PUSHALAL MANSINGHKA (P) LTD. versus COMMISSIONER OF INCOME-TAX, DELHI, RAJASTHAN & M.P.

Citation: [1967] 3 S.C.R. 961 · Decided: 05-05-1967 · Supreme Court of India · Bench: J.C. SHAH · Disposal: Dismissed

Judgment (excerpt)

A 
B 
c 
D 
E 
F 
G 
H 
PUSHALAL MANSINGHKA (P) LTD. 
v. 
COMMISSIONER OF INCOME-TAX, DELHI, 
RAJASTHAN & M.P. 
May 5, 1967 
(J. C. SHAH, S. M. SIKRI AND V. RAMASWAMI, JJJ 
Income-Tax Act 1922 s. 4(1) (a)-Exporter in Part 'B' State selling 
goods to pwchasers in Part 
'A" and Part 
'C' States-Sending 'selves' 
rail1vay receipts through local bank 'lo be given to purchaser on pay-
ment of price-Bank discounting some bills locally-whether property in 
goods passing and income accruing, 
outside Part 
1B' State.-Whether 
exen1ption 1jro1n tax available under Part 'B' States (Taxation. Concessions) 
Order, 1950, 
The appellant carried> on mining business at Bhilwara whioh was, dur-
ing the relevant period. in a Part 'B' State and exPorted mica t.o Kodarma 
and Giridih situated in Part 'A' and Part 'C' States respectively. 
The 
appellant entered into contracts with purchasers whereby the consign-
ments would be sent to Kodarma and Giridih by 
railway 
and 
the 
railway receipts would be sent through the bank. 
The goods were con-
signed to "self" and the railway receipts along with the Bills of Exchange 
were presented by the appellant to its bank in Bhilwara for collection 
after endorsing the railway receipts in favour of the bank. 
The bank, 
in its turn, endorsed the railway receipts in favour of its branches in 
Part 'A' and Part 'C' States and the goods were delivered to the buyers 
only when they paid the price to the bank's branches and obtained the 
raihvay receipts. 
In the course of the appellant's assessment to income-tax for 
the 
years 1950-51 and 1951-52, the appellant claimed that it was 
entitled 
to the benefit of rebate under the Part 'B' States (Taxation Concessions} 
Order. 1950 in regard to profits from sales made by it and thats. 4(1) (a) 
of the Income-tax Act, 1922 was not applicable to its transactions. The 
Income-tax Officer held that the sales took place in Part 'A' and Part 
'C' States and the entire profits from those sales accrued and were re-
ceived by the appellant in those States and therefore no rebate 
was 
admissible under the Order. 
He also rejected the appellant's claim that 
in regard to some of the sales, Bills were discounted by the local bank 
and hence payment to that extent should be treated as having been re-
ceived at Bh1lwara in a Part 'B' State. 
Appeals made to the Appellate 
Assistant Commissioner and the Tribunal were dismissed and, the High 
Court, upon a reference, also decided against the appellant. 
In the appeal to this Court it was also contended on behaif of the 
appellant that as the mica was extracted, processed, sorted and packed 
at B'.dlwara in Part 'B' State, there was accrual of a part of the mcome 
at Bhilwara and the ap!"'llant was, in any case, entitled to claim appor-
tionment of the profits accrued. 
HELD : ( i) The appellant became entitled to the purchase money only 
on the pa.sing of title to the purchasers at Kodarma and Giridih in Part 'A' 
and Part 'C' States and the income therefore accrued. to the appellant 
SUPREME COURT REPORTS 
(1967] 3 S.C.R, 
Jn those Stales. The appellant was not therefore entitled to exemption 
.under the Part 'B' States (Taxation Concessions) Order, 1950. [970BJ 
A 
When the seller draws a hundi or a bill of exchange on the pur· 
<:haser and delivers the hundi or the bill of exchange with a relative 
railway receipt to his own banker fo'. the purpose of deliv~ry of the 
railway receipt to the purchaser on hiS honourmg the hund~, the pro· 
pcrty in the goods cannot be held to pass to the purchaser till he pays 
B 
the price and takes delivery of the railway receipt from the banker. 
,[968 DJ 
: 
Income may accrue to an assessee ·without actual receipt of the same. 
If the assessee acquires a right to receive the income, the income can be 
said to accrue to him though it may be received later on its being ascer-
¢ained. 
The basic conception is that he must have acquired a right to 
receive the income. [966 BJ 
(ii) When the local bank discounted the bills, the payments could 
not be re$arded as income accruing in a Part 'B' State. When the bank 
:gave credit of part of the amount of some of the bills to the appellant, 
it was apparent from the conditions specified in the discount form of 
-the bank that the responsibility of the appellant did not cease till the 
bank realised payments from the purchasers. 
When the appellant nego-
tiated the documents with the bank, the latter did so only as part of 
·its banking busi

Excerpt shown. Read the full judgment & AI analysis in Lexace.