Law:

Section:

Section 9 of the Income-tax Act, 1961 (corresponding to section 42 of the Indian Income-tax Act, 1922) - Income deemed to accrue or arise in India - Assessment years 1947-48 to 1952-53 - Assessee, a non-resident company had a wholly owned subsidiary Indian company - Non resident company received indents from time to time for supply of products from Indian company - Orders were accepted by foreign company abroad and goods were shipped to Indian company for supply - Prices charged on products were on basis of price lists maintained by non-resident company - Indian company purchased goods on credit and remitted money due to non-resident company - Whether, on facts, it could be said that transactions between Indian company and non-resident company were transactions between principal and principal and not as between principal and agent - Held, yes - Whether, therefore, assessee company did not derive any income from business connection in India chargeable to tax under section 42 of 1922 Act, Held, yes FACTS The assessee, a non-resident company had a wholly owned subsidiary Indian company. The non-resident company received indents from time to time for the supply of the products from the Indian subsidiary company. The Indian subsidiary company had its own branches in India with its head office. The requirements of the branches were set out in the form of orders and were sent through the head office to the non-resident company. The non-resident company accepted these orders along with those relating to the head office also and executed those orders thus; the goods were shipped and the relevant bills of lading were taken in the name of the Indian subsidiary company. The prices charged on the products and debited to the Indian subsidiary company were on the basis of the prevailing quarterly price lists maintained by the non-resident. The prices charged were C.I.F. The documents relating to the goods were sent over to India by post addressed to the Indian subsidiary company. On receipt of the documents the Indian subsidiary company cleared the goods on their arrival and effected sales on its own account either at the head office or in the branches, as the case may be.…

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