1967 (7) TMI 4 - SC - Income Tax

Assessee effected certain sales in British India under separate contracts and categories - Tribunal was right in holding that a proportionate part of the profits determined on sales grouped under items 3,4,5 and 9 in the assessment order by the application of r. 33 was assessable to income-tax - Revenue s Appeals allowed. Case remanded

Summary

Issues:
1. Interpretation of tax liability on profits from sales in British India.
2. Determination of the passing of property in goods for tax assessment purposes.

Analysis:

Issue 1:
The case involved an appeal against the High Court's judgment regarding the tax liability on profits from sales in British India. The appellant, an assessee, conducted textile sales in British India through various methods. The Income-tax Officer initially taxed profits accruing from these sales in British India on an accrual basis. The Appellate Assistant Commissioner later applied a rule to apportion 33 1/3 per cent of the profits to activities in British India. The Tribunal upheld this decision. The High Court answered one question in favor of the assessee, prompting the appeal to the Supreme Court. The appellant argued that property in the goods passed in British India based on the delivery method, citing precedents. The Supreme Court, following established case law, held that income accrued in British India, and a proportionate part of the income was subject to income tax. Question No. 3 was answered in the affirmative.

Issue 2:
Another question in the case concerned the passing of property in goods for tax assessment purposes. The appellant sought a ruling on this question, which the High Court did not address. The Supreme Court decided to remand the case to the High Court for a legal determination on this issue. The court emphasized the importance of addressing this question in accordance with the law. As a result, the appeals were allowed, and the case was sent back to the High Court for a decision on Question No. 2. The Supreme Court did not award any costs in this matter.