A finding of the Tribunal on a question of fact is open to attack under section 66 (1) of the Income-tax Act, 1922, as erroneous in law when there is no evidence to support it or if it is perverse.

Judgement

T. L. VENKATARAMA AIYAR, J. : These two appeals arise out of proceedings taken under S. 34, Income-tax Act 1922, hereinafter referred to as the Act, to bring to tax a sum of Rs. 27,30,094 received by the appellant during the account year 1942-l943. The appellant is a public limited Company incorporated in 1921 under the provisions of the Gwalior Companies Act in what was then the independent State of Gwalior, and carries on business in the manufacture and sale of textiles. Its registered office is at Gwalior, and it is a non-resident Company for the purposes of the Act. Its managing agents are Birla Brothers, Ltd., which is a private limited Company registered in British India. The point in dispute in these proceedings is whether sums of money received by the appellant during the account year 1942-1943 and aggregating to Rs. 27,30,094 are liable to be taxed under the Act. The appellant admits that it received those monies during that period, and further that they represent profits made by it on certain forward contracts in Jarilla cotton. But it contends that those contracts were entered into at Gwalior with three brokers, viz., Lashkar Trading Company, Banwarilal Shivkumar and Meghraj Mundra, that the agreements between the parties specifically provide that the goods are to be delivered and prices paid at Gwalior, that, in fact, the sum of Rs. 27,30,094 is made up of differences paid in settlement of the contracts at Gwalior, that thus the profits accrued and were received wholly at Gwalior, and that, in consequence, they were not liable to be charged under the Act.

2. The Department, on the other hand, contends that the contracts which resulted in the profits of Rs. 27,30,094 were as a fact entered into by the managing agents of the appellant with the firm of Jwaladutt Kishanprasad at Bombay, that those profits accrued in Bombay, and that they were therefore taxable under the Act. It is common ground that the sum of Rs. 27,30,094 received by the appellant as profits is in the ultimate analysis traceable to the firm of Jwaladutt Kishanprasad, and came from it. But it is contented for the appellant that this cannot settle the question whether the profits accrued to it in Bombay. According to it, the course of dealings relating to these transactions was as follows: The appellant placed its orders for the sale or purchase of cotton with the three brokers mentioned above in Gwalior. They in their turn placed orders for the sale or purchase of the same quantity of goods with the firm of J. R. Pillani, Gwalior. This firm is a branch office of Jwaladutt Kishanprasad of Bombay and communicated the orders received from the brokers to its head office in Bombay. When the contracts were finally settled on the clearing day and monies became payable, Jwaladutt Kishanprasad of Bombay sent the same to J. R. Pillani, Gwalior which paid them over to the brokers, who in their turn paid the amounts due to the appellant under their contracts. Now, the contention of the appellant is that the contracts under which the profits sought to be taxed accrued were not entered into by it with Jwaladutt Kishauprasad, Bombay, that the sum of Rs. 27,30,094 though traceable to that firm was due from that firm not to it but to the three brokers in Gwalior, and that, in consequence, it was not liable to be taxed under the Act. If the facts were as stated by the appellant, then there can be no doubt that the sum of Rs. 27,30,094 received by it as profits is not liable to be taxed under the Act, because no portion thereof would then have accrued or arisen in British India. The question, therefore really is whether those facts have been established.

3. The Income-tax Officer who investigated the matter held by his order dated 23rd March 1948 that the forward contracts in question had really been entered into by the managing agents of the appellant at Bombay, that the profits thereon had accrued at Bombay and that the three brokers of Gwalior were mere dummie