COPY.
CONFIDENTIAL.
SIMLA.
11. 7. 39.
159
My dear Caine,
Huxham of Ceylon tells me that he has passed on to
you my letter on the subject of investigating the possibilities
of imposing an Income Tax in Hong Kong, and that he has suggested that we correspond direct.
I need not repeat what I said in that letter, but
having discussed the matter informally with Raisman, the new Finance Member here, (without mentioning that the place in question is Hong Kong) I am now in a position to explain the
circumstances in which I could get away from India for the
purpose of making the investigation, reporting and drawing up
a scheme in detail.
As the Indian Income Tax Act has been completely
revised by legislation passed early this year as a result of the recommendations which were made by an Enquiry Committee of
which I was a member, we are now in the throes of giving
effect to these changes. In addition to this I am engaged on tightening up the administration which had become slack, and in places very corrupt, and which in certain respects had been developing on wrong lines. Although this work is
proceeding smoothly enough and the results which are emerging
from the reforms are gratifying, this year is naturally a
very critical one and it would be virtually impossible for
me to get away before February of next year. What I could
do, however, would be to leave India in February, arriving in
Hong Kong at the end of that month travelling by sea so
as to get the advantage of a short rest and spend March, April, May, June, and perhaps part of July in Hong Kong.
Having initiated so many changes here, fought for them (in