TaxTMI 
TaxTMI 
1959 (5) TMI 9
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.... for the assessment year 1950-51 at the rate or rates applicable to income, profits and gains arising or accruing in Part A States. The course of their business was this : they sent out agents to various parts of India. They canvassed orders and sometimes took advance payments in full or in part and, after deducting their expenses, remitted the balance to the respondents at Ratlam through bank drafts etc. The goods ordered were sent to the customers either by V. P. P. or by rail. In the latter case the railway receipt in favour of self were sent through a bank deliverable against payment of the demand draft drawn upon the buyers and sent with the railway receipts. This price when received by the bank was sent by the bank by means of bank draft to the respondents at Ratlam who sent them for being cashed and credited to their account at Bombay. The Income-tax Officer held that the major quantity of goods was supplied to the customers in what was Part A and C States either by V.P.P. or by rail, the railway receipts being in favour of the respondents and payment was received as stated above. The assessees' banker was the Bank of India Ltd., Bombay, and the sale proceeds were, accordi....
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.... Ratlam and encashed through the assessee's bankers at Bombay constituted receipts in Part A State ? " The High Court answered both these questions in favour of the assessees but gave a certificate and the appeal is, therefore, brought by the Commissioner of Income-tax. Apart from the sales which were deemed to have taken place in Ratlam itself the goods were, as stated above, supplied to the customers in one of the following two ways. The goods were either sent from Ratlam through the post office by V. P. P. or they were sent from there by rail and the railway receipts in favour of self were sent through a bank with the direction that the goods were to be handed over against "payment of the enclosed demand draft." We shall first deal with that part in which the goods were sent by post under the V. P. P. system. The purpose of this system is given in rule 133 of the post office as under : " The V. P. P. system is designed to meet the requirements of persons who wish to pay for articles sent to them at the time of the receipt of the articles or of the bill or railway receipt relating to them and also to meet the requirements of the traders and others who wish to recover through ....
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....on that the articles are not to be delivered to the purchaser till the payment of price, the appropriation is not absolute but conditional and until the price is paid the property in the goods does not pass to the purchaser. Mirabita v. Imperial Ottoman Bank at pages 172-173 (Cotton L. J.). See also The Parchim at pages 170-171 (Per Lord Parker). And the goods pass at the place where the price is paid, i.e., which in the present case was in an A or C State. Thus the price was received by the seller in A or C State. But it was submitted on behalf of the respondents that to the present case the judgment of this court in Commissioner of Income-tax v. Ogale Glass Works Ltd. applies. There the assessee was a company which was carrying on business in an Indian State (outside British India) and its liability to Indian income-tax depended upon its receipt of money within British India. The assessee had to be paid for goods supplied to the Government of India and at his request the Government of India agreed to make payments by cheques which were drawn in Delhi on a Bombay bank and were posted in Delhi and received by the assessee in the Indian State. It was held that the post office was t....
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....person delivering them. A bailee's duty therefore is to deal with the goods according to the directions of the bailor and if the direction in the present case was that the goods were to be delivered to the buyer on payment then the bailee would receive the price on behalf of the seller at the place where the goods were delivered to the buyer. Thus the principle governing a despatch of articles by V. P. P. is that the appropriation is conditional and goods only pass when the condition is fulfilled, i.e., the price is paid against delivery. The post office is an agent for the seller and receives the price from the buyer at the place of delivery for transmission to the seller. The income in the present case was therefore received in Part A or Part C States and not in Ratlam. In our opinion, the answer to the first question should have been in favour of the Commissioner. It should have been held that the income in respect of goods sent by V. P. P. was received in Part A and C States and not in a Part B State. The next question is unfortunately not properly framed and therefore it is necessary to reframe it as was done in Narain Swadeshi Weaving Mills v. Commissioner of Excess Profits....