S. K. Ball Bearing Co., Ltd., which will hereinafter be referred to as the S. K. F. is a companypany registered under the Indian Companies Act, 1913.
The Judgment of the Court was delivered by SHAH, J. Aktiebolaget Svenska Kullakerfabriken of Gothenburg is a companypany incorporated under the laws of Sweden, and is engaged in the manufacture of ball bearing equipment.
Appeal by special leave from the judgment and order dated February 24, 1955, of the former Bombay High Court in Income tax Reference No.
The Income tax Appellate Tribunal has found that for rendering accounts of the net sales and also for making payments according to the terms of el.
In a majority of cases of sales, remittances of sale value after deducting companymission were made after sale of the goods to the buyers but before the sale proceeds were recovered.
By an agreement dated January 1, 1939, the S. K. F. was appointed by the Swedish companypany as its sole selling agent in India.
On account ,of the companymencement of hostilities in the second world war, a companyporation known as the Panrope Corporation was incorporated in the Republic of Panama in 1940, to take over as a war time arrangement the assets and business of that Swedish companypany.
The order passed by the Income tax Officer was companyfirmed by the Appellate Assistant Commissioner and also by the Income tax Appellate Tribunal.
9 of 1958.
13 of the agreement, the S. K. F. maintained for the relevant periods a current account in the names of the foreign companyporations in respect of goods received on companysignment .
When goods were sold by the S. K. F., the account of the principal was credited with the price and the account of the buyers to whom the goods were sold on credit was debited.
In the years 1947, 1948, 1949 and 1950 the K. F. sold in India as the agent of the Swedish and Panamian companypanies which will hereinafter be companylectively referred to as the foreign companyporations the goods manufactured by them.
CIVIL APPELLATE JURISDICTION Civil Appeal No.
The Income tax Officer, Companies Circle 11 3 , Bombay, exercising powers vested in him by s. 43 of the Indian Income tax Act, 1922, having appointed the K. F. as the statutory agent of the foreign companyporations for the assessment year 1948 49, and of the Swedish companypany for the assessment years 1949 50, 1950 51 and 1951 52, the K. F. submitted returns of income for these years in the taxable territory on behalf of the foreign companyporations.
With effect from July 1, 1947, the Panrope Corporation companyveyed the property and business to the Swedish companypany.
J. Kolah, S. N. Andley, J. B. Dadachanji, Rameshwar Nath and P. L. Vohra, for the respondent.
Clause 22 The Agent shall sell the said Products either for cash or on credit.
A small quantity of goods was bought by the S. K. F. and sold by it in India, but numberquestion arises in this appeal about the liability to pay income tax in respect, of sale of those goods and numberreference is made herein in respect of those sales.
Clauses 13, 22 and 23 of the agreement dated January 1, 1939, between the S. K. F. and the Swedish companypany which are material for the purpose of this appeal are as follows Clause 13 The Agent shall render before the tenth day of each month a true and detailed statement of the said Products that have been sold by him or his Sub Agents during the preceding month.
N. Rajagopal Sastri and D. Gupta, for the appellant.
The Income tax Officer assessed the foreign companyporations under s. 4 1 a of the Indian Income tax Act for payment of tax on the profits included in the price realized by the S. F. by sale of goods received on companysignment without making any distinction between sales in respect of which the remittances were made after recovery of sale proceeds and sales in respect of which remittances were made before reco very of the sale proceeds.
50/X of 1954.
In a few cases, remittances were made even before the goods were sold, and in the remaining, remittances were made after the sale proceeds were realized from the buyers.
August 10.
