Law:

Section:

I. Section 5 of the Income-tax Act, 1961 [Corresponding to section 4 of the Indian Income-tax Act, 1922] - Income - Accrual of - Assessment years 1940-41 and 1943-44 - Assessee, a non-resident company, carried on manufacture of cloth in its mill at Ujjain, Gwalior State - It supplied goods, to Government under tender system - As per terms of contract, property in goods was to pass in a destination which was in British India - First consignment of goods was dispatched by goods train addressed to Chief Ordinance Officer Delhi in British India - Payment was made by a demand draft on a bank at Ujjain by Government through its Controller of supply accounts from New Delhi - Assessee made certain profits on sale of goods to Government during previous years - Whether on facts, it could be said that a substantial part of profits did arise in British India - Held, yes - II. Section 5 of the Income-tax Act, 1961 [Corresponding to section 4 of the Indian Income-tax Act, 1922] - Income - Accrual of - There were brokers in India who were soliciting orders from their customers and passed them on for fulfilment to assessee - Brokers directed to which bank railway receipts were to be sent by consignor - Contract contemplated delivery only on payment of full price and not otherwise - Tribunal held that profits on sales made during relevant previous year through brokers accrued or arose in British India - Whether terms of contract and conduct of parties made in clear that part of profits accrued in British India within meaning of section 4(1)(c) of 1922 Act - Held, yes III. Section 5 of the Income-tax Act, 1961 [Corresponding to section 4 of the Indian Income-tax Act, 1922] - Income - Accrual of - Assessee earned profits of certain sum on sale in respect of which collection of sum was made through banks in British India - Though contract was entered into at Ujjain and delivery had to be taken there, actual payment was received through banks in British India with whom assessee did not have current account - Tribunal found that banks were entrusted with work of delivering bills to customers and collecting sale proceeds and in doing so they acted as agents for assessee - Whether on…

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