. It may be noticed that the credit entry in the Tuticorin branch account in favour of the assessee was made only on February 1, 1955, which was not, therefore, in the accounting year. This itself would disentitle the revenue from relying on the receipt and denying the application of the third proviso. In our view, the amount brought into the taxable territories for the purposes of the third proviso should be an amount referable to the income, profits and gains which accrue or arise during the accounting year without the taxable territories. There is also another reason which may stand in the way of the revenue's contention in regard to the third proviso. There is also another reason which may stand in the way of the revenue's contention in regard to the third proviso. In the statement of the case, the Tribunal has stated that the assessee had a total taxed foreign income unremitted prior to the accounting year, amounting to Rs. 36, 565 up to the assessment year 1954-55. If, therefore, there are two funds both representing foreign income, profits and gains, one of which has already suffered tax and the other has not and there was a remittance during the accounting year of a certain sum the source for which there is no indication, there is, in our opinion, a presumption that the remittance should have been from the fund which has already suffered tax. This presumption, as was pointed out in Meyyappa Chettiar v. Commissioner of Income-tax, is, no doubt, a rebuttable one. But no attempt has been made by the revenue to rebut it, nor is there anything in the record before us to countervail the presumption. On this view, the revenue cannot rely on the receipt of Rs. 15, 000 to exclude the assessee from the statutory allowance he is entitled to under the third proviso to section 4(1)We answer the question as reframed by us in favour of the assessee with costs. Counsel's fee Rs. 250.