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PETITIONER: THE COMMISSIONER OF INCOME-TAX, MADRAS

       Vs.

RESPONDENT: MYSORE CHROMITE LIMITED.

DATE OF JUDGMENT: 01/11/1954

BENCH: DAS, SUDHI RANJAN BENCH: DAS, SUDHI RANJAN MAHAJAN, MEHAR CHAND (CJ) HASAN, GHULAM BHAGWATI, NATWARLAL H.

CITATION:  1955 AIR   98            1955 SCR  (1) 849

ACT: Indian  Income-tax Act, 1922 (Act XI of 1922), s.  4-Profits derived  by the assessee- Whether arose or were received  in British Indian in the present case.

HEADNOTE: The  assessee company with its registered office  in  Mysore State  and  its  management  vested  in  Oakley  Bowden  Co. Ltd.,Madras  sold Chrome ore to buyers mostly outside  India who were in America and Europe.  The sales to the purchasers in  Europe were put through in London by Borden  Oakely  and Co.  Ltd.,  London,  the agent of the  assessee  company  in Europe,  the  said agent signing the contracts for  sale  in London.   The sales to purchasers in America  were  effected through  W.  R.  Grace  & Co., New,  York,  who  bought  for undisclosed  principals, the contracts for sale to  American purchasers  being  signed by W. R. Grace &  Co.,  Ltd.,  New York, in America and by Oakley Bowden & Co. Ltd. (Madras) in Madras.   Under both forms of contracts with  European  pur. chasers and American purchasers the price was F.O.B. Madras. Provision  was  made for weighment, sampling  and  assay  of goods  at  destination.  The course of dealing  between  the assessee company and the purchasers was as follows:- Before  the goods were actually shipped, the buyers used  to open a confirmed irrevocable Bankers’ credit with some first class Bank in London.  Being informed of the opening of such credit the 850 Eastern  Bank Ltd., London, sent intimation to  the  Eastern Bank  Ltd., Madras, and the latter in its turn used to  pass on  the  intimation  by letter  addressed  to  the  assesses company.  On receipt of such intimation the assessee company placed  the contracted goods on board the steamer at  Madras and obtained a bill of lading in its own name.  If hereafter the assessee company used to make out a provisional  invoice on the basis of the bill of lading weight and contract price for  48 percent Cr. 203 and used to draw a bill of  exchange on  the  buyers’ Bank, where the letter of credit  had  been opened,  for  90 percent of the amount  of  the  provisional invoice  payable at sight in the case of European  contracts

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and  80 percent of the amount of the provisional invoice  at 90  days’  sight in the case of American  contracts  end  in either case the bills of exchange used to be drawn in favour of  the  Eastern Bank Ltd., London.  The  bill  of  exchange together  with the bill of lading endorsed in blank  by  the assessee  company  and  the  provisional  invoice  was  then negotiated  with the Eastern Bank Ltd., Madras, the  bankers of  the  assesses company, who used to credit  the  assessee company  with  the  amount of the  bill  of  exchange.   The Eastern  Bank Ltd., Madras, then forwarded the documents  to the Eastern Bank Ltd., London, who used to present the  bill of exchange to the buyers’ Bank in London, and upon the bill of  exchange being accepted the Eastern Bank  Ltd.,  London, used  to deliver the bill of lading and the invoice  to  the buyers’  Bank.  The buyers’ Bank in due course used  to  pay the amount of the bill of exchange to the Eastern Bank Ltd., London.   Thereafter,  on  arrival of the  goods  and  after weighment and assay, the sale price was ascertained and  the balance  of price after deducting the payments made  against the  bill of exchange, used to be paid to the  Eastern  Bank Ltd.,  London,  which was the assessee company s  agent  and Banker in London. It  was common ground between the Income-tax department  and assessee  company that the income arose at the  place  where the sales took place. It was contended on behalf of the department that the  sales must  be  regarded as having taken place  in  British  India because  (i) the price and delivery of goods were on  F.O.B. terms,  (ii) that in the European contracts, the  insurance, if any, was to be the concern of the buyers, (iii) that  the payment  of the 80 percent or 90 percent as the case may  be was made in Madras by the Eastern Bank Ltd., Madras, and  as on  these  facts the property passed at Madras,  ,;he  sales were completed in British India. Held, (repelling the contention) that upon the terms of  the contracts in question and the course of dealings between the parties  ,he property in the goods could not have passed  to the  buyer earlier than the date when the bill  of  exchange was  accepted by the Bank in London and the  documents  were delivered by the assesses company’s agent, the Eastern  Bank Ltd., London, to the duyers Bank and this admittedly  always took  place  in London and in the promises  the  sales  took place outside British India and ex 851 hypothesi the profits derived from such sales arose  Outside British India. Held further, that the contention submitted on behalf of the department  that irrespective of the place where  the  sales may  have  taken place the profits derived from  such  sales were  received  in Madras, as after  shipment  the  assessee company,  through  its managing agent‘ in  Madras,  prepared provisional  invoices  and  drew bills of  exchange  for  80 percent  or 90 percent as the case may be of the  amount  of such  invoices and handed over the same to the Eastern  Bank Ltd.,  Madras,  and  received  the amount  of  the  bill  of exchange  from them in Madras and that the receipt  of  this payment  ,by the assessee company was really the receipt  of the price of the goods and amounted to receipt of profits in Madras, was also devoid of force because the price was  paid on behalf of the buyers by their respective London Banks  in London to the Eastern Bank Ltd., London, which was the agent of the assessee company.  The first receipt of the price was by  the Eastern Bank Ltd., London, on behalf of the  sellers and the balance of the price ascertained after weighment and assay and deducting the amount paid on the bill of  exchange

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was  similarly received in London by the Eastern Bank  Ltd., London,  on  behalf of the assesses company  and  subsequent adjustment  made in the books of Eastern Bank Ltd.,  London, did not operate as receipt of profits in British India. Promz Adalbert (L.R. [1917] A.C. 586) referred to.

JUDGMENT: CIVIL APPELLATE JURISDICTION :Civil AppealNo. 117 of 1953. Appeal  from  the Judgment and Order dated the 29th  day  of March,  1951, of the High Court of Judicature at  Madras  in Case Referred No. 44 of 1948. C.K.  Daphtary, Solicitor-General for India (G.   N.  Joshi, with him) for the appellant. B.Ganapathy Iyer and M. S. K. Aiyangar for the respondent. 1954.   November 1. The Judgment of the Court was  delivered by DAS J.-This is an appeal from the judgment pronounced by the High Court of Judicature at Madras on the 29th March,  1951, on  a  consolidated reference by  the  Income-tax  Appellate Tribunal  under section 66(1) of the Income-tax Act  whereby the  High  Court  answered.  in  the  affirmative  both  the referred  questions  which were expressed in  the  following terms; 852 (1)  Whether  on the facts and in the circumstances  of  the case the profits derived by the assessee company ’from sales made  to European and American buyers arose outside  British India ? (2)  Whether  on the facts and in the circumstances  of  the case the profits derived by the assessee company from  sales made  to European and American buyers were received  outside British India ? The above Questions of law arose out of proceedings for  the assessment to income-tax of the respondent, Mysore  Chromite Ltd. (hereinafter referred to as the asseessee company), for the  years  1939-1940, 1940 1941, 1941-1942  and  1942-1943. The  facts  leading  up to the reference  as  found  by  the Income-tax Appellate Tribunal are shortly as follows: The assessee company is a private limited company registered in the Mysore State under the Mysore Company Regulations and has  its  registered office at Sinduvalli in  Mysore  State. The  management  and  control of the  assessee  company  was vested  in  Messrs.   Oakley Bowden  &  Co.  (Madras)  Ltd., another  private  limited  company  incorporated  under  the Indian  Companies Act, having its registered office  at  No. 15,  Armenian  Street, Madras.  The  assessee  company  owns chromite  mines in Mysore State.  Chrome ores are  extracted from the mines and converted into a merchantable product and then  sold  to buyers mostly outside India.   A  very  small proportion  of the total sales is effected in India and  for the purposes of this case may be left out of  consideration. The  sales are mostly to buyers in America and Europe.   The sales to the purchasers in Europe are put through in  London by  Bowden Oakley & Co. Ltd., London, which is the agent  of the  assessee company in Europe holding a power of  attorney from  the  assessee  company.  The  contracts  for  sale  to European purchasers are signed by Bowden Oakley & Co.  Ltd., in London.  The sales to purchasers in America are  effected through Messrs.  W. R. Grace & Co., who buy for  undisclosed principals.   The contracts for sale to American  purchasers are  signed by W. R. Grace & Co., presumably in America  and by Oakley Bowden & Co. (Madras), Ltd., in Madras. 853

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Specimen  forms  of contracts with European  purchasers  and those  with American purchasers are set out in the order  of the  Tribunal dated the 22nd January,1948, out of which  the present reference arises.  Under both forms of contracts the price was F.C.B. Madras or Marmagoa.  A very small  quantity of  goods was sold F.O.B. Marmagoa and the same need not  be considered here.  Provision was made for weighment, sampling and  assay  of goods at destination.  The terms  of  payment under the European contract were as follows:- Payment.-Buyers  to  open a  confirmed  irrevocable  Bankers credit  in favour of Messrs.  Mysore Chromite  Ltd.,  Madras (to  be advised to sellers) through the Eastern  Bank  Ltd., for 90 per cent. (ninety per cent..) of the Provincial (sic) Invoice against documents.  Documents to consist of:- 1.    Bills of Lading, 2.   Provisional Invoice. Provisional invoice to be based on Bill of Lading weight and contract  price  for  48 per cent.   Cr.  203.   Balance  on ascertainment of weight and analysis to be paid in London to Bowden  Oakley  &  Co., Ltd., within 10 days  of  the  final invoice, based on outturn weights and assays. The  corresponding  terms  of  payment  under  the  American contracts were as follows:- Payment.-Letter  of  credit  for eighty per  cent.  (80  per cent.)  of invoice value to be available against  drafts  at ninety (90) days’ sight with documents attached to be opened immediately  in  London in favour of  the  seller.   Balance estimated twenty (20 per cent.) of the margin due to be paid by  telegraphic  transfer  through  London  on  receipt   of information  as  to  assay  and  outturn  which  should   be submitted within a month after the arrival of the steamer at destination,  Charges  for  such  telegraphic  transfer  for account of beneficiary. The European contracts also provided for insurance by buyers but no such provision was made in the American contracts. 109 854 The course of dealing as found by the Appellate Tribunal was as  follows.   Before the goods were actually  shipped,  the buyers used to open a confirmed irrevocable Bankers’  credit with some first class bank in London.  Being informed of the opening  of such credit the Eastern Bank Ltd.,  London  sent intimation to the Eastern Bank Ltd., Madras, and the  latter in  its  turn  used  to pass on  the  intimation  by  letter addressed  to  the’ assessee company.  A  specimen  of  such letter  is  also  set  out in the  order  of  the  Appellate Tribunal.  in  such  communication the  Eastern  Bank  Ltd., Madras, informed the assessee company that I ’in  accordance with  advices received by letter from our London  Office,  a confirmed  and  irrevocable credit has been opened  in  your favour by Messrs.  Morgan Grenfell & Co., Ltd., London,  for account  of Messrs.  W. R. Grace & Co., New York, for a  sum not  exceeding  pound. 7,300 (seven thousand  three  hundred pounds  sterling) in all, available by delivery to us on  or before    15th    January,   1940,    of    the    following documents............... Towards, the end of the letter  the Eastern  Bank  Ltd., Madras, used to write  that  they  were "prepared  in our options as customary to  negotiate  drafts drawn  in  terms  of  the  arrangement  provided  that   the documents as above mentioned appear to us to be in order.  " The  letter  concluded with a warning that  the  advice  was "given for your guidance and without involving any rosponsi- bility  on  the  part of this Bank.  " On  receipt  of  such intimation the assessee company placed the contracted  goods on board the steamer at Madras and obtained A bill of lading

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in  its own name.  As already mentioned, the shipments  were made  principally at Madras Port.  Thereafter, the  assessee company used to make out a provisional invoice on the  basis of  the bill of lading weight and contract price for 48  per cent’  Cr.  203 and used to draw a bill of exchange  on  the buyers Bank, where the letter of credit had been opened, for 90  per  cent.  of the amount  of  the  provisional  invoice payable  at sight in the case of European contracts  and  80 per  cent.  of the amount of the provisional invoice  at  90 days’ sight in the case of American contracts and in  either case the bills of exchange used to be drawn in favour of the 855 Eastern ’Batik Ltd., London.  The bill of exchange  together with  the relative bill of lading endorsed in blank  by  the assessee  company  and  the  provisional  invoice  was  then negotiated  with the Eastern Bank Ltd., Madras, the  bankers of  the  assessee company, Who used to credit  the  assessee company  with  the  amount of the  bill  of  exchange.   The Eastern  Bank Ltd., Madras, then forwarded the documents  to the Eastern Bank Ltd., London, who used to present the  bill of exchange to the buyers’ Bank in London and upon the  bill of  exchange being accepted the Eastern Bank  Ltd.,  London, used  to deliver the bill of lading and the invoice  to  the buyers’ Bank.  The buyers Bank in due course used to pay the amount  of  the bill of exchange to the Eastern  Bank  Ltd., London.   Thereafter,  on arrival of the  goods  and’  after weighment and assay, the sale price was ascertained and  the balance of price, after deducting the payments made  against the  bill of exchange, used to be paid to the  Eastern  Bank Ltd.,  London,  which was the assessee company’s  agent  and banker in London. On  the facts stated above the Income-tax  Officer  assessed the  assessee  company on the entire profits in  respect  of these  sales  on the footing that they arose and  were  also received  in  British  India.   On  appeal,  the   Appellate Assistant   Commissioner  confirmed  the  assessment.    The assessee  company  went  up  on  appeal  to  the  Income-tax Appellate  Tribunal.   The Tribunal by its order  dated  the 22nd  January, 1948, came to the conclusion that  the  sales took  place  outside  British India and that  the  money  in respect of such sales was also received by the agent of the. assessee company in London.  The Commissioner of  Income-tax thereupon  applied to the Appellate Tribunal  requiring  the latter  to state a case and refer certain questions  of  law said  to  &rise  out  of the order  of  the  Tribunal.   The Appellate Tribunal accordingly referred the two questions of law  hereinbefore  set out.  The High Court of Madras  in  a well reasoned judgment upheld the decision of the  Appellate Tribunal  and answered the two questions in the  affirmative and   against   the   Commissioner   of   Income-tax.    The Commissioner of Income-tax’ has now preferred 856 this  appeal  with a certificate of fitness  from  the  High Court. It appears from the statement of case as also from the order of  the  Appellate Tribunal that it was agreed  between  the department and the assessee company that the income arose at the  place, wherever that be, where, the sales  took  place. This  was  not disputed before the High Court or  before  us although  in  the  appellant’s  statement  of  case  it  was suggested   that   this  was  erroneous.   The   point   for determination,  therefore,  is as to where  the  sales  took place. Learned  Solicitor-General  appearing  in  support  of  this appeal  contends  that  having regard to the  terms  of  the

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contracts  the sales must be regarded as having taken  place in  British India.  The facts strongly relied on by him  are (i)  that  the price and delivery of goods  were  on  F.O.B. terms, (ii) that in the European contracts the insurance, if any,  was  to be the concern of the buyers  and  (iii)  that payment of the 80 per cent. or 90 per cent. as the case  may be  was made in Madras by the Eastern Bank Ltd., Madras,  to the assessee company on the delivery of the documents.   All these  facts  taken  together  indicate,  according  to  his submission, that the property in the goods passed at  Madras and  the sales accordingly were completed in British  India. We  are unable to accept this line of reasoning.   According to  section 4 of the Indian Sale of Goods Act a contract  of sale of goods is a contract whereby the seller transfer,% or agrees to transfer the property in goods to the buyer for  a price and where under a contract of sale the property in the goods  is  transferred  from the seller to  the  buyer,  the contract  is  called  a  sale, but  where  the  transfer  of property  in the goods is to take place at a future time  or subject  to some condition thereafter to be  fulfilled,  the contract is called an agreement to sell.  By sub-section (4) of that section an agreement to sell becomes a sale when the time  elapses  or the conditions are  fulfilled  subject  to which  the  property  in the goods  is  to  be  transferred. Section 18 of the Act clearly indicates that in the case  of sale  of  unascertained goods no property in  the  goods  is transferred  to  the buyer unless and until the  goods,  are ascertained.  In 857, the  present  case, the contracts were always  for  sale  of unascertained, goods.  Skipping over sections 19 to 22 which deal  with  contract of sale of specific goods  we  come  to section  23 which lays down that where there is  a  contract for the sale of unascertained or future goods by description and  goods of that description and in a,, deliverable  state are unconditionally appropriated to the contract, either  by the seller with the assent of the buyer or by the buyer with the  assent  of  the  seller,  the  property  in  the  goods thereupon passes to the buyer.  It is suggested that as soon as  the  assessee  company placed the  goods  on  board  the steamer  named  by the buyer at the Madras  Port  the  goods became  ascertained  and the property in  the  goods  passed immediately to the buyer.  This argument, however, overlooks the  important word "unconditionally" used in  the  section. The requirement of the section is not only that there  shall be appropriation of the goods to the contract but that  such appropriation must be made unconditionally.  This is further elaborated by section 25 which provides that where there  is a contract for the sale of specific goods or where goods are subsequently  appropriated to the contract, the seller  may, by  the. terms. of the contract or  appropriation,,  reserve the right of disposal of the goods until certain  conditions are fulfilled.  In such a case, notwithstanding the delivery of  the goods to the buyer, or to a carrier or other  bailer for  the purpose of transmission to the buyer, the  property in the goods does not pass to the buyer until the conditions imposed  by the seller are fulfilled.  The question in  this case,  therefore,  is:  was there  an  unconditional  appro- priation  of the goods by merely placing them on the ship  ? It  is true that the price and delivery was  F.O.B.,  Madras but the contracts themselves clearly required the buyers  to open  a  confirmed  irrevocable  Bankers’  credit  for,  the requisite  percentage of the invoice value to  be  available against  documents.  This clearly indicated that the  buyers would  not be entitled to the documents,, that is, the  bill

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of lading and the provisional invoice, until payment of  the requisite  percentage  was made upon the bill  of  exchange. The bill of lading is the document of title to the goods and by this term 858 the assessee company clearly reserved the right of disposal, of the goods until the bill of exchange *as paid’.’  Placing of the goods on board the steamer named by the buyer under a F.O.B. contract clearly discharges the contractual liability of  the  seller as seller and the delivery to the  buyer  is complete and the goods may thenceforward be also at the risk of  the buyer against which he may cover himself  by  taking out an insurance.  Prima facie such delivery of the goods to the  buyer  and the passing of the risk in  respect  of  the goods from the seller to the buyer are strong indications as to  the  passing also of the property in the  goods  to  the buyer  but they are not decisive and may be  negatived,  for under  section 25 the seller may yet reserve to himself  the right  of  disposal  of the goods until  the  fulfilment  of certain  conditions  and  thereby  prevent  the  passing  of property  in  the goods from him to the  buyer.   The  facts found in this case are that the assessee company shipped the goods  under bill of lading issued in its own  name.   Under the  contract  it was not obliged to part with the  bill  of lading which is the document of title to the goods until the bill  of exchange drawn by it on the buyers’ Bank where  the irrevocable letter of credit was opened was honoured.  It is urged that under the provision in the contract for weighment and assay, which was ultimately to fix the price unless  the buyer  rightly rejected the goods as not being in  terms  of the contract, the passing of property in the goods could not take place until the buyer accepted the goods and the  price was  fully  ascertained after weighment and  assay.   It  is submitted that being the position, the property in the goods passed  and the sales were concluded outside British  India, for the weighment, sampling, assay and the final fixation of the  price could only take place under all  these  contracts outside  British  India.   It is not  necessary  for  us  to express any opinion on this extreme contention.  Suffice  it to  say,  for the purposes of this case, that in  any  event upon  the terms of the contracts in question and the  course of  dealings between the parties the property in  the  goods could  not  have passed to the buyer earlier than  the  date when  the bill of exchange was accepted by the buyers’  Bank in London and the 859 documents  were delivered by the assessee  company’s  agent, the  Eastern Bank Ltd., London, to the buyers"  Bank.   This admittedly, and as found by the Appellate, Tribunal,  always took  place in London.  It must, therefore,. follow that  at the  earliest  the ;property in the goods passed  in  London where the bill of lading was handed over to the buyers’ Bank against the acceptance of the relative bill of exchange.  In the  premises,  the Appellate Tribunal as well as  the  High Court  were  quite correct in holding that  the  sales  took place  outside British India and, ex hypothesis the  profits derived from such sales arose outside British India. As  to the second question, the.. learned  Solicitor-General contends  that irrespective of the place where the sale  may have.  taken place the profits derived from such sales  were received in Madras.  It is recalled that after shipment  the assessee  company,  through its managing  agent  in  Madras, prepared,  provisional invoices and drew bills  of  exchange for 80 per cent. or 90 per cent., as the case may be, of the amount  of  such invoices and handed over the  same  to  the

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Eastern  Bank Ltd., Madras, and received the amount  of  the bill of exchange from them in Madras.  He contends that  the receipt  of this payment by the assessee company was  really the  receipt  of  the price of the  goods  and  amounted  to receipt of profits in Madras.  He draws our attention to the terms of payment in the European contract and to the  letter of  intimation  of  the opening of the credit  sent  by  the Eastern  Bank  Ltd.  Madras, to the assessee  company  which have  been  quoted  in  part in the  earlier  part  of  this judgment.  He relies on the words "through the Eastern  Bank Ltd.," appearing in the contract and the words "available by delivery  to us" appearing in the letter.  We do  not  think that  those  words  support the contention  of  the  learned Solicitor-General.   The  words "through  the  Eastern  Bank Ltd.,"  appear to us to go with the preceding words  "to  be advised to sellers" which are put within brackets which seem to have been wrongly closed after the word sellers’  instead of after the words the Eastern Bank Ltd.  ". Ordinarily, the buyer  opens a letter of credit with his Bank in  favour  of the seller and 860 the  words  "through  the  Eastern  Bank  Ltd.,"  would   be meaningless  unless  it  was  intended  to  mean’  that  the irrevocable  credit  which  was in favour  of  the  assessee company  was to be operated upon by the latter  through  the Eastern Bank Ltd.  If that were the true meaning, then  that certainly does not make the Eastern Bank Ltd., the agent  of the  buyers.   The  words  "available  by  delivery  to  us" occurring in the letter of the Eastern Bank Ltd., Madras, do not  appear to us to indicate that this was any part of  the terms  of the letter of credit.  This was an  intimation  in accordance  with  the advice received by  the  Eastern  Bank Ltd., Madras, from the Eastern Bank Ltd.,, London, that  the assessee company might avail itself of the letter of  credit by  delivery  of  the documents to the  Eastern  Bank  Ltd., Madras.   This is made further clear by the latter  part  of the  letter where the Eastern Bank Ltd.,  Madras,  expressed their  willingness at their option to negotiate  the  drafts drawn  in  terms  of  the  arrangement  provided  that   the documents  were  in order, The concluding sentence  of  that letter  whereby  the Eastern Bank Ltd., Madras,  disown  any responsibility  in respect of the advice  clearly  militates against the suggestion of the learned Solicitor-General.  It is,  in  these circumstances, impossible to  accede  to  the argument  that the payment of 80 per cent. or 90 per  cent., as the case may be, of the amount of the provisional invoice by  the Eastern Bank Ltd., Madras, was a payment on  account of  the price.  Normally, price is paid by or on  behalf  of the buyer.  In this case the fact found is that the  Eastern Bank Ltd., Madras, and the Eastern Bank Ltd., London.,  were agents  of the assessee company.  Neither ’of ’them had  any relation  with  the buyers.  Therefore, a  payment  by  them cannot  be  regarded as a payment of the  price.   The  true position  is  very clearly put by Lord Sumner in  The  Prinz Adalbert(1) : "  When a shipper takes his draft, not as yet accepted,  but accompanied  by a bill of lading, indorsed in this way,  and discounts  it with a banker, he makes himself liable on  the instrument as drawer, and he further makes the goods,  which the bill of lading (1)  L.R. [1917] A.C. 586, 589. 861 represents,  security  for its payment.  If,  in  turn,  the discounting  banker  surrenders the bill of  lading  to  the acceptor against his acceptance, the inference is that he is

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satisfied  to  part with his security  in  consideration  of getting this further party’s liability on the bill, and that in  so doing he acts with the permission and by the  mandate of the shipper and drawer. This payment by the Eastern Bank Ltd., Madras, therefore, is nothing but an advance made by them to their own customer on the  security  of the goods covered by the  bill  of  lading reinforced by the ’benefit of the liability taken up by  the assessee company as drawer of the bill which in its turn  is backed  by  the  confirmed and  irrevocable  credit  of  the buyers’ London Bank.  If this payment was on account of  the price,  why  should  the assessee company,  as  the  seller, undertake  any  liability to the Eastern Bank Ltd.,  as  the drawer of the bill of exchange ? The truth of the matter  is that  the  price was paid on behalf of the buyers  by  their respective London Banks in London to the Eastern Bank  Ltd., London  which  was the agent of the assessee  company.   The first receipt of the price, therefore, as pointed out by the High Court, was by the Eastern Bank Ltd., London, on  behalf of the sellers.  There is no dispute that the balance of the price  ascertained after weighment and assay  and  deducting the  amount  paid  on the bill  of  exchange  was  similarly received  in  London by the Eastern Bank  Ltd.,  London,  on behalf  of the assessee company.  The subsequent  adjustment made in the books of the Eastern Bank Ltd., London, did  not operate  as a receipt of profits in British India.   In  our opinion  the  High  Court  correctly  answered  the   second question also in favour of the assessee company.  For reasons stated above, this appeal must stand  dismissed with costs and we order accordingly. Appeal dismissed. 110 862