1960 (4) TMI 89 - SC - Income Tax

Summary

Issues Involved:
1. Jurisdiction of the High Court under Section 66(4) of the Indian Income-tax Act to call for a supplemental statement of the case from the Income-tax Appellate Tribunal.
2. Determination of the place of receipt of income for tax purposes.

Detailed Analysis:

1. Jurisdiction of the High Court under Section 66(4) of the Indian Income-tax Act:

The primary issue in this case was whether the High Court had jurisdiction to call for a supplemental statement of the case from the Income-tax Appellate Tribunal under Section 66(4) of the Indian Income-tax Act. The High Court had directed the Tribunal to find out if the cheques were sent to the assessee firm by post or by hand and what directions, if any, had been given by the assessee firm regarding this matter.

The Supreme Court examined previous cases, including *The New Jehangir Vakil Mills Ltd. v. The Commissioner of Income-tax* and *Jagdish Mills Ltd. v. Commissioner of Income-tax*, which had set limits on the jurisdiction of the High Court under Section 66(4). It was established that the High Court could not raise a new question of law not arising out of the Tribunal's order and could not direct the Tribunal to investigate new or further facts necessary to determine this new question.

The Supreme Court noted that the High Court's direction in this case did not exceed its jurisdiction because the question framed was broad enough to include an enquiry into whether there was any request, express or implied, that the amount of the bills be paid by cheques, thus falling within the dicta of the Court in the *Ogale Glass Works* and *Jagdish Mills* cases.

2. Determination of the Place of Receipt of Income for Tax Purposes:

The second issue was whether the income from sales made to the Government of India was received by the assessee in the taxable territories. The Tribunal had initially found that the cheques were received in Jaipur, and the High Court sought additional details on how the cheques were sent and received.

The Supreme Court reviewed several precedents, including:
- *Keshav Mills Co., Ltd. v. Commissioner of Income-tax*: It was held that if a cheque was received by a creditor on a British Indian Bank and he gave the cheque to his bank for collection, the bank must be treated as his agent, and the creditor must be regarded as having received it in the taxable territory.
- *Sir Sobha Singh v. Commissioner of Income-tax*: It was held that the receipt of money was at the place where the bank on which the cheques were drawn was situated.
- *Kirloskar Bros. Ltd. v. Commissioner of Income-tax* and *Ogale Glass Works Ltd. v. Commissioner of Income-tax*: These cases established that unless the payee expressly constituted the post office as his agent, the mere posting of the cheque did not constitute the post office the agent of the payee, and the amount of the cheque was received at the place where the cheque was received.

The Supreme Court held that the direction given by the High Court was within its jurisdiction as it did not require a fresh enquiry into new facts but rather a clarification based on the existing record. The question of law framed was broad enough to include whether there was an implied or express request for the cheques to be sent by post, thus determining the place of receipt of income.

Conclusion:
The Supreme Court concluded that the High Court did not exceed its jurisdiction under Section 66(4) of the Indian Income-tax Act by calling for a supplemental statement of the case. The appeal was dismissed with costs.