Law:

Section:

Section 5, read with section 9(1)(i) of the Income-tax Act, 1961 [Corresponding to section 4(1) read with section 42(3) of the Indian Income-tax Act, 1922] - Income - Accrual of - Assessment years 1940-41 to 1942-43 - Assessee company, incorporated in United Kingdom and having its office in London was managing agent of an oil company, which was also incorporated in United Kingdom - As per agreement between assessee and oil company, assessee was entitled to receive commission on sales of oil manufactured by said oil company in India and sold by their selling agent - ITO held that commission received by assessee accrued or arise in India within meaning of section 4(1) as sales were effected in India - Whether since remuneration was not paid to assessee for selling of goods of oil company which took place in India, but for its supervision, advice and control from London office, assessee's remuneration could not be said to have accrued or arisen in India, and if assessee would be liable to be taxed, proper section applicable would be section 42(3) of 1922 Act - Held, yes FACTS The assessee-company was a non-resident company, incorporated in the United Kingdom and was the managing agent of an oil company which was also a non-resident company incorporated in the United Kingdom. These companies have their respective offices in London. There were several agreements between the assessee whereby, in addition to the employment as managing agents, the assessee was also employed as the sole and exclusive agent of the oil company for the sale of all products of the latter. By way of a subsequent agreement, the said terms were modified and it was provided that assessee was entitled to remuneration for goods sold for the oil company by any agent or sub-agent. A further modification was introduced by another agreement whereby the assessee agreed to part with its exclusive agency for disposal of the oil company's products, but the commission payable to the assessee on sales, even after some other company had become the sole selling agent of the oil company, remained unaffected. For the assessment years 1940-41, 1941-42 and 1942-43, the assessee received from the oil company…

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