GABHABHAI VELJI Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) IN this reference under Section 66(1) of the INdian INcome-tax Act, 1922, at the instance of the assessee the question that has been propounded by the Tribunal for decision is :

(2.) THE material facts are that the assessees Gabhabhai Velji carried on business as a commission agent in khursani (niger seed) during the period from 2nd November, 1948, to 21st October, 1949, which was the account year period for the assessment year 1950-51, at Pachhar which was at that time in the erstwhile Gwalior State. Between the period from 17th January, 1949, to 28th January, 1949, certain forward delivery contracts of khursani which the assessee had entered into with Premji Haridas and Co. of Bombay during the period from 23rd July, 1948, to 11th August, 1948, were settled by the Bombay firm by selling the goods and buying the difference. On account of this settlement the assessee became entitled to receive from the Bombay firm an amount of Rs. 1,58,537. For payment of this amount by the Bombay firm the assessee drew hundies from time to time directing the firm of Premji Haridas & Co. of Bombay to pay to Thakersey Muraiji, a businessman said to be carrying on business at Gwalior, the sum specified in the bundles " on sight as per rules of the Grain Merchants Association ". Each of the bundles drawn by the assessee mentioned that the amount specified in the hundi had been received by the assessee at Pachhar from Thakersey Murarji. THE said Thakersey Murarji negotiated these bundles through the Imperial Bank, Hyderabad, and/or Secunderabad. As the Tribunal has found these hundies were further negotiated and ultimately the Bombay firm made payment on these hundies either to the Imperial Bank of India, Bombay, or to certain shops carrying on business in Bombay. In the assessment proceedings the assessee claimed the benefit of the provisions of the Part B States (Taxation Concessions) Order, 1950, contending that the amount of Rs. 1,58,537 accrued to him in the former State of Gwalior and not in the then taxable territories within the meaning of Section 4(1)(a) of the Indian Income-tax Act, 1922. This claim was negatived by the Income-tax Officer as well as by the Appellate Assistant Commissioner and the Tribunal in the appeals which the assessee preferred.