SHRI JAGDISH MILLS LTD. versus THE COMMISSIONEB OF INCOME-TAX, BOMBAY NORTH, KUTCH AND SAURASHTRA, AHMEDABAD

Citation: [1960] 1 S.C.R. 236 · Decided: 12-05-1959 · Supreme Court of India · Bench: SUDHI RANJAN DAS · Disposal: Dismissed

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Judgment (excerpt)

1959 
The Centr11l Bank 
of India 
v. 
Their WorktiZeJJ 
S.K. Das J. 
I9S9 
May u. 
2~6 
SUPREM.E COURT REPORTS [1960(1)] 
to any other law for the time being in force, provided 
there is no express provision to the contrary in the 
Banking Act. If, as we hold. unamended s. 10 of the 
Banking Act expressly prohibits the employment of 
any person by a bank whose remuneration takes the 
form of a share in the profits of the compa~y, then s. 2 
of the Banking Act is of no help and cannot permit 
something which i~ expressly prohibited by s. 10. 
For the reasons given above, we allow these seven 
appeals to the extent already indicated, namely, (1) 
the reference of 1952 is not now pending for determin~ 
ing the question of bonus for the relevant years in 
respect of particular banks and (2) section 10 of the 
Banking Act prior to the amendment of 1956 pro~ 
hib~ts the grant of industrial bonus to bank employees 
when such bonus is remuneration which takes the form 
of a share in the profits of the banking company. In 
the circumstances of these cases and in view of the 
long drawn out nature of the dispute, we make no 
direction as to costs. 
Appeal.s aUCYWed in part. 
SHlU JAGDISH MILLS LTD. 
v. 
THE COMMISSIONEH OE, INCOME-TAX, BOMBAY 
NORTH, KUTCH AND SAURASHTRA, 
AHMEDABAD 
(S. R. l>As, C .• J., N.H. BHAGWATT, and 
M. HIDAYA'l'ULLAH, JJ.) 
Income~tctx-Assessee company manufacturing and supplying 
goods from outside British India-Stipulation for payment by cheque 
-Cheques remitted by post from British India-Post Office, if ccn 
agent of the assessee-Income, if received in taxable territories-
Indiat' Imome~tax Act (XI of I922), s. 4(1)(a). 
The appellant company, carrying on business in manufactur ~ 
ing and st:lling textiles at Baroda, received in the assessment 
years 1942-43 and 1943~44 payments in cheques from the Govern-
ment of India for the supply of such goods on bills submitted, as 
agreed upon in prescribed printed forms which provided that the 
Government should pay the amount due to the appellant by 
cheque. The appellant, however, did not request or write to the 
Government indicating in what way the payment by cheque was 
S.C.R. 
SUPREME COURT REPORTS 
237 
to be made. The Government sent the cheques from Delhi by 
I959 
post to the appellant at Baroda and it received and accepted 
-. 
them in Baroda in full and unconditional satisfaction of its claim Jagdisll Mills Uti. 
and cashed them through its bank accounts in Bombay and 
v. . . 
Ahmedabad. The question was whether the amounts of the The CommuSWfUt' 
cheques were income, profits and gains received by the appellant 
of Income-tax 
in the taxable territories and were as such liable to tax under 
s. 4(1)(a) of the Indian Income-tax Act. The Income-tax Officer 
held that the amounts were received in British India as the 
cheques were drawn on banks in British India and the Appellate 
Assistant Commissioner on appeal affirmed his order. The 
Income-tax Appellate Tribunal on appeal held that even though 
the appellant did not ask the Government to send the cheques by 
post, there was an implied request to do so and following the 
decision of this Court in Commissioner of Income-tax, Bombay 
South v. Messrs. Ogale Glass Works Ltd. [1955] I S.C.R. I85, held 
that the amounts of the cheques were received in the taxable 
territories and as such the appellant was liable to tax under 
s. 4(r)(a) of the Act. " Hence these appeals by special leave. The 
question ior decision was whether in the facts and circumstances 
of the case the stipulation that payments should be made by 
cheques implied a request by the appellant to the Government to 
send the cheques by post so as to constitute the Post Office its 
agent for receiving such payments. 
Held, that regard being had to the general course of business 
usage which was followed in this case, there could be no doubt 
that the parties intended that the cheques should be sent by post 
which was the normat·agency for transmission of such articles 
and, consequently, there was an implied request~ the appellant 
to the Government to send the cheques by post so as to constitute 
the Post Office its agent for the purpose of receiving those 
payments. 
. 
Commissioner of ~ncome-tax, Bombay South v. Messrs. Ogalc 
Glass Works Ltd. [1955] I S.C.R. 185 and Norman v. Rickets, (I886) 
3 T.L.R. I82, applied. 
Pe1mington v. Crossley and Sons (Limited), (I879] 13 T.L.R. 
5I3, considered. 
Thorappa v. Umedmalji (1923) 25 Born. 

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