Implied Request via Post Office Deemed Profit Received in British India

The High Court upheld the Tribunal's decision that there was an implied request by the assessee company for merchants to send cheques by post, making the post office the company's agent for receiving payments. This led to the conclusion that the sale proceeds were received in British India, resulting in the assessee company being deemed to have received the profits in British India. The court ruled in favor of the revenue authorities, directing the assessee to bear the costs.

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Issues Involved:
1. Whether the sale proceeds were received by the assessee company or on its behalf in British India.
2. Whether there was an implied request by the assessee company to the merchants to send the cheques by post to Petlad, constituting the post office as the agent of the assessee company for receiving the payment.

Issue-wise Detailed Analysis:

1. Receipt of Sale Proceeds in British India:
The central issue was whether the sale proceeds amounting to Rs. 9,53,304 for the assessment year 1941-42 and Rs. 6,04,588 for the assessment year 1942-43 were received by the assessee company or on its behalf in British India. The Tribunal initially held that the moneys due on cheques and hundies were collected by banks in British India on behalf of the assessee company. However, the case was remanded for further consideration in light of the Supreme Court's decision in Commissioner of Income-tax v. Ogale Glass Works Ltd. [1954] 25 ITR 529 (SC). The Tribunal, after remand, found that the sale proceeds were received by the assessee company by post at Petlad and not in British India. The Tribunal relied on the fact that the buyers sent cheques, hundies, or drafts by post to Petlad, and there was no express agreement to make payments at Petlad.

2. Implied Request to Send Cheques by Post:
The critical question was whether there was an implied request by the assessee company to the merchants to send the cheques by post to Petlad, thereby constituting the post office as the agent of the assessee company for receiving the payment. The Tribunal inferred an implied request by the assessee company based on the established commercial practice and the fact that buyers consistently sent payments by post. The Tribunal examined affidavits from the assessee's constituents, which indicated that payments were made by sending cheques, hundies, or drafts to Petlad. The Tribunal concluded that this practice constituted an implied request by the assessee company for payments to be sent by post, making the post office the agent of the assessee company.

Conclusion:
The High Court upheld the Tribunal's finding that there was an implied request by the assessee company to the merchants to send the cheques by post, thereby constituting the post office as the agent of the assessee company for receiving the payment. Consequently, the sale proceeds were considered received in British India. The court answered the reference in the affirmative, holding that the proportionate profits on the sale proceeds were received by or on behalf of the assessee company in British India. The assessee was ordered to pay the costs.

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