TMI Blog1951 (1) TMI 47X X X X Extracts X X X X X X X X Extracts X X X X ..... nder the agreement with Attock Oil Co., was governed by Section 42 (3), Indian Income tax Act, for the purpose of computing the total income of the assesses 2. Section 42 (3) of the Act is as follows: In the case of a business of which all the operations are not carried out in the taxable territories, the profits gains of the business deemed under this section to accrue or arise in the taxable territories shall be only such profits gains as are reasonably attributable to that part of the operations carried out in the taxable territories. 3. The facts of the case so far as they are relevant to this judgment may be shortly stated as follows. The assessee is Messrs. Steel Brothers Co. Ltd. which was incorporated in the Uni ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble on the sale price of all goods cold for the Oil Company by any Agent or Sub Agent the commission to be paid to Steels under such clause as hereby amplified is not to cover expenses incurred by Steels but is to cover services remuneration of Steels in connection with the head 'supervision control' general advice by the Managing Partners of Steels or the Administrative Staff in their employ. Steels will not be entitled to commission under such clause except where the Oil Company do in fact receive the sale proceeds of the goods. The right of steels to receive commission under such clause shall not be in any way prejudiced as regards the future by the fact that in the past Steels have not actually claimed or received commis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r selling agent the Burma Oil Company. 8. In the assessment years in question the products of the oil company were manufactured in India the business processes were carried out in India, the sales by Burma Oil Company took place in India. It is clear that the assessee is a non-resident company and the Income Tax Officer rightly treated it as a non-resident company. It has various activities among others, is the managing agent of the oil company. 9. The Income Tax Officer held that the income of the assessee accrued in India because the sales were effected in India. The appellate Assistant Commissioner on appeal however took a different view. He held that the assessee had ceased to do anything with the actual sale of the Oil Comp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... crue or arise or are deemed to accrue or arise to him in British India during such year. * * * * 12. Under Section 4 (1), it is clear that residents non-residents are alike chargeable in respect of income which accrues or arises or is deemed to accrue or arise in India. Under Section 42, income is deemed to accrue or arise in India if it accrues or arises directly or indirectly (among others) through or from any business connection in India. 13. It is quite clear in this case that what the assessee has been paid is not its commission or remuneration for selling goods of Attock Oil Company which took place in India, but for its super-vision, advice control from London. The assessee's remuneration cannot be said to have a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... agent. It is quite clear that the facts of the two cases are different from the facts of the case under consideration. Here the remuneration of the assessee was not payable for doing anything in India, but for supervising controlling the operations from London. So far as the Oil Company is concerned it is quite true that their income was derived from the sale of oil in India, the sale having taken place in India their profits accrued in India. But so far as the assessee is concerned, we cannot see how it can be said that its income accrued or arose in India. The assessee was originally the selling agent of the oil company, but it divested itself of that right in consideration of a portion of the remuneration being paid to it for its su ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
