Law: Income Tax Act, 1922

Section: 42,42(1)

Income-tax Act (XI of 1922)---S. 42(1)-Income accruing or arising in Pakistan -Assessee Managing Agent for principles residing in India vested with powers of general management of property and business on commission basis-Commission receivable by assessee on basis of sales of goods in India-Held, income accruing to assessee as a result of services rendered in Pakistan and assessable to income tax. Macneill & Barry Limited v. Commissioner of Income-tax, East Pakistan, Dacca Civil Appeal No. 27-D of 1967; Octavius Steel & Company Ltd. v. The Commissioner of Income-tax, Dacca P L D 1960 S C 371 and East End Dwellings Co., Ltd. v. Finsbury Borough Council 1952 A C 109 rel. JUDGMENT A. S. CHOWDHURY, J.-The Income-tax Appellate Tribunal, Dacca Bench, Dacca has referred the following questions for our opinion under section 66 (1) of the Income-tax Act (herein­after called "the Act"). "(1) Whether on the facts and in the circumstances of the case income could be deemed to have accrued or arisen to the applicant in Pakistan whithin the meaning of sub­section (1) of section 42 of the Income-tax Act, 1922. (2) Whether on the facts and in the circumstances of the case commission received by the applicant on the goods sold by Kanknarrah Co. Ltd., was assessable in Pakistan." Facts relevant for the purpose of considering the question referred to us are as follows:- Jardine Henderson Ltd., is incorporated in India, having its registered office in the city of Calcutta. By virtue of an agreement made on 19-3-47, the assessee became Managing Agent of the Kankarrah Co. Ltd. (hereinafter referred to as "managed company"). In accordance with the terms of the said agreement, the assessee was vested with the powers of general management of the property of the company including its business transactions. With regard to its remuneration it was stipulated that it would receive a commission of 2½ per cent. on the gross profits arising from the sale of goods produced at the mills of the company and any other goods sold by the company, and also an office allowance of Rs. 200 per mensem. The assessee's case is that the managed company had no business in Pakistan and the commission…

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