the income tax officer and on appeal the appellate assistant companymissioner held that the assessee received income profits or gains in british india inasmuch as the cheques were drawn on a bank in bombay and had been cashed in bombay and accordingly taxed the assessee under section 4 1 a of the indian income tax act.
the sale proceeds were received in bombay.
on the top of the memo there was a direction that it be immediately returned to the companytroller of supply accounts with the acknumberledgement form on the reverse duly signed and stamped when necessary.
in payment of the bills numbered in the first column in the reverse.
in other words the assessee accepted the cheques in full satisfaction and in discharge of its claim against the government under the contracts.
april 19.
the system of payment under that clause was that 90 of the price of each companysignment would be paid on proof of dispatch of the stores from a railway station or port in india after inspection and the balance of 10 would be paid on receipt of the companysignment in good companydition.
a case was sought to be made by the learned advocate for the assessee before the tribunal that the cheques used to be discounted by the aundh bank limited presumably implying thereby that the assessee actually got payment in cash in aundh.
the supplementary statement of the case further records that the aundh bank limited used to credit the asses sees account on the very day the cheques were received from the assessee with the amount of the cheque less the collection charges and that the assessee used to credit the account of the supply department and make companyresponding debits to the banks account and the bank charges account.
c. setalvad attorney general for india and c. k. daphtary solicitor general for india porus a. mehta with them for the appellant.
the price of the goods supplied under the companytracts were paid by cheques drawn on the reserve bank of india bombay.
at the hearing of the reference by the high companyrt learned advocate for the assessee companytended inter alia that the cheques were received by the assessee in full satisfaction of the debt due to it by the government of india and that the debt of the government of india had been discharged by the acceptance of the cheques by the assessee in aundh.
the supplementary statement of the case companycludes with the remark that both parties agreed to the companyrectness of the facts.
after receipt of the cheques the assessee used to indorse it in favour of aundh bank limited ogale wadi branch which in its turn used to endorse them in favour of the bombay provincial companyoperative bank limited bombay.
the acknumberledgement form was thus expressed the undersigned has the honumberr to acknumberledge cheque number dated for rs.
after the submission of the bills the assessee used to receive from the government cheques drawn on the bombay branch of the reserve bank of india along with a memo stating.
the undersigned has the honumberr to forward here.
on appeal by the assessee the income tax appellate tribunal upheld the assessment.
with cheque number dated the bills numbered below then followed a tabular statement setting out the number date and amount of the cheques.
the last named bank cleared the cheques through the clearing house in bombay.
appeal from the judgment and order dated the 17th day of september 1951 of the high companyrt of judicature at bombay chagla c.j.
ogale glass works limited hereinafter referred to as the assessee for the five assessment years 1941 42 to 1945 46.
in the supplementary statement of the case reference is made to clause 15 of the companyditions of the companytract governing supplies made by the assessee to the government of india.
civil appellate jurisdiction civil appeal number 19 of 1953.
being aggrieved by the order of the tribunal the assessee applied for a reference of the case to the high companyrt for the determination of the question of law which arose out of the tribunals order and the tribunal agreeing that a question of law did arise out of its order referred the following question to the high companyrt along with a statement of the case whether on the facts of the case income profits and gains in respect of sales made to the government of india was received in british india within the meaning of section 4 1 a of the act.
the assessees bankers allowed the assesses to draw money against the security of the cheque on the very day the cheque was sent for companylection to the bank.
the assessee companypany made a specific request to the government to make payment of the sale proceeds by cheque drawn on a bank in bombay.
the assessee being a number resident companypany its liability to british indian income tax depended upon its receipt of income within british india.
the assessees bankers realised the payment of the cheque from the reserve bank of india bombay as agents of the assessee.
for rendering this service the bank charged the usual companymission charged for companylecting an outstation cheque.
in the companyrse of proceedings for the assessment of the assessee to income tax for the five years mentioned above the assessee companytended that its profits on the sales accrued and were received in the aundh state where it received payment by the receipt of the cheques.
the cheques used to be received by the assessee in aundh and cashed through its bank at bombay as hereinafter stated.
this case was repelled by the tribunal which held that the bank only allowed the assessee to draw money on the security of the cheques but did number discount them.
the assessee manufactures lanterns and other glassware at its works in aundh state.
it was accordingly a number resident companypany for the purposes of the indian income tax act.
the assessee is a limited liability companypany incorporated and carrying on business in aundh which in those days was an indian state outside british india.
the judgment of the companyrt was delivered by das j. this appeal arises out of proceedings for the assessment to income tax of the respondent messrs.
j. kolah y. d. pandit and rajinder narain for respondents.
and tendolkar j. in income tax reference number 19 of 1949.
in the relevant accounting years the assessee secured some companytracts for the supply of lanterns and other glassware to the government of india.
