COMMISSIONER OF INCOME TAX Vs. SHIVNARAYAN HARIGOPAL

JUDGEMENT

(1.) THIS is a reference under section 66 (1) of the Indian Income -tax Act, 1922, at the instance of the Commissioner of Income -tax, M. P. The question which has been formulated by the Income -tax Appellate Tribunal for our decision, is :

(2.) THE assessee, Shri Shivnarayan Harigopal, Indore, is an unregistered firm. In the accounting year from 20th June, 1947, to 8th July, 1948, it carried on business in the sale and export of cloth at Indore, which was then in non -taxable territory. In that year, there was an all -India control over the disposal of cloth. On receiving allotment orders for supply of cloth in Indore market, paid the price of the same and shocked the cloth purchased in its godowns for some time. Later on, the goods were dispatched by rail to the concerned parties in taxable territories. The relevant bills, which included the assessees commissioner, interest and some nominal profit, along with the bills of exchange and railway receipts, were endorse and handed over to bankers at Indore and to M/s. Laxmichand Muchhal of Indore. The local bankers and M/s. Laxmichand Muchhal allowed full credit to the assessee on the day they received the railway receipts with the D. Ds. or bills of exchange. The bankers and M/s. Laxmichand Muchhal did not charge the assessee any interest for period during which the amount remained unrealised. They, however, realised interest and bank charges and the sale price from purchasers in the taxable territories.

(3.) THE facts and circumstances in which this reference has been made are similar to those found in Commissioner of Income -tax v. Laxmichand Muchhal In Muchhals case also, a similar question was propounded for decision and that was :