THE COTTON AGENTS LTD., BOMBAY vs COMMISSIONER OF INCOME-TAX,BOMBAY.

The Supreme Court held that the managing agency commission of 3.5% on sales accrued to the appellant company at the end of the financial year, not at the time of each sale. The Court affirmed the High Court's ruling that no debt or right to receive payment arose upon individual sales, thus the appellant was liable to pay tax on the entire commission amount of Rs. 2,88,392 for the assessment year 1946-47. The decision referenced E. D. Sassoon and Company Ltd. v. Commissioner of Income-tax, Bombay City, establishing the principle of accrual of income.