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Issues Involved:
1. Tax liability on commission realized by the assessees on hundis collected in Bombay. 2. Determination of whether two businesses conducted by the assessees were separate or branches of the same business. Issue-Wise Detailed Analysis: 1. Tax Liability on Commission Realized by the Assessees on Hundis Collected in Bombay: The first question addressed was whether the commission of one percent realized by the assessees on the value of hundis collected in Bombay, related to cloth sold by their Indore shop to Bombay merchants, is liable to income-tax and super-tax in British India. The relevant facts include an agreement from 1919 between the Kalyanmal Mills, Ltd. (a company registered in Indore) and the assessees, which entitled the assessees to a commission on the gross sale proceeds of the company's cloth and yarn. Sales were effected in Indore on F.O.R. terms to Bombay merchants, with purchase money received in the form of hundis collected by the assessees in Bombay and paid to the company in Indore. The court examined whether the commission accrued or arose in British India under Section 4(1) of the Income-tax Act. It was noted that the commission was payable at the end of the year and paid in Indore, not received in British India. The court referred to a similar case, Commissioner of Income-tax v. Sarupchand, where the commission accrued in British India because sales were effected and moneys received in Bombay. However, in the present case, the sales occurred in Indore, and the commission was not deductible until the end of the year. The court concluded that the source of the commission was the sale in Indore, not the receipt of sale proceeds in Bombay. Therefore, the commission did not accrue or arise in British India. The court answered the first question in the negative. 2. Determination of Whether Two Businesses Conducted by the Assessees Were Separate or Branches of the Same Business: The second question arose from the assessees' claim of expenses incurred in collecting outstandings from a closed cotton Jatha business. The assessees had two other businesses: cotton speculation and banking, and cotton Jatha business. The Commissioner found these to be separate businesses, with distinct account books and operations. The relevance was whether the cotton Jatha business was subsisting as a branch of a still subsisting business, which would allow expenses under Section 10(2)(ix) of the Income-tax Act. The court noted that determining whether businesses are separate or branches of the same business is a question of fact for the Commissioner. The court reviewed various cases, acknowledging the difficulty in formulating rules for such determinations. It emphasized that common ownership does not necessarily mean businesses are branches of the same business, and distinct nature does not mean they are separate. The court found there was evidence supporting the Commissioner's conclusion that the businesses were separate, noting that they were conducted in different names, with separate accounts, and were distinct in character. The court answered the second question in the affirmative. Additional Judgments: Both judges delivered separate judgments but concurred on the answers to the questions. The court concluded with no order as to costs, as each side succeeded on one question. Conclusion: The court determined that the commission realized by the assessees on hundis collected in Bombay was not liable to income-tax and super-tax in British India, as the commission accrued from sales in Indore. Additionally, the court upheld the Commissioner's finding that the assessees' two businesses were separate, affirming the decision based on the evidence presented.
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