TMI Blog1959 (5) TMI 9X X X X Extracts X X X X X X X X Extracts X X X X ..... 373 of 1957 - - - Dated:- 20-5-1959 - Judge(s) : B. P. SINHA., J. L. KAPUR., M. HIDAYATULLAH JUDGMENT The judgment of the court was delivered by KAPUR, J.-- -This appeal on a certificate by the High Court is brought against the judgment of the High Court of Madhya Bharat in a reference by the Income-tax Appellate Tribunal under section 66(1) of the Income-tax Act. The appellant is the Commissioner of Income-tax and the respondents are a firm of manufacturers of perfumery and hair oils at Ratlam in Madhya Bharat and their goods are sold throughout India. At the relevant time Madhya Bharat was a Part B State and the sole question for determination is where were the income, profits and gains received or were deemed to be received and on that would depend the rate at which the respondents would be liable to be assessed because of the concessional rates applicable to Part B States. The facts lie in a short compass. The respondents, a registered firm, were assessed for the assessment year 1950-51 at the rate or rates applicable to income, profits and gains arising or accruing in Part A States. The course of their business was this : they sent out agents to various part ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... " The facts, however, in this case are entirely different. It appears from the printed advice sent by the assessee to its bankers in every case that the bankers are to hand over the goods against 'payment of the enclosed demand draft'. It is not a case where the assessee gives unconditional discharge on the receipt of either a cheque or a bank draft. We agree with the Appellate Assistant Commissioner that sale proceeds to the extent of Rs. 2,85,376 were received at Bombay." Both the assessees and the Commissioner applied for a reference to the High Court under section 66(1) of the Income-tax Act and the following two questions were referred : Q. 1 : " Whether the receipt of sale proceeds at Ratlam (which included the assessee's profits) in respect of goods sent by the assessee to customers in Part A or C States by V. P. P. amounted to receipts of income, profits or gains at Ratlam in Part B States. " Q. 2 : " Whether the bank drafts payable in Part A or C States but received at Ratlam and encashed through the assessee's bankers at Bombay constituted receipts in Part A State ? " The High Court answered both these questions in favour of the assessees but gave a certificate an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in damages to the seller : Mothi Rungaya Chetty v. Secretary of State for India. Under the V.P.P. system the seller retains control over the goods right up to the time the goods are delivered to the buyer against payment of price and therefore the contract would fall under section 25 of the Sale of Goods Act which provides : " 25. (1) Where there is a contract for sale of specific goods or where goods are subsequently appropriated to the contract, the seller may, by the terms of the contract or appropriation, reserve the right of disposal of the goods until certain conditions are fulfilled. In such case, notwithstanding the delivery of the goods to a buyer, or to a carrier or other bailee for the purpose of transmission to the buyer, the property in the goods does not pass to the buyer until the conditions imposed by the seller are fulfilled." The principle then is this that if the seller when sending the articles which he intends to deliver under the contract does so, with the direction that the articles are not to be delivered to the purchaser till the payment of price, the appropriation is not absolute but conditional and until the price is paid the property in the goods d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng with the passing of the ownership in goods or the appropriation of goods to the contract of sale by delivery to a carrier. The argument raised by counsel for respondents was that the respondents delivered the goods to the post office at the instance of the buyer and that the post office acted merely as a bailee for the purpose of transmission to the buyer. But even as such bailee it cannot act against the instructions of the bailor and deliver the goods to the buyer without receiving their price and when he does recover he recovers it on behalf of the bailor. Even a bailment for transmission would fall under section 25 of the Sale of Goods Act and there is only a conditional appropriation and until the condition imposed is fulfilled the goods do not pass. Under section 148 of the Contract Act a " bailment " is delivery of goods by one person to another upon a contract that they shall, when the purpose is accomplished be returned or otherwise disposed of according to the directions of the person delivering them. A bailee's duty therefore is to deal with the goods according to the directions of the bailor and if the direction in the present case was that the goods were to be del ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
