TMI Blog1976 (3) TMI 2X X X X Extracts X X X X X X X X Extracts X X X X ..... als Nos. 980 to 982 of 1971 which have been filed by special leave against the judgment of the Andhra Pradesh High Court on a reference under section 66 of the Indian Income-tax Act, 1922 (hereinafter referred to as the Act), answering besides two other questions with which we are not concerned, the following question against the assessee-appellant and in favour of the 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a". All payments were made on behalf of the Government of India by cheques, which were sent to the assessee by post. Some of these cheques were drawn on banks in British India and the others on banks in Hyderabad State. All the cheques received from the Government, including those drawn on banks in British India, were collected through the assessee's bankers in Hyderabad State. 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 accrue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re is, in our opinion, no force in this contention. It would appear from the resume of facts given above that all payments were made on behalf of the Government of India by cheques and those cheques were sent by post from British India to the assessee. The facts of the case and the course of dealings show that it was the understanding between the Government of India and the assessee-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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t Treasury in India or on a branch of the Reserve Bank of India or the Imperial Bank of India transacting Government business." The assessee submitted the bill in the prescribed form and wrote on it as follows: "Kindly remit the amount by a cheque in our favour on any bank in Bombay." The assessee received cheques drawn on the Bombay branch of the Reserve Bank of India. The assessee 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 conditional ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e cheques by post. In Jagdish Mills' case the assessee-company was incorporated in Baroda State outside British India. The company accepted orders for the supply of goods f.o.r. Baroda to the Government of India. The manufacture and delivery of goods took place at Baroda. The company after effecting delivery of the goods submitted bills in the prescribed form which contained the sentence 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Bank of India, Bombay, and sent them by post to the assessee at Indore. The assessee deposited the cheques in its account with the Imperial Bank of India, Indore, and on clearance, the amounts were credited to that account. Question which arose for decision was whether the assessee-company was liable to pay tax in the taxable territories on the ground that the sale proceeds, which included 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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