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TMI Blog1955 (1) TMI 39X X X X Extracts X X X X X X X X Extracts X X X X ..... a firm at Sangli, a Native State (hereinafter referred to as non-resident). The nonresidents are pucca adatia merchants of Sangli. There were 20 contracts between the resident and non-resident between 25.10.1941 and 4.8.1947. The mode of business followed by them was as follows : The non-residents would send out from time to time market reports in respect of certain commodities to the residents at Kurnool. Whenever the residents considered the quotation so sent to be favourable, they gave telegraphic instruction to the non-residents to but or sell for a particular Vaida. The purchase and sales were effected by the non-residents at the rate prevailing at the time of the contracts. The non-residents bought or sold al the case may be and sent telegraphic intimation to the residents, together with the rates and Vaida date. Though it is stated that the resident sent regular contracts to the non-residents for acceptance, the latter denied it and there is nothing on record to show that any such contracts were sent. The non-residents in their turn entered into similar contracts with another merchant at Sangli to purchase or sell an equal quantity at the same rate to cover the contract wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (b) of Sub-sec. 1 of S. 17 as the case may be. Section 18 (5) : Any deduction made and paid to the account of the Central Government in accordance with the provisions of this section and any such by which a dividend has been increased under Sub-s. 2, S. 16 shall be treated as a payment of Income Tax or super tax on behalf of the person from whose income the deduction was made or of the owner of the security or of the share-holder as the case may be and credit shall be given to him therefor on the production of the certificate furnished under sub-s. 9 of S. 20 as the case may be in the assessment, if any, made for the following year under this Act. Section 18 (7) : If any such person does not deduct or after deducting fails to pay the tax as required or under this section, he and in the cases specified in Sub-section 3-D, the company of which he is the principal Officer, shall without prejudice to any other consequences, which he or it may incur, be deemed to be an assessee in default in respect of the tax." (5) The result of the aforesaid sections may be stated thus : Section 4 defines the income of a person that can be charged to tax under S. 3. In the case of a person, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... espect to the sale of goods. To do so would be merely impossible and wholly unwise -- to use the language of Lord Esher in -- 'Erichsen v. Last', (1881) 8 QBD 414 (B). They are not saying that the place of formation of the contract prevails against everything else. In some circumstances, it may be so, but other matters -- acts done under the contract, for example cannot be ruled out A PRIORI. In the case before the Board, the contracts were neither framed nor carried out in British India. The High Court's conclusion that the profits accrued or arose outside British India is well founded." (7) A Division Bench of the Madras High Court in -- 'Commissioner of Income Tax, Madras v. Anamallais Timber Trust Ltd.', (C), has also considered the scope of the said words "accrue" or "arise" in S. 4 and has not been able to arrive at better results. There the assessee was a company incorporated in the Indian State of Cochin. During the accounting year, the assessee eterned into a contract with the Supply Department of the Government of India for the supply of sized timebr. There was an invitation to offer by the Supply Department and the assessees ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e all that has been said on this topic in the authorities cited." (9) At page 554, Satyanarayana Rao J., expressed his view on the scope of the said words as follows : "Where were the contracts concluded and where did the income or right to receive the payment under the contracts accrue or arise ? The dictionary meaning of the word "accrue" is to arise or spring as a natural growth or result to come by way of an increase. Arising means coming into existence or notice or presenting itself. The word receive is not used in the same sense as accrue and arise. The words "accrue" and "arise" do nt mean actual receipt of the income, profits or gains; and they may be interpreted as conveying the idea of a present or enforceable right to receive the income, profits or gains. It is something inchoate but it is capable of being enforced or converted into money by actual receipt. The words denote a point of time anterior to the actual receipt." (10) Viswanatha Sastri J. said at page 561 : "The contracts for the supply of timber in this case were, as I have held, concluded in British India. But the execution of the contracts took place who ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from the decided cases that no unerring test can be laid dows and affording a key for solving this difficult question. In the ultimate analysis the question falls to be considered on the cumulative effect of the facts in each case. (13) On the facts submitted by the Tribunal, we must hold that the contract was concluded at Sangli. The learned counsel appearing for both parties proceeding on the basis that the non-residents are pucca adatia merchants and their relationship to the residents is not that of an agent. Therefore, the transaction was between two principals. The non-residents sent market reports to the residents showing details of the commodities and the rates. The residents choosing their opportune time gave telegraphic instruction of the non-residents to buy or sell for a particular Vaida. The non-residents bought or sold as the case may be and sent telegraphic intimation of the same to the residents. By doing so, they clearly accept the offer made by the residents. (14) It is said taht subsequently the non-residents sent letters asking the residents to accept the contracts but no such letters were placed before us. Whatever might be their contents, it is manifest from ..... X X X X Extracts X X X X X X X X Extracts X X X X
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