Taxable receipt of sale proceeds turns on when the bank credits the seller, not later recovery from consignees.

Sale proceeds from cloth transactions were not received by the assessee in the taxable territories for purposes of section 4(1)(a) of the Indian Income-tax Act, 1922. The court followed an earlier ruling on similar facts and treated receipt as having occurred at Indore when the bank credited the seller upon receiving the railway receipts and documents, because the bank dealt with those instruments on its own account and not merely as a collecting agent. On that footing, later recovery from the consignees in the taxable territories did not amount to receipt by the assessee there, so the assessment on that basis failed and the issue was answered against the Revenue.

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Issues: Whether the sale proceeds attributable to the cloth transactions were received by the assessee in the taxable territories so as to justify assessment of the profits under section 4(1)(a) of the Indian Income-tax Act, 1922.

Analysis: The reference was governed by the earlier decision on similar facts, where the bank had credited the seller on receipt of the railway receipts and documents and had dealt with the instruments on its own account rather than merely as a collecting agent. On the findings recorded, the proceeds were treated as received at Indore when credited by the bank, and not at the places in the taxable territories where the bank later realised payment from the consignees.

Conclusion: The sale proceeds were not received by the assessee in the taxable territories, and the question was answered in the negative, against the Revenue and in favour of the assessee.

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