Agency in receipt of sale proceeds makes payment to the seller's bank the place of receipt for income-tax purposes.

Sale proceeds paid to a seller's own bank against railway receipts are treated as received by the seller where the bank is authorised to release the documents only on payment. On the facts, the Imperial Bank acted as the assessee's agent, so payment at Agra, Allahabad or Delhi amounted to receipt in British India for income-tax purposes. The Court treated the place of actual payment to the bank as the place of receipt by the assessee, and the issues of accrual and passing of property were not decisive on the reference.

---

---

Issues: Whether the profits realised through the Imperial Bank at Agra, Allahabad and Delhi were received by the assessee in British India for the purpose of income tax.

Analysis: The income arose from sales of goods dispatched to buyers with railway receipts routed through the Imperial Bank at Bhopal. The decisive question was where the money was actually received. The Court held that, on the facts, the bank acted as the assessee's agent because the railway receipts were handed over to it with instructions not to deliver them to the buyers unless payment was made. Payment to the bank at Agra, Allahabad or Delhi therefore amounted to receipt by the assessee through its agent. The dispute as to accrual and the passing of property in the goods was not ative of the reference.

Conclusion: The amount was received in British India through the assessee's agent, and the answer to the referred question was in the affirmative, in favour of the Revenue.

Ratio Decidendi: Where a seller delivers railway receipts to its own bank with instructions to release them only against payment, the bank receives the sale proceeds as the seller's agent and the place of payment to the bank is the place of receipt by the seller for income-tax purposes.

---