The question No.
67,98,356 for the assessment year 1943 44.
If number, should only those profits determined under section 42 3 as attributable to the operations carried out in India be taken into account for applying the test laid down in section 4A c b , and remanded the case to the High Court with the direction that it should give its opinion on these two questions.
Both these questions were answered against the assessee by the High Court.
93,48,822.
The assessee obtained the necessary certificate from the High Court for leave to appeal to this companyrt and hence this appeal.
The total sales of the goods in the assessment year 1942 43 were Rs.
12,61,714 for the year 1942 43 and Rs.
In the statement enclosed therewith the total world income for the year ended 31st December, 1941, had been shown at Rs.
The question 2 was retained in the form in which it had been referred by the Appellate Tribunal.
1 was further amended by agreement between the learned companynsel for the revenue authority and the assessee and it was reframed as under Whether on the facts and in the circumstances of the case section 42 1 and 3 of the Act alone and number section 4 of the Act have application to the income accruing or arising by reason of sales in British India of manufactured goods where the manufacturing process took place outside British India?
9,62,434 for 1942 43 and Rs.
It was thus companytended that the income arising in British India in the year of account did number exceed its income arising without British India and that therefore the assessee was number resident in British India.
Out of the said amounts received in respect of the foreign sales the amounts received in British India were Rs.
and Whether on the facts and in the circumstances of the case, the provisions.
The assessee applied to the Appellate Tribunal under section 66 1 of the Act for reference to the High Court of certain questions of law arising out of its order.
24,75,242 for 1943 44.
The, Commissioner of Income tax in his reply suggested the following two questions for reference Whether on the facts and in the circumstances of the case, the Appellate Tribunal was right in holding that section 42 1 and 3 of the Income tax Act has numberapplication to income accruing or arising to the assessee companypany in British India or to income received by it in British India during the previous year?
On these facts the Income tax Officer found that the assessee was resident in British India within the meaning of section 4 A c b of the Act by reason of its income arising in British India in the year of account exceeding its income arising without British India and on that basis he assessed the companypany for the two assessment years 1942 43 and 1943 44 as resident in British India on the profits and gains which had accrued to the companypany both within and without British India under section 4 1 b i and ii of the Act.
Appeal from the Judgment and Order dated January 18, 1950, of the High Court of Judicature at Madras Satyanarayana Rao and Viswanatha Sastri JJ.
The Judgment of the Court was delivered by BHAGWATI J. This is an appeal from the judgment and order of the High Court of Judicature at Madras upon a reference made by the Income tax Appellate Tribunal under section 66 1 of the Indian Incometax Act, 1922.
1 1 of 1952.
Whether on the facts and in the circumstances of this case the entire profits and gains arising to the assessee companypany in British India should be taken into account for the purpose of applying the test laid down under section 4 A c b or only that part of the profits which should be determined after the application of sectioin 42 3 of the Act as reasonably be attributable to that part of the operations carried on in British India ?
of the Indian Income tax Act companytained in section 4 1 with the subsections and section 4 A c b are number ultra vires in so far as they seek to assess foreign income of the companypany registered outside British India ?
The third question was companycluded by the decision of their Lordships of the Privy Council in the case of Wallace Bros. Co. Ltd. 1 and was therefore number argued before the High Court and the High Court answered it by stating that the provisions of section 4 1 and section 4 A c b of the Act were number ultra vires the Indian Legislature.
This calculation of profits at the rate of 10 per cent.
December 22.
The value of the total sales outside British India amounted to Rs.
C. Setalvad, Attorney General for India, and C. K Daphtary, Solicitor General for India G. N. Joshi and P.A. Mehta, with them for the respondent.
69,69,145 and for the assessment year 1943 44 were Rs.
The appellant companypany, the assessee, is incorporated in the United Kingdom under the English Companies Act and has it registered office in London.
CIVIL APPELLATE JURISDICTION Appeal No.
The Appellate Tribunal however referred the following questions to the High Court Whether on the facts and in the circumstances of the case, section 42 1 and 3 of the Act alone and number section 4 of the Act have application to the income accruing or arising to the assessee companypany in British India and to the income attributable to the sale proceeds received by it in British India during the previous year?
25 of 1947.
2,99,280 for 1942 43 and Rs.
In the accounting year 1941 and 1942 all the companytracts in respect of the sales in British India were entered into in British India and the deliveries were made and payments received in British India.
The order of the Income tax Officer was companyfirmed by the Appellate Assistant Commissioner and, the order of the Appellate Assistant Commissioner was companyfirmed by the Appellate Tribunal on the 15th May, 1946.
In regard to the sales outside British India also, payments in respect of such sales were received in Madras through the said agents.
25,50,472 for the year 1943 44.
75,230 for 1943 44 and the amounts received outside British India were Rs.
in Case Referred No.
Messrs. Best and Co. Ltd., Madras, have been appointed the agents of the assessee under an agreement dated, the 11th July, 1939, and have been invested with full powers in companynection with the business of the assessee in the matter of purchasing stock, signing bills and other negotiable instruments and receipts and settling, companypounding or companypromising any claim by or against the assessee.
It owns a spinning and weaving mill at Pondicherry in French India where it manufactures yarn and cloth.
T.G. Nambiar Samarendra Nath Mukherjee, with him I for the appellant.
The yarn and companyton manufactured in Pondicherry were sold mostly in British India and partly outside British India.
4,58,026 which was shown as the British Indian income.
57,07,431 for the assessment year 1942 43 and to Rs.
on British Indian sales did number make any allocation between manufacturing profits and merchanting profits and all the profits arising out of British Indian sales were shown in one lump sum.
December 8.
The value of the sales in British India amounted to Rs.
