Law:

Section:

Section 5 of the Income-tax Act, 1961 [Corresponding to section 4(1) of the Indian Income-tax Act, 1922] - Income - Accrual of - Assessment year 1944-45 - Assessee-company, which was registered in Bombay, was appointed managing agents by a salt company - Commission accruing in India State was to be paid to managing agents in such Indian States - During relevant accounting year assessee made certain profits at Aden and Kandla - Assessee claimed that profits that arose out of that business at Kandla accrued at Kandla, and as profits accrued at Kandla, therefore commission attributable to those profits must also be taken to have accrued or arisen at Kandla - Department disallowed assessee's claim - Whether since registered office of assessee was at Bombay and, works were to be done at Bombay, profits made at Kandla could be said to be accrued and arisen to assessee at Bombay only and not in native State - Held, yes FACTS The assessee was a joint stock company incorporated in Bombay and it was appointed managing agents of a salt company. The agreement provided that in any event they were entitled to a minimum of Rs. 30,000 per annum. The agreement also provided that such portion of the commission as shall be attributable to the net profits of the company arising or accruing in an Indian State shall be payable and be paid to the said agents in such Indian States, unless and untill the said agents otherwise direct in writing. During the relevant accounting year the assessee made certain profits from business at Kandla and Aden. The assessee claimed that profits that arose out of that business at Kandla accrued at Kandla, and as the profits accrued at Kandla, therefore, the commission attributable to those profits must also be taken to have accrued or arisen at Kandla. The department disallowed the assessee's claim. On appeal the Tribunal held that the sum accrued and arose to the assessee in Bombay and not in a native State. On reference: HELD The registered office of the assessee-company was in Bombay, the board of directors met in Bombay, the books of account were maintained in Bombay, and various types of work connected with the company had got to be done in…

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