Judgement

J. L. KAPUR J. : This appeal pursuant to special leave is brought by the Commissioner of Income-tax against the judgment of the High Court of Orissa holding that the amounts received by the assessees-respondents were not received in what was British India and therefore not liable to income-tax. The respondents at all material times were non-residents carrying on business at Secunderabad which was then in the territories of the Nizam of Hyderabad. They acted as agents for the supply of gas plants manufactured by Messrs. T. V. S. Iyengar and Sons, Madura to the Nizam s Government, and also as agents of the Lucas Indian Services, Bombay branch, for the supply of certain goods to that Government. The year of assessment is 1945-46. There does not appear to have been any written agreement between the two manufacturers and the respondents but the goods were to be supplied on a commission basis. In pursuance of this agreement the respondents received from M/s. T. V. S. Iyengar and Sons, Madura, cheques drawn on the Imperial Bank of India, Madras, amounting to Rs. 35,202 in respect of all goods supplied from Madura. and also from Lucas Indian Services Bombay by cheques drawn on Imp