TMI Blog1942 (9) TMI 9X X X X Extracts X X X X X X X X Extracts X X X X ..... h and yarn of the Company, and it was provided in clause (5) of the agreement that the commission should be due to the assessee firm yearly on the 31st day of December in each and every year during the continuance of the agreement and be paid immediately thereafter. The facts as found are that sales were effected in Indore, being on terms F.O.R. Indore; the purchasers being Bombay merchants, the purchase money were received in the form of hundis drawn by the assessees through their Indore shop, and accepted by the Bombay purchasers; such hundis were collected by the assessees in Bombay, and after realisation paid to the Company in Indore. So that, the position being that sales were effected outside British India, the proceeds of such sales were collected by the assessees in British India, and the Commission of one per cent. was ultimately paid outside British India, the question is whether it can be said that the commission of one per cent. accrued or arose in British India within the meaning of Section 4(1) of the Income-tax Act. The commission payable at the end of the year was paid in Indore and not received in British India. We were referred to a decision of this Cour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the decisions in the two cases must necessarily be different. I would, therefore, answer the first question in the negative. The second question arises in this way. The assessees had, apart from their commission agency business, two other businesses, one of them being cotton speculation and banking, and the other cotton Jatha business. The findings of the Commissioner are that these were two separate businesses; separate sets of account books were maintained for the two businesses; they were conducted in different names; and to a great extent they were distinct in their character. The cotton Jatha business consisted in selling cotton belonging to up-country clients and earning income thereby in the form of brokerage, godown rent, muccadami, insurance differences, etc., while the other business consisted of banking, speculation and cotton on the assessees' own account. On those facts the Commissioner came to the conclusion that the two businesses were separate. On the other hand the assessees maintain that they were two branches of one business. The relevance of the question is this. The cotton Jatha business was closed down before the year of assessment, but ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ure does not necessarily mean that they are distinct businesses. You can have two branches of a multiple store, one selling drugs, and the other selling cloth. Nobody would suggest that these two departments constitute two different businesses. On the other hand, if you have a shop in Bombay selling cloth, and a shop in Ahmedabad selling drugs under different names and different management and under separate accounts, common ownership would hardly make them one business. Mr. Justice Rowlatt in Scales v. George Thompson Co., Ltd. [1923] 13 Tax Cas. 83, suggests that there must be some sort of interrelation between the two businesses, to constitute the branches of the same business. At any rate all these cases recognise the fact that this matter is a question of fact to be determined by the Commissioner, and if there is any evidence enabling him to determine the question, then his determination is final. I am unable to say that there was no evidence in this case on which the Commissioner could come to the conclusion which he reached, that these were two distinct businesses. These two businesses may have overlapped to some extent, but there was evidence that they were separate in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It was argued on behalf of the Commissioner that the receipt of the sale proceeds is the source from which the income accrued. In my opinion, this contention is unsound. The receipt of the sale proceeds at a particular place is not stated to be a part of the contract between the Mill Company and the merchants. The accident, therefore, of the sale proceeds being received in Bombay cannot make the source of the income in Bombay. To illustrate, suppose instead of the assessees receiving the sale proceeds, the same were recovered by a bank in Bombay, and credited by the Bank to the account of the assessees which was being operated upon by the assessees from Indore and also by their manager in Bombay, I fail to see how the receipt of the sale proceeds from the merchants in Bombay by the bank would constitute a source of the income in Bombay. The underlying assumption that the receipt of the sale proceeds is a source, in my opinion, is unjustified. The commission had to be calculated on the amount of the sale proceeds. It was payable however only after the end of the year. Therefore, the receipt of the sale proceeds does not give rise to the accrual of the income in British India. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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