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TMI Blog1960 (8) TMI 3X X X X Extracts X X X X X X X X Extracts X X X X ..... ame and not in the name of the foreign corporations, but the goods were still sold for and on behalf of the foreign corporations and the sale proceeds received by the S.K.F. were received not on its own behalf but for and on behalf of its principals. In the view taken by us, the question will be answered in the affirmative in respect of sale of all goods where the price has been received by the S. K. F. in the taxable territories, and irrespective of whether the remittance has been made in respect of the goods sold before or after the price was received. Appeal allowed in part X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Swedish company for the assessment years 1949-50, 1950-51 and 1951-52, the S.K.F. submitted returns of income for these years in the taxable territory on behalf of the foreign corporations. Clauses 13, 22 and 23 of the agreement dated January 1, 1939, between the S.K.F. and the Swedish company which are material for the purpose of this appeal are as follows : Clause 13 : The agent shall render before the tenth day of each month a true and detailed statement of the said products that have been sold by him or his sub-agents during the preceding month. This statement is to be prepared in accordance with the instructions that are to be given by S.K.F. and it shall contain the names and addresses of the parties to whom the said product ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en goods were sold by the S.K.F., the account of the principal was credited with the price and the account of the buyers to whom the goods were sold on credit was debited. In a majority of cases of sales, remittances of " sale value " after deducting commission were made after sale of the goods to the buyers but before the sale proceeds were recovered. In a few cases, remittances were made even before the goods were sold, and in the remaining, remittances were made after the sale proceeds were realized from the buyers. The Income-tax Officer assessed the foreign corporations under section 4(1)(a) of the Indian Income-tax Act for payment of tax on the profits included in the price realized by the S.K.F. by sale of goods " received on consi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he same could not be taken into account under section 4(1)(a) of the Indian Income-tax Act in assessing the taxable income of the foreign corporations. The High Court observed that the S. K. F. was liable to pay tax on behalf of the foreign corporations under section 4(1)(a) only if the taxing authority established that the foreign corporations had received the sale proceeds within the taxable territories ; that the sale proceeds were received by the foreign corporations when the S. K. F. made remittances under clause 23 of the agreement, but somewhat inconsistently the High Court observed that the remittances made by the S. K. F. before the sale proceeds were realized, were remittances not of the sale proceeds, but in discharge of its obli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... if it was received in the taxable territories. It is not disputed that the sale proceeds realized by the S. K. F. in the taxable territories as agent of the foreign corporations before remittances under the terms of the agreement were liable to be taxed. Does the circumstance that the S. K. F. had in discharge of an obligation undertaken by it made remittances under the terms of the agreement before it realized the price of the goods sold alter the nature of the realizations ? The remittances made by the S. K. F. indisputably reached the foreign corporations in respect of all sales outside the taxable territories. But the S. K. F. was their agent for sale of the goods, and for receiving the price in the taxable territory. The relation betw ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . K. F. to the foreign corporations before the price was received did not include income, because income, in fact, was never received till the price was realized. Again, we are unable to agree with the contention of counsel for the S. K. F. that there was a contract of suretyship between the foreign corporations and the S. K. F. and the receipt by the former of the remittances amounted to receipt of the price of the goods. It is not pretended that there was a tripartite contract and the foreign corporations sold the goods directly to the purchasers in India, the S. K. F. having guaranteed payment of the price by the buyers to whom the goods had been sold. The price received by the S. K. F. being received within the taxable territories for ..... X X X X Extracts X X X X X X X X Extracts X X X X
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