Law:

Section:

Section 5 of the Income-tax Act, 1961 [Corresponding to section 4(1) of the Indian Income-tax Act, 1922] - Income - Accrual of - Assessment years 1941-42 to 1945-46 - Whether as between sender and addressee, it is request of addressee that cheque be sent by post that makes post office agent of addressee and after such request, addressee cannot be heard to say that post office was not his agent - Held, yes - Assessee-company, manufacturing certain articles in Indian State of Aundh, made supply thereof to Government of India - Assessee submit bill in prescribed form and requested Government to remit amount by cheque in favour of assessee on any bank in Bombay by post- Cheques were posted by Government at Delhi, they were received by assessee in Aundh and cashed through its bank at Bombay - Whether posting in Delhi, in law, amounted to payment in Delhi and, therefore, income, profits and gains made by assessee in respect of Sales made to Government of India was received by him in British India within meaning of section 4(1)(a) of 1922 Act - Held, yes FACTS The assessee-company incorporated and carrying on business in Aundh which in those days was an Indian State, secured some contracts for the supply of lanterns and other glasswares to the Government of India. The contract governing supplies provided that "unless otherwise agreed between the parties, payment for the delivery of the stores would be made on submission of bills in the prescribed form in accordance with instructions given in the Acceptance of Tender by cheque on a Government Treasury in India or on a branch of the Reserve Bank of India or the Imperial Bank of India transacting Government business". The assessee used to submit bills in prescribed form and requested that the cheques should be issued on some bank in Bombay. After receipt of the cheques the assessee used to endorse it in favour of Aundh Bank, which in its turn used to endores them in favour of the Bombay Bank. The last named bank cleared the cheques through the Clearing House in Bombay. The Aundh Bank used to credit the assessee's account on the very day the cheques were received from the assessee with the amount of the cheques less the…

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