HON’BLE SUPREME COURT · SOURCE-REVIEWED NOTE
Commissioner of Income-tax, Bombay City & Suburban District, Bombay v. Hukamchand Mills Ltd., Indore
Civil Appeals Nos. 2178 to 2182 of 1966
[1968] 1 SCR 47 ·
Indian Income-tax Act, 1922: section 66(4) · Indian Income-tax Rules, 1922: Rule 33
Sources & disclosures includedDownload original judgment / order
3-judge bench; unanimous judgment delivered by S. M. Sikri, J. · J. C. Shah, J. · S. M. Sikri, J. · V. Ramaswami, J.
Assessment years: 1942-43, 1943-44, 1945-46, 1946-47, 1947-48
01 · Facts of the case
Hukamchand Mills, incorporated in Indore with a textile mill there, sold goods to merchants in British India during calendar years 1941, 1942, 1944, 1945 and 1946. Orders arose through its Bombay representative, independent brokers or visits by purchasers and brokers to Indore. Although the sales were F.O.R. Indore, the mill consigned the goods to self, endorsed the railway receipts to the buyers and lodged them with the Imperial Bank of India for release against payment. The Income-tax Officer treated profit attributable to the sales as accruing in British India. The Appellate Assistant Commissioner excluded certain Indore-stamped contracts but attributed one-third of the profit on sales of Rs.14,80,059 to British-Indian activities by analogy with Rule 33; the Tribunal agreed and the Bombay High Court answered the territorial question for the assessee (SCR pp.48-51; PDF pp.2-5).
Source: Primary judgment: facts
02 · Discussion by the Hon’ble Court
The Court applied its same-term decision in Pushalal Mansinghka and the reasoning in P. M. Rathod and Bhopal Textiles. Delivery to a carrier under an F.O.R. term was not conclusive where the seller retained control of the documents: the railway receipts were made to self, passed through the bank and reached the purchaser only after the price was paid. On those facts, appropriation was conditional and performance was completed where payment and documentary delivery occurred in British India. The property-passing aspect was not an impermissible new question because it was an aspect of the existing issue about contract formation, performance and accrual (SCR pp.51-52; PDF pp.5-6). The exact apportionment question was not decided because the assessee had raised points on which the High Court had expressed no view (SCR p.53; PDF p.7).
Source: Primary judgment: discussion
03 · Judicial decision
The Supreme Court held that income from the disputed sales accrued within British India and that a proportionate part was assessable to Indian income-tax. It answered question No. 3 affirmatively, allowed the appeals and remitted the case to the High Court to answer question No. 2 according to law, with no order as to costs (SCR pp.52-53; PDF pp.6-7).
Source: Primary judgment: decision
04 · Outcome / in whose favour
In favour of Revenue on territorial accrual, but not a final determination of the precise amount attributable under Rule 33. That apportionment issue returned to the High Court (SCR pp.52-53; PDF pp.6-7).
Source: Primary judgment: outcome
05 · AKHB REVIEW POINT
AKHB analysis: when contractual labels and physical dispatch point differ from documentary control, map each step separately - appropriation, carrier delivery, title-document endorsement, bank presentation, payment and release to the buyer. This report shows why an F.O.R. term alone did not settle historical territorial accrual. It also requires a disciplined outcome label: nexus was resolved for Revenue, while the quantum/apportionment reference remained open (based on SCR pp.51-53; PDF pp.5-7).
Source: Primary judgment: reviewPoint
Source & verification
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Statutory scope
The decision applies the territorial-accrual framework of the repealed Indian Income-tax Act, 1922 and historical Rule 33 to pre-Independence sales involving British India and the erstwhile State of Indore. It does not determine modern source, permanent-establishment, cross-border attribution, goods-transfer or income-computation rules. No current-law or later-treatment clearance was undertaken.
Later treatment
Source checked 2026-10-11. Later judicial treatment and current statutory applicability have not been comprehensively checked; no current-law or citator clearance is represented.
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