9911796707
TMI Blog1971 (12) TMI 18X X X X Extracts X X X X X X X X Extracts X X X X ..... notice to the firm under section 34 of the Act on January 27, 1953. The assessee received it on January 31, 1953. The Commissioner of Income-tax exercising his powers under section 5(7A) of the Act transferred the case of the assessee to the Income-tax Officer, Central Circle III, Delhi, by his order, dated February 5, 1953. The assessee, however, addressed a letter, dated March 2, 1953, to the Income-tax Officer, Ajmer, challenging his jurisdiction and requested him to refer the question to the Income-tax Commissioner. The objection was overruled by the Commissioner by his order, dated May 18, 1953, on the ground that the Notification No. 44 had conferred jurisdiction on the Income-tax Officer, Ajmer. The assessee thereafter filed its return, in answer to the notice under section 34, on June 20, 1953. By its letter, dated July 25, 1953, the assessee also challenged the jurisdiction of the Income-tax Officer, Delhi, who rejected it on the ground that the assessee was then debarred from raising such an objection. The return submitted by the assessee showed a profit of Rs. 61,275 in Section (E) of the return, thereby raising the contention that it was not liable to pay any income-ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) Where any question arises under this section as to the place of assessment, such question shall be determined by the Commissioner, or, where the question is between places in more States than one, by the Commissioners concerned, or, if they are not in agreement, by the Central Board of Revenue : Provided that, before any such question is determined, the assessee shall have had an opportunity of representing his views : Provided further that the place of assessment shall not be called in question by an assessee if he has made a return in response to the notice under sub-section (1) of section 22, and has stated therein the principal place wherein he carries on his business, profession or vocation, or if he has not made such a return shall not be called in question after the expiry of the time allowed by the notice under sub-section (2) of section 22 or under section 34 for the making of a return : Provided further that if the place of assessment is called in question by an assessee the Income-tax Officer shall, if not satisfied with the correctness of the claim, refer the matter for determination under this sub-section before assessment is made. (4) Notwithstanding anything co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o issue notice to him. After this objection had been raised his case was transferred to the Income-tax Officer, Central Circle III, Delhi, by the Commissioner of Income-tax under section 5(7A). This order, however, could not confer jurisdiction on the Officer to whom the case had been transferred from the file of the Income-tax Officer, Ajmer, as the latter officer had no jurisdiction to issue notice to the assessee. The question as to the place of assessment was referred to the Commissioner of Income-tax under section 64(3) for decision. He held that the Income-tax Officer, Ajmer, had jurisdiction to issue notice by virtue of Notification No. 44 dated July 1, 1952. As we have pointed out above, that notification applied only to pending cases and did not empower the Income-tax Officer, Ajmer, to issue a fresh notice under section 34 in a case which was not pending on the date of the notification. The point regarding jurisdiction raised by the assessee was in essence an objection regarding the place of assessment. An assessee objecting to the place of assessment has, however, not been given any right of appeal against the decision on that objection either under section 30 or under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppeal in regard to the objection to the place of assessment is contemplated under the Act. Under proviso (iii) of section 64(3) of the Act a question as to the place of assessment, when it arises, is determined by the Commissioner. Any such order cannot be made a ground of appeal to the Appellate Assistant Commissioner under section 30 of the Act which provides for appeals against orders of assessment and other orders enumerated in section 30 but no appeal is there provided against orders made under section 64(3). Similarly, appeals to the Appellate Tribunal which lie under section 33 of the Act also do not provide for any appeal on the question of the place of assessment. In Wallace Brothers' case, at page 79, Spens C.J., after referring to section 64(3) and the proviso thereto, said : ' These provisions clearly indicate that the matter is more one of administrative convenience than of jurisdiction and that in any event it is not one for adjudication by the court ...... This confirms us in the view that the scheme of the Act does not contemplate an objection as to the place of assessment being raised on an appeal against the assessment after the assessment has been made. As we ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sh by the other partner, Sohanlal Golcha, of the assessee-firm at Bombay. Items (a), (b) and (c) were received in cash on behalf of the assessee in Bombay, British India, towards the price of the goods supplied by the assessee to the buyers and are clearly covered by the language of section 4(1)(a), which reads : " 4. Application of Act.- (1) Subject to the provisions of this Act, the total income of any previous year of any person includes all income, profits and gains from whatever source derived which- (a) are received or are deemed to be received in the taxable territories in such year by or on behalf of such person, or .... " The principle underlying the relevant part of section 4(1) of the Act is to make the income liable to tax dependent upon the locality of accrual or receipt. Amongst the three categories of the assessees envisaged under the Act the assessee before us is indisputably " non-resident " because it ordinarily carried on business in Udaipur, a territory outside the taxable territory in the assessment year 1945-46. The transactions covered by items (a) and (b) are actually the deposits made in the assessee's accounts in British India and item (c) was receive ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xable territories and the profits and gains in respect of the sales made to the Government of India must be deemed to have been received by the assessee outside the taxable territories. The burden of proving that the assessee received any income, gain or profit within the taxable territories is on the revenue. The department cannot ask the court to presume facts and circumstances in its favour. The factum of the cheques towards payment for supplies having been sent through post must be proved and cannot be presumed." In Keshav Mills Ltd. v. Commissioner of Income-tax, Turner Morrison & Co. Ltd. v. Commissioner of Income-tax and Zoraster & Co. v. Commissioner of Income-tax, it has been held that the realisation of the cheques in British India does not alter the fact regarding the receipt of the payment. The crucial test, however, is in regard to the place where the sale was made or the payment was received. The learned Tribunal on its own showing has proceeded on the assumption in regard to the request made by the assessee for sending the price of the products by means of cheques and about the cheques being sent from British India. We are in respectful agreement with the view take ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me-tax and Commissioner of Income-tax v. Bhopal Textiles Ltd. Put in other words, the question is whether the amount of money, which the assessee's bankers credited to the assessee's accounts, in the non-taxable territory, could be called the price of the goods supplied by the buyer. The answer to this question, in our opinion, must be in the negative. In Seth Pushalal Mansinghka's case the facts were these. The assessee had its mica mines at Bhilwara in Part B State. It exported mica by rail to Kodarma and Giridih in Part A and Part C States respectively. The purchaser's agents before purchase visited Bhilwar, inspected the quality of the mica they wanted to purchase and thereafter entered into contracts, which were to be of Bhilwara godown delivery. The railway receipts were sent through the banks. Twenty-five per cent. of the price was paid in advance. The banking charges were to be borne by the buyers. On leaving Bhilwara the consignments were entirely at the buyer's risk. The assessee-firm of Bhilwara consigned the goods to self. the railway receipts and bills of exchange were given to the Rajasthan Bank for collection. The railway receipts were endorsed in favour of the ban ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oods. The railway receipt was given on payment in British India and the property in the goods was thus transferred. The bank acted as the assessee's agent and not that of the buyer because the bank was to obey the seller's instructions. Commissioner of Income-tax v. Shivanarayan Harigopal no doubt supports the contention of the assessee. The facts of this case were that goods from Indore (non-taxable territory) were sent to the taxable territory. Proceeding on the ground that the bank, after purchasing and discounting an instrument from the customer, credited the customer with the amount of the instrument and allowed him to draw against the amount so credited before the bill of instrument was cleared, then the bank was collecting the money not for the customer but chiefly for itself. In such a case, the bank did not act as a mere conduit pipe for conveying the instrument to the person on whom it was drawn and received the money from him for its customer and the position of the bank as a holder for value of the instrument was not converted into one of agent for collection on behalf of the customer merely because, in the event of default in payment by the person in whose name the ne ..... X X X X Extracts X X X X X X X X Extracts X X X X
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