Place of receipt governs taxability of consignment sale proceeds when an Indian agent realises the price for foreign principals.

Income embedded in consignment sale proceeds is received in the taxable territories when an Indian selling agent realises the sale price there on behalf of foreign principals, making the place of receipt decisive for taxability under section 4(1)(a) of the Indian Income-tax Act, 1922. The goods remained the property of the foreign principals until sale, and the Indian company acted as agent rather than purchaser. A later remittance made under a separate contractual obligation did not alter the character or situs of the original receipt of sale proceeds. The tax consequence therefore turned on actual receipt of the price in India.

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Issues: (i) Whether the profits embedded in the sale proceeds of consignment goods were received in the taxable territories on behalf of the foreign principals for the purposes of section 4(1)(a) of the Indian Income-tax Act, 1922.

Analysis: The agreement showed that the Indian company acted as selling agent and not as purchaser. The goods remained the property of the foreign principals till sale, and the price realized by the agent in India represented income received for and on behalf of the principals. The later remittances made under the separate contractual obligation did not alter the character of the receipt of the sale price, because income arose only when the price was actually received from the buyers in India. The place of receipt of the sale price was therefore decisive for taxability under section 4(1)(a).

Conclusion: The profits embedded in the sale proceeds were received in the taxable territories on behalf of the foreign principals, and the answer to the referred question was in the affirmative.

Final Conclusion: The appeal failed on the principal tax issue, with relief confined to the extent indicated in the judgment.

Ratio Decidendi: Income embedded in sale proceeds is received in the taxable territories when the agent authorized to sell and receive price in India actually realizes the price there, and a prior remittance under a separate obligation does not change the place or character of receipt.

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