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TMI Blog1973 (7) TMI 6X X X X Extracts X X X X X X X X Extracts X X X X ..... arketing Co. Ltd., as the case may be, to the public or to the Government in the accounting years 1946, 1947 and 1948 were received by the said companies on behalf of the assessee in the taxable territories ? (3) Whether the Tribunal was right in rejecting the claim of the applicant-company, namely, that so far as the goods were sold in the State of Bikaner through the sub-agents of the Cement Marketing Co. of India Ltd., the sale proceeds thereof were not received in British India and as such it was not assessable under section 4(1)(a) of the Indian Income-tax Act, 1922, to that extent ?" It may be mentioned that the first two questions were referred by the Tribunal to this court under section 66(1) of the Act whereas the third question has been referred to this court by the Tribunal under section 66(2) of the Act and so far as the first two questions are concerned, Mr. Mehta appearing for the assessee has fairly stated before us that he is not pressing the reference and as such those two questions need not be answered by this court. Since the reference on those two questions is not pressed, we agree with Mr. Mehta that the questions need not be answered. The only question tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... department contended that this agreement of October 8, 1941, was a dummy agreement or a mere paper transaction and that the entire production of the company was marketed or sold by the aforesaid three companies during the relevant accounting periods and as such the sale proceeds that were received by those three companies were received by them on behalf of the assessee-company in the taxable territories and as such the income derived from such sales was taxable under section 4(1)(a) of the Act. On this principal question, relying upon the earlier decision of this court with regard to the assessment year 1946-47, given on 11th September, 1951 in I. T. Reference No. 20 of 1951 and after examining the relevant material that was produced before them, the taxing authorities as well as the Tribunal came to the conclusion that the sale proceeds of the cement manufactured by them and sold by the Cement Marketing Co. of India Ltd., the Dalmia Cement Ltd., and the Dalmia Cement and Paper Marketing Co. Ltd., as the case may be, were received by the said companies on behalf of the company in the taxable territories and as the assessee failed before the taxing authorities and the Tribunal on t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... I. who was responsible and it is they who received the sale proceeds. Therefore, the receipt is in India even in respect of those transactions." Before the Tribunal all the three appeals for the relevant years were heard together and though for the assessment years 1948-49 and 1949-50, no specific contention was raised by the assessee in regard to such sales that had been effected in the State of Bikaner by the Cement Marketing Co. of India through its sub-agents in the memos of appeal filed on behalf of the assessee, the said contention though in a vague form had been raised by the assessee in its memo of appeal preferred for the assessment year 1947-48 and the contention raised in the said memo of appeal was couched in the following terms : "The learned Appellate Assistant Commissioner erred in not excluding the sales of cement effected in the erstwhile native States, payments whereof were either received at the first instance in those States or were made by cheques posted from the said States to M/s. Cement Marketing Co. of India Ltd. at Bombay." However, during the course of hearing before the Tribunal, the point was specifically made on behalf of the assessee that the Ce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssistant Commissioner in terms has oserved that the agent at Bikaner was only a sub-agent of the Cement Marketing Co. of India and, therefore, the sale proceeds were received by the Cement Marketing Co. of India Ltd. In other words, according to the Appellate Assistant Commissioner, even if it were held that the sale proceeds had been received by the agent at Bikaner, when subsequently the Cement Marketing Co. of India received the amounts from the sub-agent at Bikaner at Bombay it was that payment which the Cement Marketing Co. of India received in Bombay that could be regarded as receipt of the sale proceeds which were credited by the Cement Marketing Co. of India in Bharat Eank, Bombay, in the name of Dadri Marketing Co. initially and, thereafter, in the name of Dalmia Cement Co. and he has further taken the view that in any case since the Cement Marketing Co. of India was responsible for the payment of the price to the assessee-company, it was the Cement Marketing Co. of India who received the sale proceeds. Obviously, the Appellate Assistant Commissioner overlooked the fact that profit or income derived by effecting sales at Bikaner could be said to have been received at Bikan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r are deemed to be received in the taxable territories in such year by or on behalf of such person." In other words, in order to show that the income in respect of the sales of cement that were effected by the sub-agent in the State of Bikaner could be brought to tax under the above provision it was up to the department to show that such income had been received or deemed to have been received in the taxable territories by or on behalf of the assessee-company and the claim made by the assessee that the income derived from such sales was not taxable under section 4(1)(a) could not be rejected on the ground that there was no material or evidence on record to show that any sale proceeds were received at Bikaner. The burden of proving that such sale proceeds were received by the assessee or by some one on its behalf in the taxable territories was on the department and in the absence of material in that behalf the department would suffer and not the assessee-company. It is true that the Tribunal has further observed that the case throughout had been fought on the footing that the proceeds were received at the headquarters of the Cement Marketing Co. of India at Bombay. It is difficult ..... X X X X Extracts X X X X X X X X Extracts X X X X
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