Law: Income Tax Act, 1922

Section: 4(1)(e),42(3),66(1)

Law: Excess Profits Tax Act, (XV of 1940)

Section: 5

(a) Income Tax Act (XI of 1922). Ss. 4 (1) (e), 42 (3)-Goods manufactured by assessee outside British India-Sold in British India through another firm-Profits, held, did not arise or accrue exclusively in British India-Profits to be ap6ortioned in terms of subsection (3) of S. 42. The business activity of the assessee consisted of (1) the extraction of timber, (2) the manufacture of shooks and (3) the sale of shocks. The first two activities were carried on outside British India, but the third activity .qua the transactions in question was confined to British India. Held, if the assessee's case fell under clause (c) to sub­section (1) of section 4, the provisions of section 42, including those of subsection (3) to that section were immediately attracted by reason of the fact that the: Kashmir Company effected the sales in British India through a business connection. The profits on the sale of shooks did not exclusively accrue or arise in British India and that such profits should have been apportioned in terms of subsection (3) of section 42. (1950) 18I I. T. R. 472, rel. (b) Income Tax Act (XI of 1922), Ss. 4 (1) (a), 66 (1)-Profits whether received in British India-Finding, whether based on any material-Question of law, not of fact-Determining circumstances. The real point that arose-in the case was whether the Tribunal were right in holding that the profits in question were received in British India by or on behalf of the assessee i.e., the Kashmir Company. The assessee asked the Tribunal to refer this question to the High Court, but they refused to do so on the ground that the question was purely one of fact. It is true that this question is ordinarily one of fact; but where the point is whether the finding about the receipt of the profits was based on any material, the question at once becomes one of law. In recording their finding on this aspect of the case the Tribunal seemed to have been influenced merely by the con­sideration that the sale of shocks took place in British India where the sale price was paid. This, however, is never a determining circumstance. In order to determine whether the profits in question were received in British India by or on…

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