Appeal No 755 of 1957
Appeal by special leave from the judgment and order dated March 23 1955 of the former Nagpur High Court in Misc
Civil Case No 240 of 1953
10 K N Rajagopal Sastri R H Dhebar and D Gupta for the appellant
Veda Vyasa section N Andley J B Dadachanji_ Rameshwar Nath and P L Vohra for the respondent
October 17
HIDAYATULLAH J
This appeal with special leave has been filed against the judgment of the Nagpur High Court in a reference under section 661 of the Indian Income tax Act 1922 by which the High Court answered the following question in the negative  Whether the proportionate profits on the goods of the value of Rs 410785 were received or were deemed to be received in British India in the year of account by or on behalf of the assessee Company within the meaning of Section 41a of the Indian Income tax Act 1922 
The Commissioner of Income tax Madhya Pradesh and Bhopal is the appellant and the Bhopal Textiles Ltd Bhopal is the respondent
For the assessment year 1944 45 the Company which was non resident was treated as  resident and ordinarily resident  under section 41c of the Income tax Act
In the year of account it had supplied its manufactured articles either to the Government of India or its nominees at Agra Allahabad and Delhi
Under the orders of the Government the goods were sent direct to the persons nominated who made the payment against the goods
The goods were all sent for Bhopal and the railway freight and other charges were to be borne by the buyers to whom the railway receipts made out in the name of the consignees were sent by the Company through the Imperial Bank at Bhopal
The Bhopal Branch sent the railway receipts to branches of the Bank at Agra Allahabad and Delhi which collected the amounts due from the buyers and transmitted them to the Imperial Bank Bhopal to the credit of the Company
On these facts a total sum of Rs 440373 was held by the Department to have been received in British India
of that sum an amount of Rs 29588 which represented the receipts 11 for supplies direct to Government is no longer in dispute
The balance represents the sum which was the subject matter of the reference
The usual appeals followed and the contention of the Company that the money was not received in British India was not accepted by the Tribunal
The Tribunal did not decide about the place of accrual
A reference was then made by the Tribunal of the question quoted above
The High Court in deciding the reference went into the question of passing of property under the Indian  and came to the conclusion that since the property in the goods had passed to the buyers the Imperial Bank of India Bhopal must be  deemed to have received the railway receipts as agents of the buyers 
Continuing the reason the learned Judges observed  So also the branches of the Bank at Agra Allahabad and Delhi acted as the agents of the buyers when they collected the money from them and transmitted it to the Bhopal branch
In this view the profits cannot be said to be received by the assessee Company in British India  It received the money only when it reached the Bhopal branch as a credit to its own account and that was not in British India at the material time 
The case was not decided by the Tribunal on the basis of accrual of the income profits or gains to the Company
It was decided on the fact of actual receipt whether it was in British India or in Bhopal which was then outside the taxable territories
We need not therefore concern ourselves with the problem whether property in the goods could be said to have passed absolutely to the buyers without any right of disposal being reserved by the Company
It is a matter of some doubt whether the goods were absolutely at the disposal of the buyers after the rail
way receipts were handed over to the Bank
It is in evidence and has been adverted to by the Incometax Officer that the Company when it handed over the railway receipt to the Imperial Bank at Bhopal did so along with a covering letter in which it asked the Bank to deliver the railway receipt and the bill to 12 the buyers against payment of the bill amount plus collection charges
In this view of the matter though we do not express any final opinion we doubt whether the right of disposal was parted with by the Company
A railway receipt is a document of title to goods and for all purposes represents the goods
When the railway receipt is handed over to the consignee on payment the property in the goods is transferred
In this case it is a matter of considerable doubt whether the property in the goods can be said to have passed to the buyers by the mere fact of the railway receipts being in the name of the consignees as has been held by the High Court
Since we are not deciding the question of accrual we do not elaborate the point
Coming now to the question as to where the amount was received we have no doubt that the view of the Tribunal was correct
This income was received at Agra Allahabad or Delhi from the buyers by the Imperial Bank acting as the agent of the Company
The Company had handed over the railway receipts to the Bank and asked the Bank not to hand over the railway receipts to the buyers unless payment was received
This was sufficient to make the Bank an agent of the Company
The buyers could not have countermanded the instructions given by the Company to the Bank which they would indubitably have been able to do if the Bank was their agent
This was laid down by this Court in The Commissioner of Income tax vs P M Rathod and Company 1
Mr Veda Vyasa contends that the case is distinguishable on the ground that the railway receipts there were  to self  whereas here the railway receipts were made out in the name of the consignee
Nothing turns upon this distinction
The document of title to goods was still the property of the Company till payment for it was received and it was handed over
In this view of the matter we are of opinion that the ruling in question app lies
Mr Veda Vyasa finally contended that the agreement between the parties was that the goods were to 1  13 be sent for Bhopal and that the price was also to be paid there
He contended that the handing over of the railway receipts to the Bank at Bhopal was in furtherance of the agreement that the money was ultimately obtained by the Bank and handed over at Bhopal also and that thus the money must be deemed to have been received there
This in our opinion does not truly represent the character of the transaction
No doubt under the agreement payment was to be made at Bhopal but the circumstances show that that was departed from and the ordinary mercantile practice of handing over the railway receipts to one s own bankers with a request to hand over the receipts against payment to the buyers was followed
The Bank as we have shown above was thus the agent of the sellers as was laid down in the ruling of this Court and the fact of payment to the agent determines the place where the money can be said to be received by the Company
That place was at Agra Allahabad or Delhi
In this view the income profits or gains must be deemed to have been received in the taxable territories and the answer to the question ought to have been in the affirmative
We accordingly allow the appeal and answer the question in the affirmative
The appellant will be entitled to his costs here and in the High Court
Appeal allowed


Summary:
The Marwar Tenancy Act 1949 now repealed but which was in force in the State of jodhpur at the relevant period by section 85 authorised the Government in case of any general refusal by tenants to pay rent to declare by notification that such rents might be recovered as arrears of land revenue
A notification having been issued by the Government of Rajasthan under that section the appellant a jagirdar applied to the Collector thereunder for the recovery of rents due to him from his tenants
The tenants also applied to the Collector stating that notice of the said application should be served on them and they should be given a hearing as required by the rule framed under the Rajasthan Revenue Courts Procedure and jurisdiction Act 1951
The Collector rejected the tenants  application and passed an order directing the recovery of the sum found to be due to the appellant as arrears of land revenue
The Additional Commissioner on appeal and the Board of Revenue in revision upheld the Collector s order
But before the Board passed its order the 48 Government rescinded the notification
The High Court on an application under article 226 of the Constitution held that although section 85 of the Tenancy Act had not been repealed by the Revenue Courts Act 1951 the rules framed under that section had been and the non compliance with the rules framed under the latter Act which should have been followed was an error on the face of the record and quashed the orders directing that since the notification under section 85 of the Tenancy Act had been rescinded no further action thereunder should be taken by the Collector
Held that there could be no doubt that section 2 of the Rajasthan Revenue Courts Procedure and jurisdiction Act 1951 had not repealed section 85 of the Marwar Tenancy Act 1949 and that the former Act contemplated its continuance unfettered by the bar of limitation and subject to this modification that an application under the section was no longer to be made to the Deputy Commissioner but to the Collector
Section 85 of the Tenancy Act clearly contemplated that an application thereunder shall be heard and determined in the absence of the tenant
The right given by the section was a summary one and the application must be heard ex parte
It was not therefore necessary to serve any notice on the tenants
It would not be correct to hold that the procedure of a con tested proceeding as prescribed by Ch
II of the Rules framed under the Revenue Courts Procedure and jurisdiction Act 1951 could apply to the application for to apply them would be to wholly defeat its object
Once a notification under the section had been issued and an application duly made subsequent rescission of the notification could not divest the appropriate authority of the power already vested in him to dispose of the application