An appeal was taken by the respondents to the Appellate Assistant Commissioner who upheld the order holding that income must be held to have accrued, arisen or received in British India.
The finding Of the Appellate Tribunal in their own words was The companytention of the Appellants is that the cheques being negotiable instruments and the creditor having accepted them and passed through their books, II the receipt must be taken to be receipts in Hyderabad.
Appeal by special leave from the judgment and order dated February 16, 1955, of the Orissa High Court in N. J. C. No.
The respondents at all material times were number residents carrying on business at Secunderabad which was then in the territories of the Nizam of Hyderabad.
The Judgment of the Court was delivered by KAPUR, J. This appeal pursuant to special leave is brought by the Commissioner of lncome tax against the judgment of the High Court of Orissa holding that the amounts received by the assessees respondents were number received in what was British India and therefore number liable to income tax.
5,302 in respect of goods supplied by them, thus making a total of Rs.
Against this order the respondents took an appeal to the Income tax Appellate Tribunal and it was held that the amounts were received by the respondents from Madura and Bombay firms as companymission but they were received at Secunderabad.
The year of assessment is 1945 46.
These cheques were sent by post and when received by the respondents at Secunderabad were credited in the account books of the respondents and sent to their banker G. Raghunathmal for companylecting and crediting to the account of the respondents.
They acted as agents for the supply of gas plants manufactured by Messrs. T. V. S. Iyengar Sons, Madura, to the Nizams Government, and also as agents of the Lucas Indian Services, Bombay branch, for the supply of certain goods to that Government.
CIVIL APPELLATE JURISDICTION Civil Appeal No.
In regard to the companymission received from the Bombay firm it was paid into the account on December 22, 1944, but was given credit for only on January 2, 1945.
May 5.
40,504.
In pursuance of this agreement the respondents received from M s. T.V.S. lyengar Sons, Madura, cheques drawn on the Imperial Bank of India, Madras, amounting to Rs.
326 of 1957.
40,504 was received in British India and number at Secunderabad.
35,202 in respect of all goods supplied from Madura and also from Lucas Indian Services, Bombay, by cheques drawn on Imperial Bank of India, Bombay branch, amounting to Rs.
The Income tax Officer assessed these sums as taxable income holding that the entire amount of Rs.
As against these sums so deposited the respondents at once drew cheques and thus operated on these amounts deposited.
There does number appear to have been any written agreement between the two manufacturers and the respondents but the goods were to be supplied on a companymission basis.
117 of 1951.
Rameshwar Nath, S. N. Andley and J. B. Dadachanji, for the respondent.
K. Daphtary, Solicitor General of India, K. N. Rajagopal Sastri, R. H. Dhebar and D. Gupta, for the appellants.
The Appellate Tribunal found that all the cheques whether from Madura or from Bombay were sent by the two respective firms from Madura or Bombay and were received by the respondents at Secunderabad and were treated as payment.
The High Court refused to give leave to appeal to this Court and it was this Court which gave special leave to appeal.
