THE COMMISSIONER OF INCOME-TAX, MADHYA PRADESH & BHOPAL, NAGPUR versus BHOPAL TEXTILES LTD., BHOPAL.

Citation: [1961] 2 S.C.R. 9 · Decided: 17-10-1960 · Supreme Court of India · Bench: S.K. DAS · Disposal: Appeal(s) allowed

Cited by 2 judgment(s) · cites 1 · see the full citation network in Lexace

Judgment (excerpt)

2 S.C.R. SUPREME COURT REPORTS 
THE COMMISSIONER OF INCOME-TAX, 
MADHYA PRADESH & BHOPAL, NAGPUR 
v. 
BHOPAL TEXTILES LTD., BHOPAL. 
9 
(S. K. DAs, M. HIDAYATULLAH, and J. C. SHAH, JJ.) 
Income Tax-Supply of goods by non-resident company-~ 
Place of paymeitt, when place of receipt of money by seller-Bank 
when agent of seller-Railway receipt, if document of title of goods 
-Property in goods, when transferred to buyer. 
Respondent, a non-resident company, in the accounting 
year supplied goods which were sent F. 0. R. Bhopal to the 
' 
buyers in British India. The railway receipts were handed 
ovd to a Bank in Bhopal with instructions to hand over the 
railway receipts to the buyers, who were named as consignees, 
only on receipt of payment of the bill and collei;tion charges. 
The branches of the Bank within the taxable territory collected 
the amounts due from the buyers and transmitted them to 
Bhopal to the credit of the respondent. 
Tlie question was whether the profits in the goods were 
received or deemed to be received in British India, 
Held, that· the decision of this Court in Commissioner of 
Income-tax v. P. M. Rathod ©- Co. applied to this case; and the 
income, profits or gain must be deemed to have been received 
within the taxable territory. 
The fact of payment to the agent determines the place 
where the money can be said to be received by the seller. Since 
in the instant case the railway receipts were not to be handed 
over to the buyers by the Bank, as per instructions of the seller, 
unless payment for the value of the goods were· received by the 
Bank which instructions the buyers could not countermand, 
this was sufficient to make the Bank an agent of the seller. 
Held, also, that a railway receipt is a document of title to 
goods, and, for all purposes, represents the goods. When the 
;~ 
railway receipt is handed over to the consignee on payment, 
the property in the goods is transferred. 
The Commissioner of Income-tax v. P. M. Rathod and Co., 
(1960] l S.C.R. 401, relied on. 
CIVIL APPELLATE 
JuBISDIOTION: 
Civil 
Appeal 
No. 755 of 1957. 
Appeal by special leave from the judgment and 
order dated March 23, 1955, of the former Nagpur 
t 
High Court in Misc. Civil Case No. 240 of 19.53, 
a 
z960 
Octobsr z7. 
10 
,SUPREME COURT REPORTS 
[1961] 
z960 
K. N. Rajagopal Sastri, R.H. Dhebar a.nd D. Gupta, 
. 
-
for the appellant. 
T~e Com111issio11e1· 
•• 
of Incomc-tax 
Veda Vyasa, S. N. Andley, J.B. Dada.chanJi, Rame-
Madhya Prndc~h shwar Nath and P. L. Vohra, for the respondent. 
& Bhopal, Nagpur 
1 
v. 
1960 .. October 17. The Judgment of the Court 
Bhopal Toxliles was delivered by 
' Ltd .• Bhopal 
•. H 
J 
Th" 
I 
"th 
. ] 1 
IDAYATULLAH .-
IS a ppea ' WI 
ipecia.. ea. ve, 
Hidayatullah r. ha.s been filed against the judgment of the Nagpur 
1 
• 
High Court in a reference under s. 66(1) of the Indian 
Income-tax Act, 1922, by which the High Court 
answered t.he following question in the negative : 
"Whether the proportionate profits on the goods 
of the value of Rs. 4,10,785 were received or were 
deemed to be received in British India, in the year of 
account, hy or on behalf of the a.ssessee Company 
within the meaning of Section 4(l)(a.) of the Indian 
Inco111e-tax Act, 1922 ". 
The Commissioner of Income-tax, Madhya. Pradesh 
a.nd Bhopal is the appellant, and the Bhopal Textiles 
Ltd., Bhopal, is the respondent. For the assessment 
year 1944-45, the Company which wa.s non-resident 
was treated as ' resident a.nd ordinarily resident' 
under s. 4(l)(c) of the Income-tax Aot. In the year 
of account, it had supplied its manufactured articles 
either to the Government of India. or its nominees a.t 
Agra, Alla.ha.bad and Delhi. Under the orders of the 
Government, the goods were sent direct to the persons 
nominated, who ma.de the payment against the goods. 
The goods were a.II sent f.o.r. Bhopal, a.nd the re.ii wa.y 
freight and other charges were to be borne by the 
buyers to whom the railway receipts made out in the 
name of the consignees were sent by the Company 
through the Imperial Bank a.t Bhopal. The Bhopal 
Bra.nob sent the railway receipts to branches of the 
Bank a.t Agra., Alla.haba.d and Delhi, which collected 
the a.mounts due from the buyers, and transmitted 
them to the Im peria.l Bank, Bhopal, to the credit of 
the Company. 
On these facts, a. total sum of 
Rs. 4,40,373 was held by the Department to have 
been received in British India.. 
Of that sum, an 
amount of Rs. 29,

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