HON’BLE SUPREME COURT · SOURCE-REVIEWED NOTE
Keshav Mills Ltd. v Commissioner of Income-tax, Bombay
Civil Appeal No. 151 of 1951
[1953] SCR 950 ·
Indian Income-tax Act, 1922, sections 4(1)(a), 4(1)(c), 10 and 13
Sources & disclosures includedDownload original judgment / order
4-judge bench · Mehr Chand Mahajan J. · S. R. Das J. · N. H. Bhagwati J. (majority author) · Vivian Bose J. (dissent)
Assessment years: 1942–43
01 · Facts of the case
A non-resident textile company at Petlad kept mercantile accounts. Sale proceeds of Rs. 12,68,480 were collected through guaranteed brokers and Rs. 4,40,878 through banks or shroffs in British India. The company argued that earlier accounting credits outside British India precluded taxation on receipt. A third receipt category was not disposed of in this appeal.
Source: Primary report: SCR 952–957
02 · Discussion by the Hon’ble Court
Did mercantile credits constitute earlier receipt outside British India, and did the accounting method displace actual-receipt taxation under section 4(1)(a)? The majority held that book credits established accrual, not actual or statutory deemed receipt. The sale relationship was not transformed into a different transaction by bookkeeping. The first receipts occurred through brokers and banks in British India on the company’s behalf. Section 13 governed computation, not exemption from liability. Bose J. dissented: mercantile computation required examination of accrual under section 4(1)(c), and he would have remitted for reframed questions and additional facts. Both opinions distinguished statutory deemed receipt from mere accounting treatment.
03 · Judicial decision
By majority the appeal was dismissed with costs. The two receipt categories were taxable on the stated basis, subject to all just deductions and allowances.
Source: Primary report: SCR 963–964, 972
04 · Outcome / in whose favour
By majority the appeal was dismissed with costs. The two receipt categories were taxable on the stated basis, subject to all just deductions and allowances.
Source: Primary report: SCR 963–964, 972
05 · AKHB REVIEW POINT
Keep accrual, first receipt and subsequent remittance analytically separate. Report the majority and dissent distinctly. This 1953 merits judgment should not be conflated with later Keshav Mills litigation, and does not clear modern territorial or treaty rules.
Source: Primary report: SCR 961–972
Source & verification
Download original judgment / order · Open cited source rendition
All 23 PDF pages / SCR 950–972. Majority SCR 952–964; dissent SCR 964–972; final disposition SCR 972.
Statutory scope
Historical statutory text and assessment period only. Present statutory equivalence and later judicial treatment are not cleared.
Later treatment
Source checked 2026-10-18. Subsequent treatment and current-law applicability have not been comprehensively checked.
Page references identify the supplied PDF; paragraph references identify the judgment unless stated otherwise.
AI disclosure & professional disclaimer
This AKHB research note was prepared with AI assistance from an identified primary report. Independent human review is not represented.
General legal and tax research only; not legal or tax advice. Verify the complete judgment, applicable statutory version and subsequent treatment before reliance. The AKHB REVIEW POINT is editorial analysis, not the Court’s holding. No current-law clearance is claimed.