Law:

Section:

JUDGMENT Chagla, CJ.-The assessee is a textile mill situated in Bhavnagar and in the assessment years 1943-44 and 1944-45 it effected sales of the goods manufactured by it, and the question that arose for the consideration of the Income-tax Tribunal was whether the sale proceeds had been received in Bhavnagar or in the taxable territories. While this matter was pending before the Tribunal, this Court gave its judgment in Kirloskar Bros. Ltd. v. Commissioner of Income-tax [1952] 21 ITR 82 and the judgment was delivered on the 17th September, 1951. In that case we pointed out that if sale proceeds were remitted by cheque to Bhavnagar then the receipt of the cheque in Bhavnagar constituted the first receipt and therefore the amount so received was not liable to tax under section 4 (1)(a) of the Income-tax Act. In that case it was also sought to be argued by Mr. Joshi that even though cheques may be received by post the assessee may constitute the post office its agent and if the cheques were posted in the taxable territories then the receipt would be in the taxable territories and not in an Indian State. On the facts before us in Kirloskar's case (supra ) we came to the conclusion that there was no request, express or implied, by the assessee to the merchant, or in that case to Government, to remit the money by cheque, and therefore the post office was not constituted the agent of the assessee. We therefore rejected the contention put forward by Mr. Joshi in that case. The matter went to the Supreme Court and the Supreme Court gave its judgment in a sister case on the 19th April, 1954. The Supreme Court upheld our view with regard to the receipt by cheque, but it took the view on the facts of Kirloskar's case (supra ) and Ogale's case [1954] 25 ITR 529 that inasmuch as the assessee had asked the Government to remit moneys to the Indian State an inference must be drawn that there was an implied request by the assessee to send those moneys by post and therefore the post office was constituted the agent of the assessee and the receipt was not in the Indian State but in the taxable territories. The question that has been submitted to us by the Tribunal is whether the…

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