Jagannadha Das, C.J.
1. The point that has been raised on this reference is whether on the facts and in the circumstances of the case as stated in the reference at p. 3 of the printed paper-book, certain amounts received during the accounting year by the assessee as commission, from some of the parties for whom it was doing business, was income that accrued, arose or was received in British India. The assessment relates to the year 1945-46 before the State of Hyderabad was integrated with India and the assessee is a company doing commission business at Secunderabad. The facts on which the question arises are stated in paragraph 4 of the statement of the case printed at p. 2 of the paper-book.
Two objections have been raised at the outset by counsel for the assessee as follows: (1) The question as to whether the income accrued or arose, within British India, was not dealt with by the Income-tax Appellate Tribunal in its appellate order and therefore it was not competent for the tribunal when making a reference to us to reopen that question. The Tribunal has sought to reopen it by referring to certain notes of arguments made before it at the time of hearing of the appeal (and?) it was not permissible.
In answer we may say that whether it was open on that material for the Tribunal to reopen and raise the question is one which we need not decide for the purpose of this case. So far as the statement of the case to us at p. 3 of the paper book goes, we do not gather that any facts which give rise to a case ofincome 'accruing or arising' within British India have been stated and learned counsel for the Income-tax Commissioner has not been afcle to show us any. Therefore on this ground we are satisfied that the Income-tax Commissioner is not entitled to ask us for any answer to the reference on the footing of income having accrued or arisen within British India. This reference must, therefore, be confined in its further stages only to the question of accessibility of the income on the basis of the place of the receipt of the same.
2. The second objection that has been raised by learned counsel for the assessee is that the question of the place of receipt of the income is a question of fact which has been conclusively found in his favour in the appellate order of the Income-tax Appellate Tribunal and that it is not open to the Tribunal to make a reference to us at the instance of the Income-tax Commissioner, on the footing that that finding of fact can be challenged as being a question of law and a different view of the facts can be taken. We are not, however, prepared to agree with this objection. The correct legal inference to be drawn from certain facts found is not always a question of fact. It may be a question of law where the fact to be found is what may (be?) called a 'legal' fact and not a mere 'physical' fact. The question here is whether on certain evidence and facts, (on?) which the Tribunal finds, the conclusion to be drawn is that the income is to be taken to have been received at one place or the other. That is not such a pure question of fact on which it is not open to raise a reference of this kind. Receiving of income for income-tax purposes is not the mere receipt of income into his hands by the assessee, but, is a legal concept depending on all the relevant facts. We may notice that the questions, as to whether on the evidence there has been receipt of income at one place or other, have been raised on reference in a number of reported cases to which our attention has been drawn. We are, therefore, not prepared to accept this objection raised by learned counsel for the assessee.
3. On the main question raised in this case, both sides have drawn our attention to the following cases: -- 'Keshav Mills Co. Ltd. v. Commr. of Incomes-tax, Bombay Mofussil' : 18ITR407(Bom) ; -- 'Sobha Singh v. Commr. of Income-tax, Delhi, Punjab and Ajmer-Merwara, Delhi,1 and -- 'Kirloskar Bros. Ltd. v. Commr. of Income-tax, Bombay' : 21ITR82(Bom) . Having gone through those cases in the light of the facts stated in para 4 of the reference we are constrained to feel that the crucial question that arises in such cases as pointed in -- : 18ITR407(Bom) has been missed by the Tribunal in their statement of the case to us. The real question in all such cases is not merely whether the cheques were drawn on a Bank in British India and sent for collection to that Bank. The question is whether when the cheques were received by the assessee having his place of business outside British India, those cheques were in fact received as absolute and final payments by way of unconditional discharge or whether they were received as mere conditional payments on realisation. The facts that the cheques were drawn on a hank in British India or that they were sent for collection through a Secunderabad banker of the assessee though relevant, are not conclusive. These aspects have been very clearly pointed out in the above three cases, vide : 18ITR407(Bom) . That question requires further elucidation than what appears from the statement of facts furnished to us in the reference now before us. We therefore, direct the Tribunal to submit to us a supplementary statement showing whether the cheques which were received by the assessee from the two customers, towards commission were received in full satisfaction of the commission due to them as and when they were received in Secunderabad and whether the course of the dealings between the parties showed that the debt by wayof commission was intended to be discharged by the mere receipt and acceptance at Secundarabad of the cheques by the asssssee (or when they?) entrusted these cheques to their bankers for collection, they did so merely treating these cheques as provisional and conditional payment and not as absolute discharge. The Tribunal will make such further inquiry as it considers necessary for elucidating all therelevant facts and to help a conclusion on the above, matter, after giving fresh opportunity to the parties concerned.
4. We accordingly refer this case back to the Appellate Tribunal under Section 66 (4) of the Act for submission of a supplementary statement of the case at an early date.
5. I agree.