COMMISSIONER OF INCOME-TAX, DELHI versus MESSRS. P. M. RATHOD & CO.

Citation: [1960] 1 S.C.R. 401 · Decided: 20-05-1959 · Supreme Court of India · Bench: BHUVNESHWAR PRASAD SINHA · Disposal: Appeal(s) allowed

Cited by 1 judgment(s) · see the full citation network in Lexace

Judgment (excerpt)

S.C.R. 
SUPREME COURT REPORTS 
401 
expedition because if a nuisance exists it should be 
removed without delay in order to preserve the health 
of the community and the fertility of the soil. 
The appeal is accordingly allowed with costs. 
A petition (No. 174 of 1958) under Art. 32 of the 
Constitution was also filed by the appellant. It is 
unnecessary to pass any formal order on this petition 
as, the appellant has i:mcceeded in the Civil Appeal 
No. 173 of 1959, and it is dif-!posed of accordingly 
except that there will be no order for costs in this 
petition. 
Appeal allowed. 
COMMISSIONER OF INCOME-TAX, DELHI 
v. 
MESSRS. P. M. RATHOD & CO. 
(B. P. SINHA, J. L. KAPUR and 
M. HIDAYATULLAR, ,JJ.) 
Income-tax-Place of accrual or receipt of profits-Goods sold 
by a trader in a Part B State to customers in Part A or C States-
Goods sent by Value Payahle Post or by rail-Post office, whethe1 
agent of seller or bailee of goods-Railway receipt sent to bankers to 
be delivered to customers against payment--Concessional rate of 
taxation applicable to Part B States-Indian Sale of Goods Act, I9JO 
(3 of I9JO), s. 25(I)-lndian Contract Act, I872 (9 of I872), s. I48. 
The respondents were manufactur<'rs of perfumery and hair 
oils at Ratlam in Madhya Bharat which at the relevant time 
was a Part B State. They sent out agents who canvassed orders. 
The goods ordered were sent to the customers from Ratlam 
either through the post office by Value Payable Post or they were 
sent from there by rail and the railway receipts in favour of self 
were sent through a bank with the direction that they (railway 
receipts) were to be handed over against ' payment of the en-
closed demand draft.' The price when received by the bank was 
sent by means of a demand draft to the respondents at Ratlam 
who had it cashed and credited to their account at Bombay. The 
respondents were assessed to income-tax. in respect of profits 
from such sales of goods to customers in Part A and C States, for 
the assessment year 1950-51, at the rate or rates applicable to 
income, profits or gains arising or accruing in Part A States on 
the footing that the sales were effected in Part A and C States 
and the payments were also received there. The respondents 
claimed that the prices realised constituted receipts in Ratlam 
51 
r959 
Dh,.angadhra 
Chemical 
Worl<s Ltd. 
v. 
The Dhrangadhra 
Municipality 
Imam]. 
I959 
Mayzo. 
402 
SUPREME COURT REPORTS [1960(1)) 
I959 
and that therefore they were liable to be assessed only at the 
-. . 
concessional rates applicable to Part B States. The Appellate 
The Commissioner Tribunal held that the price of goods sent by Value Payable 
of Incmne-tax 
Post was received at Ratlam and .that in respect of the price 
v. 
received by bank drafts which had been realised through the 
P. M. Rathod 
bank at Bombay, the amount must be treated as having been 
6- Company 
received in a Part A State. At the instance of the Commissioner 
of Income-tax and the respondents, the Tribunal referred two 
questions to the High Court: 
(1) 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? 
(2) 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 a Part B State? The High Court having answered 
both the questions in favour of the respondents, the Com-
missioner of Income-tax preferred an appeal to the Supreme 
Court:-
Held: (1) When a question referred to the Court is not 
properly framed, it is open to the Court to reframe the question 
which arises on a proper appreciation of the facts of the Case. 
Narain Swadeshi Weaving Mills v. The Commissioner of 
Excess Profits Tax, [1955] l S.C.R. 925, followed. 
The proper question that arose on the facts of the present 
case was held to be : " Whether on the facts and circumstances 
of this case the payment received from a buyer by a banker in 
Part A or C States against delivery of railway receipts for goods 
sent by the seller' is payment in these States or in Ratlam which 
was a Part B State." 
(2) Where goods are sent by rail and the railway receipts in 
favour of self are sent to a banker to be delivered to the buyer 
against payment of the price, the appropriation to the contract is 
only 

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