Law:

Section:

Section 9 of the Income-tax Act, 1961 [Corresponding to section 42(3) of the Indian Income-tax Act, 1922] - Income - Deemed to accrue or arise in India - Assessment year 1941-42 - Assessee, non-resident HUF, carrying on business in gold and silver in Secunderabad, outside British India, sold gold in British India through brokers - Assessee's claim was that it being a non-resident was only trading with British India and not in British India and that consequently profits attributable to transactions in British India fell to be taxed under section 42 (3) on basis of allocation of operations.- Whether, on facts, provisions of section 42(8) were not applicable to profits on sale of gold effected in British India by assessee, in such manner as to override provisions of section 4(1)(c) of 1922 Act and render only such portion of such profits assessable as were attributable to operations carried out in British India - Held, yes - Whether, therefore, assessee's claim was to be rejected - Held, yes FACTS The applicant was a non-resident and he had been carrying on business in gold and silver in Secunderabad outside British India. He used to purchase gold at Secunderabad and to sell the major portion of it at Bombay through brokers in that line. The rest of it used to be sold in Hyderabad itself, a small portion of it being sold locally at Secunderabad. The Bombay brokers with whom the assessee was in touch would telegraphically intimate to the assessee the current prices of gold in Bombay and thereupon advices would be sent from Secunderabad notifying to them the quantity of gold that would be available for sale at those rates. Soon thereafter gold would be sent to Bombay through a representative of the assessee who would get it assayed in the mint and give the same to the broker who after selling it paid the sale proceeds to the assessee's agent. Upon these facts the assessee claimed that he being a non-resident was only trading with British India and not in British India and that consequently profits attributable to transactions in British India fell to be taxed under section 42(3) on basis of allocation of operations. The revenue authorities as well as Tribunal,…

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