JUDGMENT

This is a petition under article 226 of the Constitution.

The relief claimed in the petition is that a writ of certiorari may be issued quashing an order dated March 12, 1957, passed u/s 18(3B) read with section 18(7) of the Income Tax Act.

The facts lie within a narrow ambit. The petitioner entered into a contract with Messrs. Lababedi Textiles of Manchester for the supply of cloth. The deal was arranged through Messrs. Pioneer Consolidated Company (London) Ltd. The contract form is annexure "A-1" to the affidavit filed in support of the petition. The buyers name as entered in the contract form is : The Lababedi Textiles Manchester, England, through the Pioneer Consolidated Company (London) Ltd. London. The rate at which cloth was to be supplied is mentioned in this contract form as follows : 19 1/2 pence less 2 1/2 per cent. commission payable to the Pioneer Consolidated Company (London) Ltd. It appears that in respect of the supply of cloth the commission payable to Messrs. Pioneer Consolidated Company amounted to a sum of Rs. 10,777. In the accounts relevant to the assessment year 1952-53 the entries in regard to this transaction which appeared therein were to the effect that the entire amount of sale price worked out at 19 1/2 pence without any deduction whatsoever on account of commission was credited as the sale price in respect of the supply of the entire quantity of cloth. On the debit side the sum of Rs. 10,777 was shown as expense in respect of the sale of cloth. Upon these facts the Income Tax Officer passed the impugned order u/s 18(3B) read with section 18(7) on the finding that from these entries it appeared that the amount of Rs. 10,777 though not paid by the petitioner directly to Pioneer Consolidated Company, London was paid indirectly through Messrs. Lababedi Textiles by receiving from that company not the entire amount worked out at 19 1/2 pence but only the amount worked out at 19 1/2 pence less 2 1/2 percent. payable to Pioneer Consolidated Company, London. The Income Tax Officer recorded the further finding in the impugned order to the effect that the liability for payment of commission was of the petitioner. The liability was to be liquidated by payment to the Pioneer Consolidated Company by the petitioner through Messrs. Lababedi Textiles. The petitioner could do this by accepting an amount for purchase price reduced by the amount of commission from Messrs. Lababedi Textiles. Thus according to the view of the Income Tax Officer Messrs. Lababedi Textiles were in a sense the collecting agents on behalf of the Pioneer Consolidated Company Ltd. for collection of the commission due to the Pioneer Consolidated Company, London. I cannot say that this conclusion could not be legitimately drawn from the manner in which entries were made in the account books of the petitioner. The debit of the sum of Rs. 10,777 as expenses of sale would seem to show that the liability was of the petitioner for payment of the commission to Pioneer Consolidated Company in respect of the sale of cloth by it to Messrs. Lababedi Textiles of Manchester.

Two points have been raised before me by learned counsel for the petitioner to challenge the conclusions of the Income Tax Officer in the impugned order. The first point is that the description of the buyer in the contract form as Lababedi Textiles through the Pioneer Consolidated Company showed that the Pioneer Consolidated Company were the buying agent on behalf of the Lababedi Textiles. Accordingly the liability for commission was of Lababedi Textiles and not of the petitioner. To my mind the description of the buyer in the manner indicated above in the contract form is too slender a foundation for this argument. This description does not necessarily lead to the conclusion that the Pioneer Consolidated Company were the agents of Lababedi Textiles for purchase of cloth and as such the liability for payment of commission to Pioneer Consolidated Company was of Lababedi Textiles. T