Accrual of profits depends on passing of property where railway receipts are released only through bank on payment.

Income from the assessee's mining business was taxed on the mercantile basis, so accrual depended on when property in the goods passed. Because the contracts required railway receipts to be sent through bank and delivery to be made only against payment at the destination stations, the bargain was not unconditional for section 20 of the Sale of Goods Act. Property did not pass at Bhilwara when the goods were dispatched; it passed only on payment and delivery of the railway receipts in the destination States. On that footing, the profits accrued outside Part B States and the assessee was not entitled to rebate under the Part B States (Taxation Concessions) Order.

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Issues: Whether the assessee was entitled to rebate under the Part B States (Taxation Concessions) Order in respect of income from its mining business for the assessment years 1950-51 and 1951-52, and whether the profits accrued at Bhilwara or at the destination States when the railway receipts were sent through bank against payment.

Analysis: The assessee kept its accounts on the mercantile basis, so income had to be computed on accrual. Under the Sale of Goods Act, property in specific goods passes according to the intention of the parties, and sections 20 and 23 apply only where the contract is unconditional or the goods are unconditionally appropriated to the contract. The contracts required the railway receipts to be sent through bank, and the goods were consigned to self, with delivery to the buyers only against payment through the bank at the destination stations. That stipulation was treated as a material condition of the bargain, showing that the property did not pass at Bhilwara when the contracts were made or when the goods left the seller's godown. Instead, title and therefore accrual of profit arose only when the buyers paid and obtained the railway receipts in the Part A or Part C States.

Conclusion: The assessee was not entitled to rebate under the Part B States (Taxation Concessions) Order, and the question was answered against the assessee.

Ratio Decidendi: Where a sale contract requires railway receipts to be delivered through bank and the buyer obtains delivery only on payment at destination, the contract is not unconditional for section 20 purposes and the profits accrue where property in the goods passes on such payment, not where the goods are initially dispatched.

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