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TMI Blog1967 (5) TMI 1X X X X Extracts X X X X X X X X Extracts X X X X ..... antile method of accounting and the assessment years in question are 1950-51 and 1951-52, the corresponding previous years being the years from November 2, 1948, to October 21, 1949, and October 22, 1949, to November 9, 1950, respectively. The total sale proceeds of the appellant during the two assessment years amounted to Rs. 19,77,544. The appellant tendered bills to the local branch of the Bank of Rajasthan to the extent of Rs. 15,64,475 and received payment of that amount at Bhilwara. The appellant claimed that it was entitled to the benefit of rebate in regard to profits from these sales under the Part B States (Taxation Concessions) Order, 1950, and that section 4(1)(a) of the Income-tax Act, 1922 (hereinafter called " the Act "), was not applicable to its transactions. By his orders dated March 24, 1955, and May 31, 1954, the Income-tax Officer held that the sales took place in Part A and Part C States and the entire profits from those sales accrued and were received by the appellant in Part A and Part C States and therefore no rebate was admissible under the Part B States (Taxation Concessions) Order, 1950. The Income-tax Officer also rejected the claim of the appellant tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts would be sent " through bank". There is the further stipulation that 25 per cent. of the price would be sent by way of an advance within a week's time, that the packing expenses would be payable by the buyers and that after the consignments left the godown at Bhilwara, they would be entirely at the buyer's risk. Apart from these written terms and conditions of the contract, the Income-tax Appellate Tribunal has recorded the further finding of fact that the appellant consigned the goods to " self " and that the railway receipts along with the bills of exchange were presented by the appellant to the Rajasthan Bank, Bhilwara, for collection after endorsing the railway receipts in favour of the bank. It has also been found that the Rajasthan Bank in its turn endorsed the railway receipts in favour of its branches in Part A and Part C States and that the goods were delivered to the buyers only when they paid the price to the bank and obtained the railway receipts. Paragraph 4(1)(iii) of the Part B States (Taxation Concessions) Order, 1950, is to the following effect : " 4. Scope of the main concessions.--(1) The provisions of paragraphs 5, 6, sub-paragraph (1) of paragraphs 11, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and might have accrued in the kingdom. I think, therefore, that the words 'arising or accruing' are general words descriptive of a right to receive profits. " It is clear, therefore, that the income may accrue to an assessee without actual receipt of the same. If the assessee acquires a right to receive the income, the income can be said to accrue to him, though it may be received later, on its being ascertained. The basic conception is that he must have acquired a right to receive the income (see E. D. Sassoon and Co. Ltd. v. Commissioner of Income-tax). As pointed out by the Judicial Committee in Commissioner of Income-tax v. Chunilal B. Mehta, it is impossible to lay down any general test to determine the place where the profits of the business accrue. In some cases it may be the place of the formation of the contract, but other matters--for instance the place where the contract is carried out or acts are done under the contract--may be decisive in certain circumstances. When the business consists of buying and selling goods, profits accrue as a general rule at the place where the contract of sale is made or where sales are effected. But the question depends very much upo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the sale of specific goods or where goods are subsequently appropriated to the contract, the seller may, by the terms of the contract or appropriation, reserve the right of disposal of the goods until certain conditions are fulfilled. In such a case, notwithstanding the delivery of the goods to a buyer, or to a carrier or other bailee for the purpose of transmission to the buyer, the property in the goods does not pass to the buyer until the conditions imposed by the seller are fulfilled. (2) Where goods are shipped and by the bill of lading the goods are deliverable to the order of the seller or his agent, the seller is prima facie deemed to reserve the right of disposal . . . " In the present case, the appellant has reserved the right of disposal over the goods at the time of despatch. The consignment was sent " self ", railway receipt was taken in the name of the appellant and the railway receipt along with the bill of exchange was presented by the appellant to the Rajasthan Bank for collection after endorsing the railway receipt in favour of the Rajasthan Bank. The goods were delivered to the buyers only when they paid the price to the bank and obtained the railway receip ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er. Possession of the indorsed bill of lading enables the acceptor to get possession of the goods on the ship's arrival. If the shipper, being then owner of the goods, authorises and directs the banker, to whom he is himself liable and whose interest it is to continue to hold the bill of lading till the draft is accepted, to surrender the bill of lading against the acceptance of the draft, it is natural to infer that he intends to transfer the ownership when this is done, but intends also to remain the owner until this has been done. . . . . .The general law infers under these circumstances that the ownership in the goods is transferred when the draft drawn against them is accepted." It was argued on behalf of the appellant that after the railway receipts had been endorsed in favour of the bank and the appellant got the consideration by discount of the railway receipts the title in the goods had passed from the appellant to the Bank of Rajasthan which became thereafter the agent of the purchaser. We do not think there is any substance in this argument. Before the Appellate Tribunal the case of the appellant was that the railway receipt and the bills were sent by it to the bank f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll then, the latter will have a right of recourse against the appellant in case the hundi is dishonoured. In the present case, the appellant became entitled to the purchase money only on the passing of title to the purchasers at Kodarma and Giridih in Part A and Part C States and it must therefore be held that the income accrued to the appellant in Part A and Part C States. We proceed to consider the next contention of the appellant, namely, that mica was extracted, processed, sorted, packed and despatched at Bhilwara in Part B State and there was accrual of a part of the income at Bhilwara and the appellant was, in any case, entitled to claim apportionment of the profits accrued. Counsel on behalf of the appellant placed reliance upon the decisions of this court in Commissioner of Income-tax v. Ahmedbhai Umarbhai Co. and in Anglo-French Textile Co. Ltd. v. Commissioner of Income-tax, where it was pointed out that in the case of a composite business, for instance, where a person carries on a manufacturing and selling business it was not possible to say that the only place where the profits accrue to him is the place of sale. The profits are received by him firstly for his busi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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