TURNER MORRISON & CO. LTD versus COMMISSIONER OF INCOME-TAX, WEST BENGAL

Citation: [1953] 1 S.C.R. 520 · Decided: 16-01-1953 · Supreme Court of India · Bench: MEHR CHAND MAHAJAN · Disposal: Dismissed

Judgment (excerpt)

19-53 
Jan. 16. 
5'20 
SUPREME COURT REPORTS 
[191)3] . 
• 
'rURNBR MORRISON & CO., L1'D 
v. 
COMMISSIONER OF INCOME-TAX, 
WEST BENGAL. 
[MEHR CHAND MAHAJAN, DAS, VIVIAN BosE 
and BHAGWATI JJ.] 
Indian Inc"'1ie-tax Act (XI of 1922), ss. 4(1) (a), 4 (1) (c), 42, 
48-Non-resident cornpany-Sale in India uf goods 1nan11,factured 
outside India-Person e.-O'ecting sales in India-Whether agent of 
non-resident-Proji,ts received in India.from sales-Whether asses-
sable under s. 4 (1) (a) ors. 42-Liability of agent-Scope of s. 43. 
'l'he Port Said Salt Association Ltd., a company incorporated 
in the United Kingdom carried on business in Egypt and had its 
headquarters in Egypt. It manufactured salt in Egypt and part 
of the salt so manufactured was consigned to Turner Morrison and 
Co. Ltd., (the assessee) for sale in India. 
The assessee effected 
sales in India through brokers at prices approved by the A_ssocia-
tion, collected the sale proceeds and received a commission of 2-!% 
generally on all sales. 
After deducting the expenses and commis-
sion the balance was remitted to the Association in Egypt. 
On 
these facts the assessee was treated as agents of the Association 
under s. 43 of the Indian Income-tax Act and assessed to income-
tax under s. 4 (1) (a) or alternatively under s. 4 (1) (c) of the Act 
on the income derived by the Association fron) the sale of salt in · 
India. 
The High Court of Calcutta held that tbe income in ques-
tion was chargeable t.o income-tax under s. 4 (1) (a) as income 
received in India and not under s. 42 of the Act: 
Held, (i) that, as the assessee was entrusted with the selling 
of goods consigned to them for sale, handling the cargoes, issuing 
delivery orders, collecting the proceeds etc., they were agents of 
the Association, and did not act merely as a post office; 
Pondicherry Railway Co. v. OonMnissioner of Income-tax, Mad-
ras (1931) I.L.R. 54 Mad. 691 referred to. 
(ii) as the goods were neithei- imported nor sold by the asses-
sees on their own account but on account of the Association the 
income received by the assessees v'lere received by them on behalf 
of the Association and not on their own account. 
Ex parte White (L.R. 6 Oh. A. 397) distinguished. 
(iii) As the assessees were authorised not only to sell but to 
collect the price from the purchasers, the income was received by 
the assessee as agents of the Association. 
Bi;twick v. Grant (L.R. [1924] 2 K.B. 483) distinguished. 
S.C.H. 
SUPREME COURT REPORTS 
521 
19-58 
(iv) The fact that the assessees as agents had a right to retain 
the expenses incurred by them and their commission out of the 
proceeds could not make the sale proceeds received by them as 
Turner 
agents any the less the proporty of their principals. 
Morrison ct Co., 
• 
Ltd. 
Colquhoun v. Brooks (2 Tax Oas. 490) and Saiyid Ali Imam v. 
v. 
King Emperor ([19:J5] I.L.R. 4 Pat. 210) referred to. 
Commissioner of 
(v) When the gross sale proceeds were received by the agents 
Income-tare, 
in India they necessarily received whatever profits and gains were 
West Bengal. 
lying dormitnt in them. If on taking accounts there were income, 
· 
profits or gains, then the proportionate part thereof attributable 
to the sale proceeds received by the agents in India was income, 
profits and gains received by them at the moment the gross sale 
proceeds were received by them in India, and s. 4 (1) (a) of the 
Income-tax Act was _immediately attracted and the income, profits 
and gains so received became chargeable to tax under s. 4 (1) (a) 
read with s. 3. 
Grainger ct Son v. William Lane Gough (L.R. [1896] A.O. 325) 
i·elied on. 
(vi) Where income, profits and gains are actually received in 
India s. 4 (1) (a) applies and it is no longer necessary for the 
revenue to resort to the fiction introduced by s. 42, and the asses-
sees were properly assessed under s. 4 (1) (a) and not under s. 4 
(1) (c), Section 4(1) (a) applies to all categories of assessees includ-
ing non-residents. 
Hirn Mills v. Income-tax Officer, Cawnpore ([1946] 14 I.T.R. 
417), Burugu Nagayya v. Commissioner of Income-tax, Madras 
([1949] 17 LT .R. 194J and Pondicherry Railway Co. v. Commissioner 
of Income-tax, Madras ([1931] I.L.R. 54 Mad. 691) relied on. 
(vii) The mere fact that the assessees were treated as agents 
under s. 43 of the Act did not 1nake it compulsory on the part of 
the revenue authorities to assess under s. 42, for an appointment 
as agent under s. 43 is for all the purposes

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