Case Note & Summary
The Commissioner of Income-tax, Bangalore appealed against the decision of the High Court in favour of the assessee, Union of Tile Exports, Bangalore. The assessee firm carried on business at Bangalore, then a Part B State, and was appointed sole selling agent for tiles manufactured at Feroke in British India. The agreement with the purchaser at Colombo was entered into at Bangalore. Goods were sold F.O.B. Beypore Port, with chartering and loading supervised by the assessee’s employee at Calicut. Bills of lading were obtained at Beypore and sent to Bangalore, where the assessee handed over shipping documents to a bank and received payments under letters of credit opened by the Ceylon purchaser. For assessment years 1951-52, 1952-53, and 1953-54, the assessee claimed that the entire income accrued in the Part B State and sought the benefit of the Part B States (Taxation Concessions) Order, 1950. The Income-tax Officer and the Appellate Tribunal rejected the claim, holding that a part of the profits accrued in taxable territory. On reference, the High Court reversed, holding that the profits were received in the Part B State and the concession was available. The Commissioner appealed to the Supreme Court. The central issue was whether, on the facts, the income could be said to accrue or arise in a Part B State under section 4(1)(a) of the Indian Income-tax Act, 1922, and whether the assessee was entitled to the concession under the Part B States (Taxation Concessions) Order, 1950, or whether profits had to be apportioned under section 42(3) of the Act. The judgment of the Supreme Court is not available from the provided text, and its ultimate decision remains not mentioned.
Headnote
A) Income Tax - Accrual of Income - Place of Accrual - Indian Income-tax Act, 1922, Section 4(1)(a) - Assessee firm having registered office in Part B State entered into agency agreement in Bangalore and received payments through Bangalore bank, but manufacturing and shipment occurred in taxable territory - Issue of whether entire income accrued in Part B State for purpose of concession under Part B States (Taxation Concessions) Order, 1950 - Held: Not mentioned (Paras Not mentioned). B) Income Tax - Tax Concession - Part B States (Taxation Concessions) Order, 1950 - Apportionment of Profits - Indian Income-tax Act, 1922, Section 42(3) - Business operations partly in taxable territory led to question of apportionment of profits between Part B State and taxable territory - Held: Not mentioned (Paras Not mentioned).
Issue of Consideration
Place of accrual of income and entitlement to tax concession under Part B States (Taxation Concessions) Order, 1950 when business operations partly in taxable territory
Law Points
- accrual of income
- place of accrual
- Part B State
- taxation concession
- apportionment of profits
- selling agent
- F.O.B. contract
- letter of credit
