Law:

Section:

Section 4 of the Indian Income-tax Act, 1922 [corresponding to section 5 of the Income-tax act, 1961] - Income - Accrual of - Assessee in part B state despatched goods to purchasers in part a and part C states - Railway receipts made in name of "self" and endorsed in purchasers' favour - Hundis drawn in purchasers' name and delivered to local bank in part B state for collection - Whether property in goods passed and income accrued to assessee in part A and part C states - Held, on facts, yes Facts During the accounting year ending 31-5-1949, the assessee-firm, a dealer in soap-stone, despatched goods worth Rs. 94,037, out of the total sales of Rs. 12,16,692, in Part B State to purchasers in Part A and Part C States. The railway receipts were made in the name of "self" and endorsed in favour of the customers. Hundis were drawn in the names of the purchasers and were delivered to the local bank in Part B State for collection. The ITO held that right to property and the goods passed to the purchasers only after the freight was paid and he accordingly considered that the profit amounting to Rs. 93,919 on the abovementioned sales had accrued to the assessee in Part A and Part C States. The AAC observed (i ) that the property in the goods passed immediately when the railway receipts were despatched to the customers ; and (ii ) that the payments were also received by assessee in Part B State. He, therefore, reversed the order of the ITO. On second appeal, the Tribunal observed (i) that the goods were despatched f.o.r. destination and the railway receipts were drawn in the name of "self" ; (ii) that the freight was also required to be paid at the destination ; and (iii) that the assessee became entitled to the purchase money on the passing of the title to the purchasers in Part A and Part C States. It, therefore, held that the income accrued to the assessee in Part A and Part C States. On reference, the assessee contended, inter alia, (i) that although the railway receipts were drawn in the name of "self", but they were endorsed in the name of the purchasers without any reservation and, therefore, as soon as the goods were delivered to the railway, the property in the…

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