1. A very simple question arises on this reference as to where the commission earned by the assessee was received in Part A States or Part B States - and where the commission accrued. The facts are not in dispute. The assessee firm has its place of business in Saurashtra. This firm procures orders from various mills in Part A States for supply of coal. Having procured the orders, the assessee forwards those orders to the Deputy Coal Controller in Calcutta. The Deputy Coal Controller then issues quotas of coal to these various mills and orders are issued to the collieries in Bengal to supply the coal ordered by the Controller to the mills. The coal is supplied directly to the mills in Bombay. the railway receipt is sent by the colliery to the assessee and the railway receipt is endorsed by the assessee in favour of the mills. The assessee then submits his bill to the mills, which includes the price of the coal and the assessee's commission. The mills then send cheques to the assessee in Saurashtra and the assessee remits the price of coal to the collieries and retains its own commission. Now the assessee claimed that it was entitled to be charges on the commission earned by it during the assessment year 1953-54 at a concessional rate which applied to Part B States, and in order to be entitled to this concessional rate it had to establish that its income accrued in Part B States and was also received in Part B States. In other words, if the Department succeeded in establishing either that the income accrued in Part A States or was received in Part A States, them the assessee would not be entitled to the concessional rate. Having considered the modus operandi to which we have just referred, the Tribunal came to the conclusion that the income had accrued in Part A States and the income was also received in Part A States.
2. Turning first to the question of accrual, in order to decide this the first question that we have to ask ourselves is : Why did the assessee receive the commission from the mills The answer to that question must be : he received this commission because he rendered certain services. Now, if the commission was paid to the assessee firm for rendering services, then the commission must accrue at the place where the services were rendered, and, therefore, the next question that we have to ask ourselves is : where were the services rendered by the assessee On the facts found there seems to be no doubt that all the services rendered by the assessee were in Saurashtra and not in Part A States. The services that the assessee rendered were, having obtained orders from the mills, it got the necessary quota from the Controller. In order to get the quota it carried on correspondence with the Controller from Saurashtra. It received the railway receipts from the collieries and endorsed over the railway receipts also in Saurashtra. Every item of the service which ultimately resulted in the mills receiving the coal was rendered in Saurashtra. We cannot accept Mr. Joshi's contention that the real test to apply is where the sale was effected. The assessee is not a selling agent; it does not get its commission on the sale; the commission which it gets is the result of services rendered at the instance of the mills. The mills required the assessee to do some work for them which otherwise they would themselves have had to do and the nature of that work is, not to effect a sale or a purchase, but to obtain the necessary quota from the Controller and to take various steps to see that the coal which the mills require is supplied to them. Mr. Joshi further says that the issue of the quota and the issue of an order to the collieries was also done in Calcutta, which is in a Part A State. Again from the point of view of the liability of the assessee, that is an immaterial fact. The question is not what anyone else did; the question is what the assessee did in order to earn the commission : and whatever it did, it did from Saurashtra. Mr. Joshi has drawn our attention to the Coal Control Order under which the assessee received a fixed commission. It is perfectly true that the assessee could only receive a statutory commission and it is being taxed in respect of that statutory commission. But the Coal Control Order does not throw any light on what the services rendered by the assessee were or where those services were rendered. In order to decide that we must look at the statement of the case and see what work the assessee did and where that work was done. Therefore, it is clear to us that, if we look upon the assessee as an agent, which he undoubtedly was, then we must decide the question of accrual of income from the point of view of service rendered by an agent and therefore, the Tribunal was in error when it came to the conclusion that the accrual of the income was in Part A States and not Part B states.
3. The next question is with regard to the receipt of income. Here, with respect to the Tribunal, it is obviously wrong because the cheques in payment of the assessee's commission were sent to the assessee in Saurashtra. They were sent by post, but there is no finding that the assessee asked the mills to send the cheques by post. If that finding had been there, possibly it may have been argued that the assessee constituted the post office its agent. But in the absence of any finding, as the cheques were received by the assessee in Saurashtra, what the assessee received was money's worth and, therefore, the receipt of the income must be considered to have been in Saurashtra and not in Part A States. It is difficult to understand how the Tribunal considers the sending of the cheques by the mills from Part A States a relevant factor in order to determine where the income was received.
4. We must, therefore, answer the question submitted to us in the negative.
5. The Commissioner to pay the costs.
6. Question answered in the negative.