1980 (3) TMI 50 - HC - Income Tax

Summary

Issues:
1. Determining whether the property in goods passed to customers in Part A and C States based on railway receipts and hundis.
2. Deciding if the entire profits from sales in Part A and C States should be considered for taxation or only a portion attributable to operations in British India.

Analysis:
Issue 1:
The case involved the assessee, a soapstone dealer, dispatching goods to Part A and C States with railway receipts made in the name of "self" and later endorsed to customers. The Income Tax Officer (ITO) initially held that property passed only after freight payment, attributing profits to Part A and C States. The Appellate Assistant Commissioner (AAC) disagreed, stating property passed upon dispatch of railway receipts and payment receipt in Part B State. The Appellate Tribunal ruled in favor of property passing to customers in Part A and C States, citing relevant Supreme Court cases. The Tribunal found the bank acted as the assessee's agent in collecting payments, supporting the property transfer conclusion. The High Court affirmed this decision, emphasizing the passing of property in Part A and C States.

Issue 2:
The second issue pertained to whether the entire profits from sales in Part A and C States should be considered for taxation or only a portion related to operations in British India. The counsel argued that since the ITO had already apportioned profits, the question was irrelevant. The High Court concurred, stating that since the profits had already been apportioned by the ITO, there was no need to address this question separately. Thus, the High Court answered the reference in favor of the assessee, with each party bearing their own costs.