9911796707
TMI Blog1976 (3) TMI 2X X X X Extracts X X X X X X X X Extracts X X X X ..... revenue: "Whether, on the facts and in the circumstances of the case, the sale proceeds were received from the Government of India in British India ?" The assessee-company is a public limited company registered in what was at the relevant time the Nizam's Dominion (hereinafter referred to as Hyderabad State) outside British India. The matter relates to assessment years 1945-46, 1946-47 and 1947-48, for which the relevant accounting period ended on October 5, 1944, October 5, 1945, and October 5, 1946, respectively. The assessee-company had a textile mill at Warangal in Hyderabad State. During the Second World War the company supplied textile goods to the Department of Supplies, Government of India, under what was known as "Panel Syst ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In making the assessment the Income-tax Officer held that the sale proceeds in respect of cheques, which had been drawn on banks in British India, were received by the assessee in British India and as such the assessee was liable to tax under the Act. In respect of cheques drawn on the banks in Hyderabad State, the Income-tax Officer held that no income had accrued in British India and was, therefore, not subject to assessment under the Act. The assessee took the matter in appeal to the Assistant Commissioner claiming that no portion of the income had been received in British India. The Appellate Assistant Commissioner held that the entire sale proceeds had been received in British India and he, therefore, passed an order enhancing the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee-company that the payment would be made on account of the goods supplied by the assessee by cheques. The cheques were in the very nature of things to be sent from British India by post as that is usual and normal agency for transmission of such articles. As the cheques were sent to the assessee-company on behalf of the Government of India by post from British India in pursuance of an understanding between the parties, the payment to the assessee shall be treated to have been made in British India. The post office in such cases is taken to be an agent of the assessee-company. The position in law is that in the absence of a request by the creditor or an agreement between the parties regarding the sending of money by cheque by post, the m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e realised the amount of the cheques through the Aundh Bank. It was held that the posting of cheques in Delhi in law amounted to payment in Delhi. It was further observed that the circumstances of the case revealed an implied agreement under which cheques were accepted unconditionally as payment. Even if the cheques, according to this court, were taken conditionally the cheques having been not dishonoured, the payment related back to the dates of the receipt of the cheques and in law the dates of payment were the dates of the delivery of the cheques. Income, profits and gains in respect of the sales made to the Government of India were accordingly held to have been received by the assessee in British India. Dealing with the question of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ence that "Government should pay the amount due to the company by cheque". There was, however, nothing in the bills to show in what way the payment by cheque was to be made. The company thereafter received at Baroda, in payment of its bills, cheques through post from the Government drawn on a Government Treasury or on a branch of the Reserve Bank of India or the Imperial Bank of India transacting Government business. The company endorsed the cheques and sent them either to Bombay or Ahmedabad in its banking account at such places. It was held that according to the course of business usage in general which was followed in the case, the parties must have intended that the cheques should be sent by post which was the usual and normal agency fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... luded the profit element therein, were received in the taxable territories. It was held that if by an agreement, express or implied, between the creditor and the debtor or by request, express or implied, by the creditor, the debtor is authorised to pay the debt by a cheque, and to send the cheque to the creditor by post, the post office becomes the agent of the creditor to receive the cheque and the creditor receives payment as soon as the cheque is posted to him. It was also held that there was an implied agreement between the parties that the Government of India would send the cheque by post to the assessee. The sale proceeds which included the profit element therein were, in the opinion of this court, received in British India where the ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
