LexCOMMISSIONER OF INCOME-TAX, BIHAR & ORISSA versus M/S. PATNEY & CO.
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868 SUPREME COURT REPORTS [1959] Supp. x959 not been considered by the Appellate Tribunal and . therefore it is a case which should be remitted to the Saroj I<uniaY Mazumdar Income-tax Appellate Tribunal to determine the facts v. in accorda.nce with the observations made by this The Commission" Court and in the light of those findings to determine 0! Income-tax, whether the transaction was an adventure in the West Bengal, nature of a trade or not. ~~~ . Kapur], I959 • May 5. I would order accordmgly. ORDER OF THE COURT In view of the opinion of the majority, the appeal is allowed with costs. COMMISSIONER OF INCOME-TAX; BIHAR & ORISSA v. M/S. PATNEY & CO. (B. P. SINHA, J. L. KAPUR and M. liIDAYATULLAH, JJ.) Income-tax - Assessment on non-resident-Agree1nent with resident debtor for payment outside British India-Remittance by cheques posted in British India--Place of payment-Non-resident's liability to tax. The respondents, Vl'ho were non-residents carrying on business at Secunderabad within the territories of the Nizam of Hydera- bad, were acting as agents of two firms in Bombay and Madurai, in British India, for the supply of certain goods to the Nizam's Government. In respect of the Commission due to the respon- dents by the firms the agreement between the parties was that the amounts were to be paid to the respondents in cash or by cheques at Secunderabad. For these amounts cheques drawn.by the firms on the Bombay and Madras branches, respectively, of the Imperial Bank of India, were sent by post at Bombay and Madurai to the respondents at Secunderabad, and when received, they were credited in their books of account, the cheques being sent to their banker there for collecting and crediting to their account. For the assessment year 1945-1946 the Income-tax Officer, Berhampnr (in British India), assessed these sums as tax- able income holding that the amount was received in British • '· . . (2) S.C.R. SUPREME COURT REPOltTS 869 India and not at Secunderabad. The Appellate Tribunal found '959 that all the cheques received at Secunderabad by the respondents \Vere treated by them as payment. The respondents claimed Com1nissioner of that in. view of the· agreement between the parties that the Income-tax: amount of commission should be paid at Secunderabad, \Vhen Biho.r &- Orissa the cheques were sent by post, the post office was the agent v. of the debtor and not of the respondents, that the amount M/s. Putney & Co. must be treated as having been received when the post office delivered the cheques to the respondents, and that, consequently, the amount cannot be treated as having been received in British India. The Income-tax authorities relied on the decision in Commissioner of Income-tax v. Ogale Glass IVorks Ltd., [1955] r S.C.R. 185 •. Held, that in the case of payment by cheques sent by post the determination of the place of payment would depend upon the agreement between the parties or the course of conduct of· the parties. If it is shown that the creilitor authorised the debtor either expressly or impliedly to send a cheque by post the pro- perty in the cheque passes to the creditor as soon as if is posted. But \Vhere, as in the present case, the agreement was that the amount was to be paid at Secunderabad, outside British India, when the cheques were received by the respondents there the amount must be deemed to have been received at that place, and, therefore, the amount was not liable to be taxed in British India. Commissioner of Income-tax v. Ogale Glass IVorks Ltd., [1955] r S.C.R. 185, distinguished. · CIVIL APPELLATE JumsDICTION: Civil Appeal No. 326 of 1957. Appe.al by special leave from the judgment and order dated February 16, 1955, of the Orissa High Court in S. J.C. No. 117 of 1951. · G. K. Daphtary, Solicitor-General of India, K. N. Rajagopal Sastri, R. II. Dhebar and D. Gupta, for the appellant~ · Rameshwar Nath, S. N. Andley and J.B. Dada- chanji, for the respondent. 1959. JIIay 5. The· Judgment of tho Court was delivered by · KAPUR, J.-This appeal pursuant to special leave is brought by the Commissioner of Income-tax against · the judgment of th_e High Court of Orissa holding that the amounts received by the assessees-respondcnts were not received in what was British India. and Kapzi, ]. --------=~~~--~-~-----·-··. 870 SUPREME COURT REPORTS [1959] Supp. therefore not liable to income-tax. The re
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