LexTHE COMMISSIONER OF INCOME-TAX BOMBAY SOUTH BA,Y BOMBAY versus MESSRS OGALE GLASS WORKS LTD OGALE WADL
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... ,- .. • s~C.R. SUPREME C0UR:'J1 REPORTS THE COMMISSIONER OF INCOME-TAX · · BOMBAY SOUTH; .B.OMBA,Y .· . :. ti •. MESSRS: OGALE GLAS·s· WORKS LTD.,. '· &, . • ' • OGALE WADL · _, · [SuoHI RANJAN· DAS, N. ·H. BHAGWATI ·and · }AGANNADHADAS JU . 185 · Indian Income-tax Act· (XI of 1922), sectirm· 4(1)(a)-Non-resi- dent company-Payment of sale-proceeds to the company (assessee), by Government of India by means of cheques drawn and posted in British India-Whether income, profits and gains received by ·~he assessee ·in British India within the meaning of section 4(J.)(a):....:... Indian Contract Act, 1872 (Act IX of 1872), section 50, illustration (d)~Addressee requesting sender to send c/ieque by-post-.:.Post-office acting as agent of addressee. · •' · ·The assessee,. a limited liability.. company, incorporated artd carrying on business in ·an Indian State (outside British India) was a non-resident company for the purposes ·of the •Indian .Incomectax Act and therefore its liability fo British Indian income-tax depend- ed upon its receipt of income within British India. On the express request of the assessee· to remit the . amount· of ·the 'bills by means of cheques in respect of. the· goods ·supplied by the -asses-see to the Government of India the latter agreed· to make payments by cheques which were drawn in Delhi and received by the asses- see in the Indian State. · · · . Held, that according to the cour>r of business usage in• general the parties must have intended that cheques should be sent by post and therefore the posting of cheques in Delhi amounted to payment in Delhi to the post-office which was constituted the agent of the assessee. Therefore on the facts of -the case, income, profits and gains in respect of sales , made to the Government of India was .received 'in Briti.sh India within the meaning of section 4( 1) (a) of the .Act.. • Held, also, that as between the sender and the _addressee it is the 't-- request of the addressee that. makes the post-office the agent of the ., addressee and after such request the addressee cannot be· heard to say . that the post-office was not his agent. On t.he other . hand if there is no such request by the addressee, express or implied, then on delivery of the letter or the cheque to the post-o'flice by the sender, the post-office acts as the agent of the sender. '. . Apart from the principle of agency, section 50, illustration ( d) of the Indian Contract Act (IX of 1872) lays down the well-known principle that a contractual obligation is discharged by the · perfor- ~ mance of the engagement or promise in the manner prescribed ·or ~sanctioned by the promisee. Indian Post-Office Act 1898 (Act VI of 1898), does not nullify illustration· (cl) to section 50 of the Inc:lian Contract Act, or the above 'proposition of law. ' · 1954 April ~9 Tht Commissiontr of Income-tax, Bombay South, Bombay v. Mtssrs. Ogalt Glass Works Ltd., Ogalt Wadi. 18.6 SUPREME COURT REPORTS [1955] Gresham Life "Assurance Society v. Bishop (L.R. (1902] A.C. 287 at p. 296). Commi;sioner of Income-tax v. Kameshwar Singh, ([1933] 1 I.1'.R. J.07), Raghunandan Prasad v.'Commiiiioner of Income-tax,. (60 I.A. 133: [1933] 1 I.T.R. 113), Commissioner of Income-tax v. Maheswari Saran Singh, (.[1951 J 19 l.T.R. 83), Stedman v. Gooch, ( (1793) I Esp. 5), 'Maillard v. Duke of Argyle, ((1843) 6 M. & G. 40), Kempt v. Watt, ((1846) .15 M. & W. 672), Re. Rower and Haslam, (L.R. (1893) 2 Q.B. 286), Palaniappa Chetty v. Arunachalam Chetty ((1911) 21 M.L.J. 432), Robinson v. Henry Reid, ((1829) 9 B. & C. 449), Anderson v. Hi/lies, ((1852) 21 L.J.C.P. (N.S.) 150), Kodarmal v. Sagormal, ((1907) 9 Born. L.R. 903 at p. 911), Felix Hadley & Co. v. Hadley, (L.R. (1898) 2 Ch. D. 680), Rhokana Corporation v. In- land Revenue Commissioners,. (L.R. (1938) A.C. 380 at p. 399), Com- missioner of Excess Profits Tax, West Bengal v. /eewanlal Ltd., ([ 1951] 20 I.T.R. '39 at p. 47), Chainrup Sampatram v. · C.1.T., West Bengal, ([1951] 20 l.T.R. 484 at pp. 493, 496), Allahabad Bank Ltd .. v. C.1.T., West Bengal), ([1952] 21 l.T.R. 169), Mohan/al Hiralal v. C.1.T., C.P. & Berar, ([19521 22 l.T.R. 448), Hira Mills Ltd., Cawnpore v. Income-tax Officer, Cawnpore, ([1946] 14 I.T.R. 417), Madan/al Dharnidharka v. Commissioner of Income-tax, Bombay. City, ((1948.1 16 l.T.R. 227 at p. 232), Commissioner of Income-tax, Delhi
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