1955 (2) TMI 26

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..... the assessee company within the taxable territories. The assessee company contended that by reason of the agreement it sold goods as a principal and not as an agent of the foreign company. That contention is now given up by Mr. Kolah and the only contention that he has put forward is that in respect of certain transactions the sale proceeds were not received by the principal, the foreign company, in the taxable territories and to the extent that the sale proceeds were not received these receipts cannot be taxed under section 4(1)(a) of the Income-tax Act. Now, the finding of fact is that the assessee company in most cases makes remittances to the foreign company after the sale of the goods, but before the sale proceeds are recovered f .....

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..... sale proceeds but were remittances in discharge of the assessee's obligation arising under clause 23 of the agreement by which they were bound to pay to the principal within 30 days of the sale, and when in fact the assessee did receive the sale proceeds subsequent to the remittances, what the agent was receiving was not the sale proceeds on behalf of the principal but was receiving it on his own behalf, in his own right, and in order that he should recoup himself having already made the remittances in respect of the sale to his principal, or, in other words, when the agent received the sale proceeds after he had made the remittances he was receiving a debt due to him, the debt arising from the fact that he had already discharged his ob .....

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..... eipt of the sale proceeds the agent is not liable. What he says is that he is not liable on the receipt basis under section 4(1)(a) although he may be liable on the accrual basis under section 4(1)(c), and it is clear that on accrual basis those profits will have to be apportioned according to the principles now well settled. Two questions have been submitted to us by the Tribunal. With regard to the first question Mr. Kolah gives up his contention and therefore that question must be answered in the affirmative. With regard to question No. 2, our answer will be Yes to the extent that the remittances were made after the sale proceeds were received by the assessee company. The assessee to get 3/4ths of the costs of the reference. The not .....

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