1. The Income-tax Appellate Tribunal referred the following question to this court in November, 1954 :
'Whether the receipt of the cheques in Bhavnagar amounted to receipt of sale proceeds in Bhavnagar.'
2. The reference was then heard by this court on September 23, 1955, and a supplementary statement of the case was called for from the Tribunal on the point whether there was any request by the assessees, express or implied, that the amounts of the cheques should be remitted to Bhavnagar by post. Against the order calling for a supplementary statement an appeal was preferred to their Lordships of the Supreme Court and by judgment, dated May 12, 1959, their Lordships set aside the order. They expressed the opinion that this court was in error in not deciding the reference before it and answering the question on the facts disclosed in the statement of the case, and accordingly the order calling for a supplementary statement of the case on the points mentioned in the judgment should be set aside. The reference now comes up for hearing before us.
3. It is necessary for us to set out in detail the facts which gave rise to this reference because they have been set out more than once. The only facts which have been found proved by the Tribunal and which are material for answering this reference are that the cheques were in fact received by the assessee's at Bhavnagar which, at the relevant time, was not part of British India and that there were two letters on record which showed that the cheques were received from the Supply Department of the Government of India by post. It is true that according to the authority of the Supreme Court, Commissioner of Income-tax v. Ogale Glass Works Ltd., if an amount was sent by cheque by the debtor pursuant to a request from the creditor to send the amount by cheque, the post office to which the cheques are delivered by the debtor for transmission to the creditor will be regarded as the agent of the creditor and payment will be regarded as made at the place where the cheque is posted. It has also been held by their Lordships of the Supreme Court in Shree Jagdish Mills Ltd. v. Commissioner of Income-tax, decided on AXFBe May 12, 1959, that even if the words to the effect 'to remit the amount by cheque' have not been specifically used in the request made by the creditor to the debtor to send the amount due, it may appear from the facts and circumstances of the case that an implied request made by the creditor to send the cheque by post and the post office may then be constituted an agent of the creditor for receiving such payment. It is clear from the judgment in Shree Jagdish Mills' case that in order to constitute the post office an agent of the creditor so as to make the place of posting the cheque the place of payment, there need not be an express request by the creditor and such a request may be spelt out from the facts and circumstances of the case. But on the evidence in this case there appears neither an express request made by the creditor nor any material from which an implied request may be spelt out. There is not even evidence of demand made by the assessees of the money due to them. The mere posting of the cheques from what then was part of British India in satisfaction of the claim of the assessees will not, in our judgment, be sufficient to justify the view that the cheques were remitted in pursuance of an implied request made by the assessees to send the same by post.
4. We are, therefore, of the view that the Tribunal was right in the view it took, and the answer to the question referred will be in the affirmative. The assessees will be entitled to their costs from the Commissioner of Income-tax.
5. Question answered in the affirmative.