Receipt of profits in British India turns on appropriation of goods and place of credit, not bank collection route.

Profits from goods supplied to the Government of India were not received, and were not deemed to be received, in British India for section 4(1)(a) of the Indian Income-tax Act, 1922. After inspection and approval at the mill premises, the goods were treated as unconditionally appropriated to the contract and passed to the buyers under section 23 of the Indian Sale of Goods Act, 1930. The railway receipts and collection process were therefore regarded as operating on behalf of the buyers, while the assessee received the money only when it was credited at Bhopal, not when collected by bank branches in British India.

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Issues: Whether the proportionate profits on goods supplied to the Government of India were received or deemed to be received in British India within the meaning of section 4(1)(a) of the Indian Income-tax Act, 1922.

Analysis: The goods, after inspection and approval at the mill premises, were treated as having been unconditionally appropriated to the contract and therefore passed to the buyers under section 23 of the Indian Sale of Goods Act, 1930. The railway receipts and subsequent collection machinery were accordingly treated as being on behalf of the buyers, not the assessee. The money reached the assessee only when credited at Bhopal, and not when collected by the bank branches in British India.

Conclusion: The profits were not received and were not deemed to be received in British India. The reference was answered in the negative, in favour of the assessee.

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