Receipt by cheque or hundi depends on delivery of the instrument; postal remittance needs an express or implied creditor request.

Payment by cheque or hundi is received when the negotiable instrument is delivered to the creditor, whether as absolute or conditional payment. For income-tax purposes, receipt in British India could be attributed to the assessee only if the buyers remitted the amounts by post pursuant to an express or clearly implied request from the assessee, so that the post office acted as the assessee's agent. Mere proof that buyers in fact sent cheques and hundis by post, without any contractual term, demand, or other reliable evidence of such a request, was insufficient to establish receipt in British India.

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Issues: Whether the profits attributable to the disputed sales were received by or on behalf of the assessee in British India so as to attract section 4(i)(a) of the Income-tax Act, 1922, on the footing that the post office acted as the assessee's agent when the cheques and hundis were posted.

Analysis: Receipt of payment through a negotiable instrument occurs when the instrument is delivered to the creditor, whether it is treated as unconditional payment or as conditional payment subject to honour on presentation. The decisive question was therefore the place where the cheques and hundis were received. In the absence of any agreement fixing the place of payment, receipt in British India could be inferred only if the assessee had expressly or impliedly requested the buyers to remit the amounts by post so that the post office became the assessee's agent. Mere proof that many buyers in fact remitted the amounts by post, without any contractual stipulation, demand, or other reliable evidence of such request, was insufficient to raise that implication.

Conclusion: The cheques and hundis were not shown to have been posted pursuant to any implied request by the assessee, and the receipt of the disputed amounts could not be treated as receipt by or on behalf of the assessee in British India. The question was answered in the negative, in favour of the assessee.

Ratio Decidendi: Where payment is made by cheque or hundi, receipt occurs on delivery of the negotiable instrument; but receipt at the place of posting in the creditor's favour can be inferred only from an express or clearly implied request by the creditor that the debtor remit by post.

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