Case: Indore Malwa United Mills Vs. Commissioner Of Income-Tax, (Central) Bombay

assessee by cheques, and this Court held that there was by necessary implication a request by the assessee to the debtor to send the cheques by post from Delhi, thus constituting the post office its agent for the purpose of receiving the payments. In the instant case, Cl. 9 of the terms and conditions of the contract read with the prescribed form of the bills and the instructions regarding payment show that the parties had agreed that the assessee would submit to the Government of India, Department of Supply, New Delhi, bills in the prescribed form requesting payment of the price of the supplies by cheques together with signed receipts and the Government of India would pay the price by crossed cheques drawn in favour of the assessee. Having regard to the fact that the assessee was at Indore and the Supply Department of the Government of India was at New Delhi, the parties must have intended that the Government would send the cheques to the assessee by post from New Delhi, and this inference is supported by the fact that the cheques used to be sent to the assessee by post. In the circumstances, there was an implied agreement between the parties that the Government of India would send the cheques to the assessee by post.9. Mr. Pathak argued that the assessee had requested the Government to pay money by cheques on a bank at Indore and as that request as not complied with and the Government of India sent instead cheques on the Reserve Bank of India, Bombay, there was no effective request by the assessee to the Government to send the cheque by post. But independently of any subsequent request by the assessee, the contract between the parties authorised the Government of India to pay the price by cheques drawn on the Reserve Bank of India, Bombay and imported a request by the assessee to the Government of India to send the cheques by post. The Government of India was entitled to ignore the subsequent request of the assessee for cheques on an Indore bank and the assessee received payments of the price as and when the cheques on the Reserve Bank of India, Bombay were posted in British India in accordance with the contract. In Thairlwall v. Great Northern Rly., (1910) 2 KB 509, Lord Coleridge, J., observed:"The real question is whether the posting of the warrant was payment of the amount of the dividend. To establish that it was, the defendants must prove a request by the plaintiff or an agreement between the plaintiff and the defendants that payment should be made by means of a warrant posted to the plaintiff. If such a request or agreement is proved, then payment is established by posting even although the instrument is lost in the post: (1886) 3 TLR 182.10. Mr. Pathak contended that the assessee and the Government of India had agreed that the sale proceeds would be paid to the assessee in Indore outside British India, and, therefore, the rule in M/s. Ogale Glass Works case, (1955) 1 SCR 185 : (AIR 1954 SC 429 ), did not apply, having regard to the decision in Commr. of Income-tax v. Patney and Co., (1959) 36 ITR 488 : (AIR 1959 SC 1070 ). We are not inclined to accept this contention. There is nothing on the record to show that there was any express agreement between the parties that the sale proceeds would be paid to the assessee at Indore.We are satisfied that the post office was the agent of the assessee for the purpose of receiving the cheques representing the sale proceeds and the assessee received the sale proceeds in British India where the cheques were posted, and consequently, the profits in respect of the sales were taxable under S. 4 (1) (a). The High Court, therefore, rightly answered the question in the affirmative.11. Mr. Pathak and following him Mr. Kolah submitted that the assessee would have led additional evidence to disprove the contention that the post office acted as its agent, had that contention been raised before the Tribunal, and the Revenue authorities should not, therefore, have been allowed by the High Court to raise the new contention. On being asked what additional evidence would have been led by the assessee, counsel said that the assessee would have led evidence to show (a) that the purchase orders were accepted by the assessee under compulsion of the Defence of India Act and Rules and consequently there was no voluntary request by the assessee for payment by cheques, and (b) the Imperial Bank of India, Indore, as the statutory agent of the Reserve Bank of India, Bombay, paid the amount of the cheques to the assessee at Indore. But counsel was unable to show any provision of the Defence of India Act or Rules under which the assessee was obliged to accept the purchase orders, and we need not, therefore, enquire into the correctness of counsels assumption that acceptance of the purchase orders under compulsion of law would have negatived the contention that the post office acted as the agent of the assessee. And if the assessee received payment by cheques posted in British India, the fact that subsequently the Imperial Bank of India, Indore, as the statutory agent of the Reserve Bank of India, Bombay paid the amount of the cheques at Indore would not take the case of the assessee out of the purview of Section 4 (1) (a).We are, therefore, satisfied that the assessee was not prevented from adducing any material evidence by reason of the omission of the Revenue authorities to argue the new point before the Tribunal. We do not, therefore, think it necessary to express any opinion on the question whether the Court should refuse to allow the Revenue authorities to raise a new contention where by reason of their omission to raise the contention before the Tribunal, the assessee had been prevented from adducing material evidence on the point.12

Decision (1 = appeal accepted, 0 = rejected): 0

Explanation:
0[ds]Mr. Pathak contended that the assessee and the Government of India had agreed that the sale proceeds would be paid to the assessee in Indore outside British India, and, therefore, the rule in M/s. Ogale Glass Works case, (1955) 1 SCR 185  : (AIR 1954 SC 429  ), did not apply, having regard to the decision in Commr. of Income-tax v. Patney and Co., (1959) 36 ITR 488  : (AIR 1959 SC 1070  ). We are not inclined to accept this contention.There is nothing on the record to show that there was any express agreement between the parties that the sale proceeds would be paid to the assessee at Indore.We are satisfied that the post office was the agent of the assessee for the purpose of receiving the cheques representing the sale proceeds and the assessee received the sale proceeds in British India where the cheques were posted, and consequently, the profits in respect of the sales were taxable under S. 4 (1) (a). The High Court, therefore, rightly answered the question in the affirmative.11. Mr. Pathak and following him Mr. Kolah submitted that the assessee would have led additional evidence to disprove the contention that the post office acted as its agent, had that contention been raised before the Tribunal, and the Revenue authorities should not, therefore, have been allowed by the High Court to raise the new contention. On being asked what additional evidence would have been led by the assessee, counsel said that the assessee would have led evidence to show (a) that the purchase orders were accepted by the assessee under compulsion of the Defence of India Act and Rules and consequently there was no voluntary request by the assessee for payment by cheques, and (b) the Imperial Bank of India, Indore, as the statutory agent of the Reserve Bank of India, Bombay, paid the amount of the cheques to the assessee at Indore. But counsel was unable to show any provision of the Defence of India Act or Rules under which the assessee was obliged to accept the purchase orders, and we need not, therefore, enquire into the correctness of counsels assumption that acceptance of the purchase orders under compulsion of law would have negatived the contention that the post office acted as the agent of the assessee. And if the assessee received payment by cheques posted in British India, the fact that subsequently the Imperial Bank of India, Indore, as the statutory agent of the Reserve Bank of India, Bombay paid the amount of the cheques at Indore would not take the case of the assessee out of the purview of Section 4 (1) (a).We are, therefore, satisfied that the assessee was not prevented from adducing any material evidence by reason of the omission of the Revenue authorities to argue the new point before the Tribunal. We do not, therefore, think it necessary to express any opinion on the question whether the Court should refuse to allow the Revenue authorities to raise a new contention where by reason of their omission to raise the contention before the Tribunal, the assessee had been prevented from adducing material evidence on the point.