HON’BLE SUPREME COURT · SOURCE-REVIEWED NOTE
Pushalal Mansinghka (P) Ltd. v. Commissioner of Income-tax, Delhi, Rajasthan & M.P.
Civil Appeals Nos. 557 and 558 of 1966
[1967] 3 SCR 961 ·
Indian Income-tax Act, 1922: section 4(1)(a) and section 66 reference principles · Part B States (Taxation Concessions) Order, 1950: paragraph 4(1)(iii) · Sale of Goods Act, 1930: sections 23 and 25
Sources & disclosures includedDownload original judgment / order
3-judge bench; unanimous judgment delivered by V. Ramaswami, J. · J. C. Shah, J. · S. M. Sikri, J. · V. Ramaswami, J.
Assessment years: 1950-51, 1951-52
01 · Facts of the case
Pushalal Mansinghka (P) Ltd. mined, processed, sorted and packed mica at Bhilwara, then a Part B State, and sold it to purchasers at Kodarma and Giridih in Part A and Part C States. For assessment years 1950-51 and 1951-52 its total sales were Rs.19,77,544; it tendered bills of Rs.15,64,475 to the Bank of Rajasthan's Bhilwara branch and received credit there. Contracts provided Bhilwara-godown delivery, destination dispatch through bank, a 25 percent advance, buyer-paid packing and buyer risk once goods left the godown. The seller nevertheless consigned to itself and endorsed railway receipts with bills of exchange to its bank for collection; buyers obtained the goods only after paying destination branches and receiving the receipts. The officer, first appellate authority, Tribunal and Rajasthan High Court denied the Part B State rebate (SCR pp.963-965; PDF pp.3-5).
Source: Primary judgment: facts
02 · Discussion by the Hon’ble Court
The Court treated 'accrue' and 'arise' as describing a right to receive rather than actual receipt. The place of business profit could not be fixed by a universal rule; on these sales it followed the place where property passed. Sections 23 and 25 of the Sale of Goods Act supported the conclusion that self-consignment and retention of the railway receipt reserved disposal even after carrier delivery. When a seller sends the endorsed receipt with a bill or hundi through its bank for release against payment, title remains with the seller until the buyer pays and takes the document. Title and the purchase-money right therefore arose at Kodarma and Giridih (SCR pp.965-968; PDF pp.5-8). Discounting did not move accrual to Bhilwara: the bank's form preserved recourse against the seller, its advance bought or financed the bill rather than the goods, and it was not the buyer's agent. The price accrued only when the purchaser paid or arranged with the bank (SCR pp.969-970; PDF pp.9-10). The proposed manufacturing/selling profit apportionment was not considered because no such question had been raised before or decided by the Tribunal (SCR p.970; PDF p.10).
Source: Primary judgment: discussion
03 · Judicial decision
The Court held that the sales and the right to their price accrued in the Part A and Part C destinations, so the claimed Part B State rebate was unavailable. It declined to entertain the unpreserved apportionment point and dismissed both appeals with costs and one hearing fee (SCR p.970; PDF p.10).
Source: Primary judgment: decision
04 · Outcome / in whose favour
In favour of Revenue/the Commissioner. The assessee's sales income did not qualify for the claimed Part B State concession on the proved documentary and payment arrangements (SCR pp.969-970; PDF pp.9-10).
Source: Primary judgment: outcome
05 · AKHB REVIEW POINT
AKHB analysis: for documentary sales, build a transaction timeline for contractual risk, appropriation, reservation of disposal, document endorsement, buyer payment and the seller's enforceable right to price. A local bank advance does not necessarily establish local sale proceeds when the seller retains recourse and the bank merely handles collection or financing. Preserve procedural boundaries too: a fact-sensitive profit-apportionment theory must be developed before the Tribunal. Current cross-border and interstate rules require separate statutory analysis (based on SCR pp.965-970; PDF pp.5-10).
Source: Primary judgment: reviewPoint
Source & verification
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Statutory scope
The ruling applies the repealed 1922 Act, the transitional Part B States (Taxation Concessions) Order, 1950 and contemporaneous Sale of Goods Act principles to pre-Constitution/transition-period transactions. It does not determine present territorial nexus, residence, source, place-of-effective-management, goods-and-services tax, export or banking consequences. No current-law or later-treatment clearance was undertaken.
Later treatment
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