LexSHOORJI VALLABHDAS & CO., BOMBAY versus THE COMMISSIONER OF INCOME-TAX/EXCESS PROFITS TAX, BOMBAY.
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3 S.C.R. SUPREJVIE: COURT REPORTS SHOORJI VALLABHDAS & CO., BOMBAY .v. 557 THE 1COMMISSIONER OF 1NCOME-T AX/EXCESS PROFITS TAX, BOMBAY. (S. K. DAs, .J. L. KAPUR and M. HmAYATHULLAH, JJ.) Income-tax-Place of accrual of income-Business of trans- porting cargo to ports in and outside British India-Managing Agency commission, a percentage of freightage-Managing agents' services f erf armed in British lndia~Liability to tax of, entire ·manag- --, ing agency commission-Excess Profits Tax Act, 1940 (15 of 1940), s. 5, proviso 3-lndian Income-tax Act, 1922 (II of 1922), s. 14(2)(c). , The appellant was the ma~aging agent of a company which was, at the relevant time, carrying on the· business of transporting cargo in boats which touched ports in British India and in the Indian State of Cochin and other States. Under the managing agency contract the remuneration payable to the appellant was • · expressed in the following terms : "That the managing agent shall as and by way of remuneration for its services receive a commis- sion of ten per cent. of the gross freight charged to the shippers ... Such remuneration shall be payable to the ·managing. agents at the place where the same is earned ·by the company unless other- wise requested by the managing agent." The Income-tax Officer and the Excess Profits Tax Officer assessed the appellant to tax in respect of the whole of the managing commission received by it · on the footing that the entire commission accrued or arose in British India. The appellant claimed that a part of the manag- ing agency commission accrued in the Indian States and not in British India· and that it would be entitled to an apportionment of the managing agency commission and to claim exemption from tax in respect of. the commission which accrued outside British India under s. 14(2)(c) of the Indian Income-tax Act, 1922, and the third ,proviso to s. 5 of the _Excess Profits Tax Act, 1940. The Appellate Tribunal found that' except booking and collecting some freight at Cochin, all other important and responsible work of managing the company was done from the head office at Bombay and not 'from Cochin: · Held, that normally the commission payable to the managing agent of a company accrues at the place where the business is actually done, that is, where rthe services of the managing agent are performed, and as ·On ·the finding in the present case the appellant practically .performed all the services at Bombay, the commission which it earned though computed on the· percentage of freight, accrued or arose in British India. Commissioner of Income-tax, Madras v. K. R. M. T. T. Thia- garaja Chetty and Co., [1950] S.C.R. 258, followed. Commissioner of Income-tax, Bombay v. Ahmedbhai Umarbhai and Co., Bombay, [1950] S.C.R. 335 and Commissioner of lncome- tax, Bombay Presidency 'ilnd Aden v. Ghunilal B. Mehta, [19381 6 I.T.R. 521, distinguised. 9-6 SCT/ND/82 1960 April 19. 1960 Shnnrji Vn!lnhhrfns & Co. v. r:ommissioner of hvo1w~·ln.\., F.xr1.u Prnjils TaxJ lJmnbn)' S. It. Dns .J. 558 SUl'REME COURT REPORTS [1960] Salt and Industries AF;encies Ltd., Bombay v. Comtnissioner of Income-tax, Bombay City, [1950] 18 I.T.R. 58, considered. C1v1L APPELLATE juR1smcr10:-.;: Civil Appeal No. ~0:) of l 'lti:i. Appeal by special leave from the .indgment :rnd order dated March 81, 111:)2, and .\larch 2, l9:i'l, of the Bom- bay High Court, in Income-tax Reference No. '18 of l'l:il. R. .T. Ko/ah; Solirab N. Vnhil and S. N. A11dlr)•. for the appellant. C. K. Daf1litmy, Solicifor-Ger1eral of India, R. Gnnn- pnthy l)•Cr and D. Gup!a, for the respondent. l %0. April l'l. The .Judgment of the Court was delivered by S. K. DAs, .J.-This is an appeal "'ith special leave from the judgment and orders elated March 'll. 1 !J02, :rncl .\-l:irch 2, l 11.'i'l, of the High Court of Bombay in an I 11comc-I ax Reference No. -18 of l 'l!i 1 made by the Income-tax Appelbtc Tribunal, Bombay, under s. li6(l) of the Indian Income-tax Act, l'l22, aml s. 21 of the Excess Profits Tax Act, 1940. \\'e mav shortly state the relevant facts first. The assessce, i\lcssrs. Shoorji Vallabhdas and Company, Bomh:11•, appellant herein, is a firm registered under the Indian Income-tax Act. It helrl the managing agency of three companies, namely-(l) the Mahibar Steamship Company Ltd., (2) the :\'cw Dholcra Steamships Ltd.. and (3) the ;'\cw Dholera Shipping and
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