1959 (5) TMI 16

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....itories of the Nizam of Hyderabad. They acted as agents for the supply of gas plants manufactured by Messrs. T. V. S. Iyengar & Sons, Madura, to the Nizam's Government, and also as agents of the Lucas Indian Services, Bombay branch, for the supply of certain goods to that Government. The year of assessment is 1945-46. There does not appear to have been any written agreement between the two manufacturers and the respondents but the goods were to be supplied on a commission basis. In pursuance of this agreement the respondents received from Messrs. T. V. S. Iyengar & Sons, Madura, cheques drawn on the Imperial Bank of India, Madras, amounting to Rs. 35,202 in respect of all goods supplied from Madura and also from Lucas Indian Services, Bomba....

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....gh their books, the receipt must be taken to be receipts in Hyderabad. We agree with the view submitted by the appellants. In Bhashyam's Negotiable Instruments Act, 8th Edition, Revised, page 556, it is stated that it will be open to a creditor to accept a cheque in absolute payment of money due to him, in which case it will be equivalent to cash payment. That being the position it cannot be said that the income was received in British India. " At the instance of the Commissioner a reference under section 66(1) of the Act was made to the High Court of Orissa for their opinion on the following question : " Whether in the circumstances of the case, the sums of Rs. 35,202 and Rs. 5,302 received as commission from T. V. S. Iyengar & Sons Lt....

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....ch entries were made in the assessee's books, that the cheques were put into the bank immediately, that the bank at once gave credit to the assessee for these sums after charging discount thereon and immediately allowed the assessee to operate on those sums are significant. " Therefore the finding of fact by the Tribunal although not specific was that the receipt of the cheque by the respondents operated as full discharge of the debt due on account of commission from these two firms. The matter was decided by the High Court against the appellant and in the meanwhile this court had given a judgment in Commissioner of Income-tax v. Ogale Glass Works Ltd. Even after considering the decision of that case the High Court was of the opinion th....

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....upon in the High Court. According to this affidavit it was verbally agreed that the commission would be paid at Secunderabad in cash or by cheque (as the case may be). The language used in the affidavit was : " The above commission was verbally decided to be paid to Messrs. Patney & Co. Ltd., Secunderabad, the agent company in Hyderabad State at Secunderabad in cash or by cheque as the case might be. " In the case of payment by cheques sent by post the determination of the place of payment would depend upon the agreement between the parties or the course of conduct of the parties. If it is shown that the creditor authorised the debtor either expressly or impliedly to send a cheque by post the property in the cheque passes to the credito....