HON’BLE SUPREME COURT · SOURCE-REVIEWED NOTE
Cotton Agents Ltd., Bombay v. Commissioner of Income-tax, Bombay
Civil Appeal No. 100 of 1959
[1960] 3 SCR 810 ·
Indian Income-tax Act, 1922: sections 66(1), 66A(2); accrual of business income
Sources & disclosures includedDownload original judgment / order
2-judge bench · S. K. Das · M. Hidayatullah
Assessment years: 1946-47
01 · Facts of the case
The assessee acquired a managing agency in January 1945 with entitlement to emoluments from April 1944. It disputed tax on Rs. 2,20,433 attributable to April–December 1944, arguing that commission on sales accrued to the outgoing agents transaction by transaction.
Source: Primary report: SCR 812–814
02 · Discussion by the Hon’ble Court
Reading the agreement as a whole, clause 2 measured commission at 3.5% of annual gross sales; clause 3 fixed accrual at the financial year end and payment after approval of accounts. Neither a debt nor a right to receive arose at each sale.
Source: Primary report: SCR 815–819
03 · Judicial decision
The whole commission accrued to the assessee at the financial year end. The High Court correctly rejected the Tribunal’s transaction-by-transaction accrual interpretation.
Source: Primary report: SCR 817–819
04 · Outcome / in whose favour
The assessee appeal was dismissed with costs; Revenue succeeded on the accrual issue.
Source: Primary report: SCR 819
05 · AKHB REVIEW POINT
Distinguish the contractual method of calculating remuneration, the date a right accrues and the later payment date. The Court expressly left protective-assessment validity and general service/apportionment questions undecided.
Source: Primary report: SCR 815, 817–819
Source & verification
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Statutory scope
Historical legislation expressly identified in this note. This is not a decision under the Income-tax Act, 1961 or the Income-tax Act, 2025. Verify enacted wording, commencement, transition and subsequent judicial treatment independently before modern reliance.
Later treatment
Source checked 2026-10-23. Subsequent treatment and present-law applicability have not been comprehensively checked.
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