LexTHE COMMISSIONER OF INCOME-TAX, MADRAS versus MYSORE CHROMITE LIMITED.
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-- - - , S.C.R. SUPREME COURT REPORTS 849 Instead of adopting that straightforward course the officers of the State have sought to circumvent the decision of this Court on a flimsy pretext and covertly to challenge its correctness on an obviously untenable plea which has not even the merit of a seeming plausibility. This conduct verges dangerously on a contempt of this Court. We desire to make it quite clear that we view with great disfavour such unworthy attempt to get round the decision of this Court. THE COMMISSIONER OF INCOME-TAX, MADRAS v. MYSORE CHROMITE LIMITED. [MEHR CHAND MAHAJAN C.J., s. R. DAS, GHl)LAM HASAN, BHAGWATI and VENKATARAMA AYYAR JJ.) Indian Income-tax Act, 1922 (Act XI of 1922), s. 4-Profits derived by the assessee-W hether arose or were 1·eceived in British India in the present case. The assessee con;ipaqy with its registered office in Mysore State and its management vested in Oakley Bowden Co. Ltd., Madras, sold Chrome ore to buyers mostly outside India who were in America and Europe. The sales to the purchasers in Europe were put through in London by Bowden Oakley and Co. Ltd., London, the agent of the assessee company in Europe, the said '-.. agent signing the contracts for sale in London. The sales to pur- <. chasers in America were effected through W. R. Grace & Co., New York, who bought for undisclosed principals, the contracts for sale to American purchasers being signed by W. R. Grace & Co., Ltd., New York, in America and by Oakley Bowden & Co. Ltd. (Madras), in Madras. Under both forms of contracts with European pur- chasers and American purchasers the price was f.O.B. Madras. • Provision was made for weighment, sampling and assay of goods at destination. The course of dealing between the assessee company and the purchasers was as follows :- > Before the goods were actually shipped, the buyers used to open a confirmed irrevocable Bankers' credit with some first class Bank in London. Being informed of the opening of such credit the 1954 The Chamber of Commerce, Ha/UT, and three Others. v. The State of Uttar Pradesh and two Others. 1954 November r. 1954 Tht Commissiontr of lnco~·lax, Madrru v. Mysore ·Chromite Limilfd. 850 SUPREME COURT REPORTS [1955] Eastern Bank Ltd., London, sent inti111ation to the Eastern Bank Ltd., Madras, and the latter in its turn used to_ pass on the intima- tion by letter addressed to the assessee company. On receipt of such intimation ·the asscssee company placed the contracted goods on board· the steamer at Madras and obtained a bill of lading in its own name. Thereafter the assessee company used to make out a provisional· invoice on thC basis of the bill of lading \Veight and contract price for 48 percent Cr. 203 and used to draw a bill of exchange on the buyers' Bank, where the letter of credit had been opened, for 90 percent of the amount of the provisional invoice payable at sight in the case of European contracts and 80 percent of the an1ount of the provisional invoice at 90 days' sight in the. case of A1nerican contracts and in either case the bills of exchange used to be dra\vn in favour of the Eastern Bank Ltd., London. The bill of exchange together with the bill of lading endorsed in blank by the assessee company and the provisional invoice \Vas then negotiated \Vith the Eastern Bank Ltd., Madras, the bankers of the assessee con1pany, who used to credit the assessee company \Vith the a1nount of the bill of exchange. The Eastern Bank Ltd., Madras, then forwarded the documents to the Eastern Bank Ltd., London, who used to present the bill of exchange to the buyers' Bank in London, and upon the bill of exchange being accepted the Eastern Bank Ltd., London, used to deliver the bill of lading and the invoice to the buyers' Bank. The buyers' Bank in due course used to pay the amount ~f the bill of exchange to the Eastern Bank Ltd., London. Thereafter, on arrival of the goods and after weighment and assay, the sale price \Vas ascertained and the balance of price after deducting the payments made against the bill of exchange, used to be paid to the Eastern Bank Ltd., London, which was the assessee company's agent and Banker in London. It was common ground between the Income-tax department and assessee company that the incon1e arose at the place v.•here the sales took place. It was contended on behalf of the department that
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