Receipt in British India: cheque delivery by post treated as payment when honoured, so receipts deemed received.

Contractual payment by cheque and creditor's request for remittance were treated as performance when cheques drawn on the debtor's bank were posted and received at the creditor's office. Posting cheques in the ordinary course makes the post office the creditor's agent and constitutes delivery; a cheque constitutes payment unless dishonoured, and payment is treated as relating back to delivery where honour is satisfied. On the stated facts the cheques were received by post and cashed without dishonour, supporting that receipts from sales to the Government were received within British India under the governing statutory provision.

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Issues: (i) Whether on the facts of the case income, profits and gains in respect of sales made to the Government of India were received in British India within the meaning of Section 4(1)(a) of the Act.

Analysis: The contract expressly prescribed payment by cheque and the assessee had requested remittance by cheque on a bank in Bombay. The cheques were drawn by the Government department at Delhi on the Reserve Bank of India, Bombay branch, and were posted and received by the assessee at its office in Aundh. Under Section 50 of the Indian Contract Act, 1872, performance in the manner prescribed by the promisee discharges the contract. Where a creditor requests remittance and cheques are sent in the ordinary course by post, the post office becomes the agent of the creditor and posting amounts to delivery; authorities treat a cheque as payment unless dishonoured, and payment relates back to the date of delivery where the condition of honour is satisfied. The Tribunal found the cheques were received by post and were cashed without dishonour; these facts support either an implied unconditional acceptance or, alternatively, a conditional acceptance which was not defeated because the cheques were honoured.

Conclusion: On the facts, the receipts in respect of sales to the Government of India were received in British India within the meaning of Section 4(1)(a) of the Income-tax Act, 1922.

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