Law:

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Non-resident-Business connection with firm in India-Amounts credited in Indian firm's accounts to non-resident as commission under direction of non-resident-Whether amounts "received" by non-resident-Levy of income-tax-Legality-Legal effect of credit entries-Income-tax Act (XI of 1922), Ss. 4 (1) (a), (c) & 43.   The assessee firm which was exporting mica to Japan appoin ted a Japanese company to negotiate orders and to handle its affairs in Japan, undertaking to pay a commission on the gross proceeds of the sales effected in Japan. The Japanese company instructed the assessee to credit the amounts due to it as com mission in the account books of the assessee without remitting them to Japan until definite instructions were given. The Income-tax authorities treated the assessee as the statutory agent of the Japanese company under section 43 of the Income-tax Act, 1922 and assessed the amounts which were so credited in the assessee's books to the Japanese company as income received by the Japanese company in India [under section 4 (1) (a) of the Income -tax Act] through the assessee. The assessee firm contended that mere entry in the account books cannot amount to receipt and the amounts could not be assessed until they were actually paid over to the Japanese company or dealt with according to its directions   Held, that the legal effect of the directions given by the Japanese company was that, as soon as the assessee credited the amounts to the company in the assessee's accounts, the relation ship between the parties ceased to be that of debtor and creditor ; when the moneys were credited in the accounts they should be treated as moneys deposited by the Japanese company with the assessee. The moneys were thus "received" by the Japanese company in India on the date when they were credited, and the assessee could be assessed as their statutory agent in respect of such moneys.   Commissioner of Income-tax v. P. V. Raghava Reddi (1956) 29 I T R 929 affirmed.   Turner Morrison & Co. Ltd. v. Commissioner of Income-tax (1953) 23 I T R 152 ref. JUDGMENT   HIDAYATULLAH, J.-The appellant is a firm at Gudur…