TMI Blog1964 (10) TMI 98X X X X Extracts X X X X X X X X Extracts X X X X ..... o British Indian buyers were again divisible into two categories : (1) sales to the extent of ₹ 5,30,460 were such that in the bills in respect of those sales there was a request that the sale proceeds should be paid by demand draft on Rajkot ; and (2) so far as the remaining sales were concerned, neither the mode nor the place of payment was specified in the bills in respect of those sales since the sale proceeds were received by the assessee in advance of the sales. The goods which formed the subject-matter of these sales were sent by rail from Dhrangadhra to various places in British India. The prices charged were for Dhrangadhra and the railway receipts were taken in the names of the buyers and were either sent to the buyers by post or handed over to the buyers or their agents. The sale proceeds in respect of the first category of sales where the payment was required by demand draft on Rajkot were in fact received by the assessee by demand drafts sent by buyers by post while the sale proceeds in respect of the remaining sales were received by the assessee by cheques sent by buyers through post to the assessee in Dhrangadhra. The assessee being a non-resident company, i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax Officer, Central Circle IV, Delhi, who had jurisdiction to assess the assessee and not the Income-tax Officer, Surendranagar. Thereafter there was some further correspondence between the Income-tax Officer and the assessee, but it is not necessary to refer to it in any detail since it does jot throw any light on the question before us. It is sufficient to state that the assessee produced before the Income-tax Officer its books of account and bill books in respect of sales effected by it during the year of account. The Income-tax Officer on this material came to the conclusion that the sale proceeds Were sent by British Indian buyers to the assessee by cheques and demand drafts through post pursuant to an express or implied request from the assessee and the post office, therefore, acted as agent of the assessee in the matter of transmission of the cheques and demand drafts and since the cheques and demand drafts were posted in British India the sale proceeds were received by the assessee in British India and the profit of ₹ 1,56,808 embedded in the sale proceeds was accordingly taxable under section 4(1)(a). The Income-tax Officer also negatived the objection of the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d decided against it, namely, that the Income-tax Officer, Surendranagar, had no jurisdiction to assess the assessee by reason of Entry 78A in the notification dated 1st July, 1952. The Tribunal, however, rejected this ground and in addition to the reasons given by the Appellate Assistant Commissioner, the Tribunal gave a further reason, namely, that the burden of showing facts necessary to bring the case within entry 78A was on the assessee and the assessee had failed to discharge that burden as no facts relating to the control or exercise of the affairs of the company relating to the period 1st September, 1939, to 31st March, 1946, were placed before the revenue authorities to determine the applicability of section 78A. The Tribunal then examined the merits of the case and held that, so far as the sale proceeds to the extent of ₹ 5,30,460 were concerned, since there were instructions in the bills that the sale proceeds should be paid by demand drafts on Rajkot, the case fell within the ratio of the decision of the Supreme Court in Shri Jagdish Mills Ltd. v. Commissioner of Income-tax [1959] 37 ITR 114 ; [1960] 1 SCR 236, and the sale proceeds must be regarded as having be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sub-section (3) of section 64, the Income-tax Officer was right in refusing to consider the objection since it was raised beyond the time prescribed by the sub-section. The time prescribed by the sub-section expired on or before 2nd May, 1957, and even if any extension of time was granted by the Income-tax Officer on the application of the assessee, such extended time also expired at the end of May, 1957, and it was not until 18th February, 1958, long after the return was filed, that the assessee for the first time raised objection to the jurisdiction of the Income-tax Officer, Surendranagar. The objection was, therefore, clearly beyond the time prescribed by sub-section (3) of section 64 and the Income-tax Officer was not bound to entertain the objection and to refer it to the Commissioner for his determination under the provisions of the sub-section. Mr. S.P. Mehta, however, contended that the objection raised by the assessee was an objection to the jurisdiction of the Income-tax Officer, Surendranagar, and did not raise any question as to the place of assessment within the meaning of sub-section (3) of section 64. He tried to make a distinction between a question as to place of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gar, was, therefore, in reality and substance an objection as to the place of assessment and being covered by sub-section (3) of section 64, it could not be raised beyond the time-limit prescribed by that sub-section. We are, therefore, of the opinion that the Tribunal was right in taking the view that the objection of the assessee to the Income-tax Officer, Surendranagar, assuming jurisdiction over the assessee was nothing but an objection about the place of assessment and was, therefore, rightly not entertained by the Income-tax Officer. We must, therefore, answer question No. 2 in the negative. In view of this answer to question No. 2, it is not necessary to go into questions Nos. 1, 3 and 4, and so far as question No. 5 is concerned, it must obviously be answered in the affirmative. That takes us to the next question as regards the assessability of the profit embedded in the sale proceeds of ₹ 33,94,900 received by the assessee from British Indian buyers. Now the principles applicable to the determination of the question as to when and where payment can be said to have been received by a creditor when he receives payment by negotiable instrument sent through post are n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1 SCR 185 the request was an express request whereas in the case of Shri Jagdish Mills Ltd. v. Commissioner of Income-tax [1959] 37 ITR 114 ; [1960] 1 SCR 236, the request was implied from the facts and circumstances of that case. These are the principles which we must apply to the facts of the present case. Now when we turn to the facts we find that the sale proceeds are divided into two categories, one category being of sales to the extent of ₹ 5,30,460 where there were instructions in the bills to pay the sale proceeds by demand draft on Rajkot and the other category being of the remaining sales where there were no instructions as regards either the mode or the place of payment and the sale proceeds were received in advance. We will consider these two categories of sales separately as the application of the principle set out above to the facts of the two categories of sales might lead to different consequences. Taking up first the case of sales where the bills contained instructions from the assessee to pay the sale proceeds by demand draft on Rajkot we must first examine whether there was any agreement in regard to the place of payment between the parties. The arg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... normal agency for transmission of such articles. If that be so, there must be imported by necessary implication an implied request by the assessee to send the demand drafts by post thus constituting the post office its agent for the purpose of receiving those payments: see Shri Jagdish Mills' case (supra). We are, therefore, of the opinion that so far as the sale proceeds to the extent of ₹ 5,30,460 are concerned, they were received by the assessee in British India where the demand drafts were posted by British Indian buyers and the profit embedded in these sale proceeds must, therefore, be regarded as having been received in British India so as to be taxable under section 4(1)(a). The position is, however, different when we come to the second category of sales where sale proceeds were received by the assessee in advance and neither the mode nor the place of payment was specified in the bills or in any letters or documents prior to the receipt of the sale proceeds. In the case of these sales there was obviously no agreement between the parties in regard to the place of payment. The only question which would, therefore, require to be considered is whether there was any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lied request on the part of the assessee to remit the sale proceeds in respect of the remaining sales by cheques by post. As a matter of fact it would show that wherever the assessee required payment in any particular mode, it always gave express and specific instructions to the buyers to make payment in that particular mode and no such express or specific instructions in regard to the mode of payment having been given in respect of these remaining sales, no implication of a request can be made. It is in this connection significant to note that it was not the case of the revenue that any documents or papers were withheld or suppressed by the assessee. Moreover, the instructions contained in the bills relating to the sales of ₹ 5,30,460 showed that the assessee preferred to have payment by demand drafts on a bank in Rajkot and, therefore, if at all any inference could be drawn that the assessee might have given instructions in regard to payment in respect of the remaining sales, such instructions could only be for payment by demand drafts on a bank in Rajkot but the payment in respect of the remaining sales was made by British Indian buyers by cheques and there is nothing to s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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