Indo Burma Petroleum Company, Ltd. vs Commissioner of Income Tax

Chakravartti, C.J.—This is a reference by the Calcutta Bench of the income tax Appellate Tribunal of eight question of law, two of which they referred u/s 66(1) of the India income tax Act and six of which they were subsequently directed by this Court to refer u/s 66(2). The reference has been made at the instance of the Assessee, The info-Burma Petroleum Company Ltd., Calcutta, and concerns the assessment that company to income tax for the assessment years 1940-41 1941-42, and 1942-43 and to super-tax for the chargeable accounting periods, September 1" 1939'' to December 31, 1939, January 1940 to December 31, 1940 and January 1, 1941 to December 3 1941. Six assessments are thus involved, but as the question raised with regard to them are common, they have been consolidated.

The facts as found by the Tribunal and about which the does not appear to have been any dispute, are as follows:

The company is incorporated in Burma, is controlled a managed from there and has its registered office at Rangoon. I business consists in raising crude oil from the earth, refining the same into various products such as engine oil, kerosene and petrol and selling the finished commodities for profit. The manufacturing operations and all other operations necessary; make the products marketable take place in Burma and 95 per cent, of the fixed capital of the company is located in the country. Sales of the refined products take place at version places, including India. Only about 5 per cent, of the fixed capital of the company is located here, but the proportion sales made in India to world sales was 78.35 in 1939, 78.35 in 1940 and 79.58 in 1941.

As the relevant assessment years all belong to the period prior to the Partition, references to India must be understood as references to British India, as it was.

The selling agents of the Assessee company are Steel Bros. and Company Ltd., who are also the managing agents and have their offices at Calcutta, Chittagong and Bombay. The contracts for the sales in India were entered into by the selling agents at one or other of the places in India mentioned above and the proceeds from those sales were also received in India on the, Assessee company''s account.

On the above facts, the income tax officer, who was also the Excess profits tax officer, held the Assessee to be a resident company for purposes of taxation u/s 4A(c)(b) of the Act, on the ground that its income arising in British India in the relevant years exceeded its income arising in those years outside British India. He found such excess by relying on the fact that the major portion of the sales had taken place in British India and by following the decision of this Court in the Matter of Mohanpur Tea Company Limited ILR (1937) 2 Cal. 201, where it was held that in the case of goods produced or manufactured at one place and sold at another, profits accrue and arise at the place where the sale takes place. The effect of holding the Assessee company to be resident in India was that u/s 4B(c), it was also to be treated as ordinarily resident; and a further effect was that u/s 4(1)(b), its total income chargeable to tax, was to be taken to include, besides income deemed to have accrued or arisen in India, all income accrued or arisen to it during the relevant accounting year, wherever it might have accrued or arisen. Accordingly, the income tax officer assessed the Assessee company in the status of "resident and ordinarily "resident" and computed its total income on that basis.

The contention of the Assessee was that in determining for the purposes of Section 4A(c)(b) what profits had arisen in British India, the portion attributable to the manufacturing operations carried out in Burma was to be excluded and only the portion attributable to such operations as had taken place in British India, viz., the sales, was to be taken into account. The point in that contention was that if the profits were apportioned in the manner suggested, the British Indian income of the Assessee would not be found to exceed the income accrued or arisen outside India and, in that event, it would have to be assessed as a non-resident u/s 4(1)(c) only on the income which had accrued or arisen to it or could be deemed to have accrued or arisen in British India during the relevant accounting year. The same object was sought to be achieved by an alternative contention. It was contended that since the profits bad arisen through a business connection in British India, the assessment should be made u/s 42 of the Act and the assessable profits should be taken to be, under Sub-section (3) of the section, only such profits as were reasonably attributable to that part of the operations which was carried out in India. These contentions were repelled successively by the income tax officer, the Appellate Assistant Commissioner and the Appellate Tribunal, the first on the authority of the decision already mentioned and the second on the ground that Section 42 applied only to income which was to be deemed to be income accruing or arising in British India and had no application to cases where the income concerned had actually accrued or arisen in this country.

Thereafter, the Assessee required the Tribunal to refer to this Court certain questions of law and at first the following two questions were referred:

Whether, on the facts of the case, the whole of the profits derived from sales of products in British India through managing agents who were also selling agents, were rightly held to be arising in British India in determining the question of residence under Clause (c)(6) of Section 4A of the Indian income tax Act.

Whether, on the facts of the case, the Tribunal was right in law in holding that Section 42 of the Indian income tax Act had no application to profits or gains derived from sales of products in British India.

The Assessee wanted certain further questions to be referred and moved this Court u/s 66(5) of the Act. The application succeeded and the High Court directed the Tribunal to refer the following further questions which has since been done:

Whether in the facts and circumstances of the ease, the whole of the profits arising from the sales can be said to have been received in British India u/s 4(1)(a) of the Indian income tax Act. If the whole of the profits have not been received in British India, has any part of the said profits and if so, what part, has been received in British India?

Whether for the purpose of attributing to the company residence or non-residence in British India under Clause (c), Sub-clause (b) of Section 4A of the Indian income tax Act, it is essential to apportion the company''s profits from sales made through Managing Agents in British India as between income from merchanting arising in British India and income from production and manufacturing accruing or arising outside British India?

Whether within the meaning of Sub-section (1) of Section 42 of the Indian income tax Act, the entire profits of the company from sales in India made through Managing Agents in British India are deemed to be income accruing or arising within British India?

If yes, whether a part of such profits which is reasonably attributable to the operations of production and refining in Burma is excluded from being charged to income tax (including super-tax) by virtue of Sub-section (3) of Section 42 of the Indian income tax Act.

If yes, whether the said part of such profits must also be excluded from computation of ''total income'' under Clauses (a), (b) and (c) respectively of Section 4(1) of the Indian income tax Act?

Whether any, and if so which, compartments of the company''s total world profits from business are excluded from taxation under the Excess Profits Tax Act, 1940?

Before proceeding further, a word may be said about the basis on which the assessment was made and the scope of some of the additional questions. Section 3 of the income tax Act provides that the tax shall be charged in respect of the total income of the previous year of every Assessee. What income, profits and gains shall be included in the "total income" is laid down in Section 4 and the provision contained there is different, according as the profits are profits received or profits accruing or arising and again, in respect of the latter kind of profits, according as the Assessee is resident in India or non-resident. u/s 4(1)(a), profits received or deemed to be received in British India by or on behalf of "any person" are to be included in the total income and, brought to charge. But as regards profits accruing or arising, the whole of such profits, whether accruing or arising in British India or accruing or arising outside, is to be included in the total income u/s 4(1)(b), if the Assessee is a resident. If, on the other hand, he is non-resident, "only such profits as accrued or arose or can be deemed to have accrued or arisen in British India art to be included by virtue of Section 4(1)(c). Residence is defined in Section 4A; u/s 4A(c)(b), a company is resident if its income arising or accruing in British India exceeds its income accruing or arising outside and u/s 4B(c), a company is ordinarily resident, if it is resident. The assessment in the present case was made on the basis of profits accruing or arising in British India and therefore the question of residence became relevant. But the first of the additional questions and the fifth question, in part, are framed on the basis of profits received. In the case of such profits, residence is immaterial and an enquiry as to what part of the profits arose in British India and what part arose outside is unnecessary.

Reverting now to the questions referred, it appears to me that so far as they bear on assessment to income tax, they stand concluded against the Assessee by reason of the decision of the (Supreme Court in Turner Morrison and Co. Ltd. Vs. Commissioner of Income Tax, West Bengal, and so far as they bear on assessment to excess profits tax, they stand concluded against the Revenue by reason of the decision of the Supreme Court in Commissioner of Income Tax, Bombay Vs. Ahmedbhai Umarbhai and Co., Bombay, .

In Turner Morrison Company''s case (supra), the facts were that Messrs. Port Said Salt Association, Ltd., a company incorporated in the United Kingdom and carrying on business in Egypt, used to manufacture salt in the latter country and consign a part of its products to its Indian agents, Messrs. Turner Morrison and Company, Ltd., for sale in India and the said agents effected the sales and received the sale proceeds in India on behalf of the manufacturing company. For purposes of taxation, the Salt Association was treated as a non-resident. On those facts, it was held by the Supreme Court, in agreement with this Court, that the moment the sale proceeds were received by the agents, the provisions of Section 4(1)(a) of the income tax Act were immediately attracted and since that section applied equally to residents and non-residents and since it made receipt in India the basis of liability to income tax, the profits contained in the sale proceeds received by the agents became, as soon as they were received, chargeable to tax u/s 3 of the Act on the sufficient ground that they had been received. The Supreme Court also held that the whole scope of Section 42 of the Act was to make certain kinds of profits and gains deemed to accrue or arise in India so as to bring them to charge on the basis of accrual or arising, but where the profits were actually received in India, Section 42 had no application, because such receipt being itself a ground of tax-liability for purposes of income tax, it was not necessary to establish accrual or arising by means of a fiction. In all material respects, the facts in Turner Morrison Co''s case (2) are precisely the same as those in the present case and the decision of the Supreme Court must obviously apply. Mr. Chaudhuri, who appeared for the Assessee company, made no attempt to distinguish it or to contend that even as to assessment to income tax of the whole of the profits received in India from the Indian sales, it did not conclude the present case against the Assessee. When his attention was drawn to the decision, he did not proceed further with his argument as to how the quantum on profits arising in India was to be determined for the purposes on Section 4A(c)(b) in a case where the goods were only sold in India, but were manufactured elsewhere, for he appreciated, as he very candidly said, that if the test of receipt was decisive, it was irrelevant and unprofitable to enquire whether the Assessee was a resident or a non-resident'' and, in that connection, to ascertain what part of its profits had arisen in India. All that Mr. Chaudhuri thought he could still say was that the actual profits had been worked out from the sale proceeds by the application of Rule 33 of the rules framed under the income tax Act which applied only to profits deemed to accrue or arise in India u/s 42 and Section 42 having been thus applied by implication, Sub-section (3) of the section was attracted and the assessment should have been only of such part of the profits as was reasonably attributable to the operations carried out in India. I do not find that r. 33 was applied, but even if it was, a method adopted for the arithmetical computation of the profits cannot make applicable basis of tax-liability and a mode of assessment, if they are inapplicable under the law.

From what has been said above, it follows that, so far as assessment to income tax is concerned, Section 42 must be held to be inapplicable to the case and it must further be held that no question u/s 4A(c)(b) arises. It is true that the assessment was made on the basis of Section 4(1)(b) upon a finding u/s 4A(c)(b) that the Assessee was, by the test laid down in that section, a resident, but in view of the nature of the profits which fell to be assessed, the basis adopted was wrong. The correct basis would be that laid down in Section 4(1)(a). The question whether, on the basis adopted, the quantum of assessable profits was rightly computed is, however, only one of an academic interest, because as the whole of the profits received in India, which had been brought under assessment, was the correct quantum u/s 4(1)(a), a decision that the whole of such profits had been wrongly taken as profits arising in India in the assessment, as made, would not affect the tax-liability of the Assessee. As to Section 4(1)(a) which has been brought in by two of the additional questions, it is clear from the decisions of the Supreme Court that the whole of the profits arising from the sale in India must be taken to be received in India for the purposes of that section. In the course of the argument before us, nothing was said as to why the entirety of such profits should not be so taken, although the point is raised in the first of the additional questions. The reason perhaps was that the grounds which the Assessee had in mind were those which were urged before the Supreme ''Court in Turner Morrison and Co. Ltd. Vs. Comr. of I.T., : on appeal Turner Morrison and Co. Ltd. Vs. Commissioner of Income Tax, West Bengal, , by Mr. Mitra, who is junior Counsel in the present case, and since those grounds had not found favour with the Court, they were not repeated.

So much about the assessment to income tax. It was conceded on behalf of the Department by Dr. Pal that excess profits tax stood on a different footing. In the first place, the Excess Profits Tax Act does not apply directly to the income, profits and gains of a person, but applies to the profits of a business. In the second place, the Act does not make receipt of profits in India a basis of their chargeability to tax. The Act, by Section 5, applies only to every business of which any part of the profits is chargeable to income tax under either Section 4(1)(b)(i) or Section 4(1)(b)(ii) or u/s 4(1)(c). Accordingly, it applies, in the case of a resident person, only to such of his business profits as accrue or arise to him OT are deemed to accrue or arise in British India, as also to such business profits as accrue or arise to him outside. In the case of a non-resident person, it applies only to such of his business profits as accrue or arise to him or are deemed to accrue or arise in India. It is thus necessary in the case of -excess profits tax to find what profits accrued or arise or may be deemed to have accrued or arisen to the Assessee in India and it is also necessary, where the Assessee is a resident, to find what profits accrued or arose to him outside India, in order to determine the chargeable income and where the Assessee is a company, it is necessary to find u/s 4A(c)(b) what part of its profits arose in India and what part outside, in order to decide the question of residence, if required.

In the case of Turner Morrison and Co. Ltd. Vs. Comr. of I.T., : on appeal Turner Morrison and Co. Ltd. Vs. Commissioner of Income Tax, West Bengal, , this Court held that in the case of excess profits tax which was livable only on business profits accruing or arising or deemed to accrue or arise and had nothing to do with receipt, Section 42 of the income tax Act applied and the profits of the Port Said Salt Association, Ltd., arising from the sales made in India, were to be deemed to have accrued or arisen in India u/s 42. It was held further that as all the operations of the business were not carried out in India, Section 42(3) was attracted and, accordingly, the quantum of the profits which could be deemed to have accrued or arisen in India would be only such profits as were reasonably attributable to the operations carried out in India. From that part of the decision which was against the Commissioner of income tax, he did not appeal. The point and the only point urged on his behalf in the present case was that though the manufacture of commodities might take place at one place and their sale by or on behalf of the manufacturer at another, profits resulting from their sale arose wholly at the latter place, because till the goods were sold at a profit, no profits could arise. It will be seen that this contention, if correct, would answer the Assessee''s case both u/s 4A(c)(b) and Section 42. The Assessee''s case u/s 4A(c)(b) is that in determining a company''s residence under that section and deciding for that purpose whether the profits arising to it in India exceed the profits arising outside, the income tax authorities can, where the company merely sells in India commodities manufactured by it elsewhere, take as arising in India only such profits as arose out of the sales, as distinguished from the profits which arose out of the manufacturing operations at the place of manufacture. If the former is found to be less than or even equal to the latter, the company must be treated as a non-resident and will not be chargeable to excess profits tax on profits arising to it outside India. The argument presupposes that, in such a case, separate portions of the total profit arise separately at the place of manufacture and that of sale. The Assessee''s case u/s 42 rests practically on the same basis. It is said that from the point of view of account or arise in the profits in such a case are profits deemed to accrue or arise in India and if so, by reason of the provisions of Section 42(3), only such part of the profits can be so deemed as is reasonably attributable to the operations carried out in India, that is to say, the sales, since all the operations of the Assessee''s business were not carried out here. This argument, again, presupposes that the total profits are apportion able between manufacture and sale and arise at different places. The common object of both the cases made by the Assessee is to confine its chargeability to tax to the profits, said to have arisen purely out of the sales, as the only profits arising in India and the only profits reasonably attributable to the Indian part of the operations of the Assessee''s business. Strictly speaking, the argument u/s 42 would apply only to the profits said to be attributable to the manufacturing operations, because the Assessee admitted that the portion attributable to the sales arose in India. So applied, the effect of the argument would be that when one tried to determine the quantum of the deemed income in accordance with the principle laid down in Section 42(3) one would find that there was nothing to determine or add, because the profits attributable to the sales, which were the only operations carried out in India, had already been taken into account on the basis of their having actually arisen in India. Be that as it may, if Dr. Pal was right in his contention that the whole of the profits arose in India where the sales took place, the Assessee''s argument u/s 4A(c)(b) would obviously fail and the argument u/s 42 would also fail, because the whole of the profits having arisen in India, there would be no room or occasion for deeming the profits or any part of them to have arisen here.

In my opinion, in view of the decision of the Supreme Court in the case of Commissioner of Income Tax, Bombay Vs. Ahmedbhai Umarbhai and Co., Bombay, , the argument of Dr. Pal cannot be accepted. That case was concerned with the construction of the third proviso to Section 5 of the Excess Profits Tax Act, but all their Lordships, except Shastri, J., as he then was, seem to accept apportion ability of the profits of a business between the manufacturing operations and the sales as a general principle and not an artificial rule of division prescribed under certain particular schemes of taxation. The main provision in Section 5 lays down that the Act shall, apply to every business of which any part of the profits is chargeable to income tax under the provisions of Section 4(1)(b)(i) or Section 4(1)(b)(ii) or Section 4(1)(c) of the income tax Act. The third proviso to the section reads as follows:

Provided further this Act shall not apply to any business, the whole of the profits of which accrue or arise in an Indian State, and where the profits of a part of business accrue or arise in an Indian State, such part shall, for the purposes of this provision, be deemed to be a separate business, the whole of the profits of which accrue or arise in an Indian State, and the other part of the business shall for all the purposes of this Act, be deemed to be a separate business.

In the case before the Supreme Court, a firm resident in British India and carrying'' on the business of manufacturing and selling groundnut oil, owned some oil mills in British India and one Mill in Raichur in the Hyderabad State. The oil manufactured at Raichur was sold partly within the State of Hyderabad State and partly in Bombay and the question being whether the whole of the profits derived from the sales in Bombay was chargeable to excess profits tax, it was held that such part of the profits as was attributable to the manufacture of the oil at Raichur was exempt from the tax under the third proviso to Section 5 of the Act. The majority of their Lordships based their decision on the general ground that profits were not wholly made by the act of sale, but a part was also made by the manufacturing operations which necessarily arose where those operations took place and therefore the profits arising out of the manufacturing operations at Raichur were to be taken as the profits of those operations, arising where the operations were located, and accordingly they were taken out of the charge by the proviso. Shastri, J. did not subscribe to this conception of the divisibility of the operations of a business and the apportion ability of the profits, but preferred to base his conclusion on Section 42(3) of the income tax Act which required only such portion of the profits as was reasonably attributable to the sales in Bombay to be deemed to have arisen in India and necessarily left the rest to be regarded as accruing or arising at Raichur with the result that the latter portion, arising in an Indian State, was exempt from the tax under the third proviso to Section 5.

It was contended by Dr. Pal that there was a difference between the income of a part of a business and a part of the income of a business. The decision of the Supreme Court, it was contended, was only a pronouncement on fractional income of the first kind and no pronouncement on fractional income of the second variety. It was also contended that for the purposes of the third proviso to Section 5 of the Excess Profits Tax Act, it was sufficient to find that the profits of a part of the business arose in an Indian State, but the fact that such profits arose in an Indian State did not mean that, taken as the profits of the whole business, they could not also arise in British India, if the manufactured products were sold in British India. Section 4A(c)(b) of the income tax Act, it was said, contemplated the income of the whole business. Reference was made to the decisions of this Court in Re Rogers Pyatt Shellac and Company v. The Secretary of State for India ILR (1924) Cal. 1, and In re: Port Said Salt Association, Ltd. ILR (1932) Cal. 1226.

I am unable to accept either of the contentions of Dr. Pal on the merits and do not find that the decisions relied on by him are of any assistance. The first of the decisions was considered by the Supreme Court and was not found to be relevant and the second was given at a time when Section 42(3) had not yet been enacted. It is interesting to note that the Assessee in the second case was the very same Assessee as was concerned in the case of Turner Morrison and Co. Ltd. Vs. Comr. of I.T., : on appeal Turner Morrison and Co. Ltd. Vs. Commissioner of Income Tax, West Bengal, .

I do not think that so far as the present question is concerned, here is any difference between the profits of a part of a business and a part of the profits of a business. The question is whether, when raw materials are subjected to a manufacturing process in order to the turning out of finished products and the products are hold at a profit at some place other than the place of manufacture, the whole of the profits arise far the first time when sales are made and at the place of sale or whether a part of the profits arise out of the manufacturing operations at the place where whose operations take place. It seems to me that whether the manufacturing operations are taken as a part of the business and portion of the profits as the profits of that part or whether the portion of the profits attributable to the manufacturing operations is taken as a part of the profits of the whole business, makes t0 difference. The real question is, can profits arise at all before sales are made and are manufacturing operations capable it all in themselves of yielding profits apart from or before sale? If the matter had not been concluded by the majority decision of the Supreme Court, I would have given serious consideration to the argument of Dr. Pal that even when goods are manufactured it one place and sold at another, the whole of the profits arise at the latter place upon the sales being made. "But profit", observed Rankin, C.J., in the Port Said Salt Association case ILR (1932) Cal. 1226:

Though it may be anticipated by valuation or otherwise, is not realised before price, and when the article is sold, the whole profit is realised for the first time.

It is true the learned Chief Justice did not proceed to say expressly that even after the profits had actually arisen from the sales, the place of the accrual of a portion of them could not be said to be the place of manufacture, but such must have been his meaning, being that he held that the company was liable to tax on the whole of the profits and was not entitled to exclude any part of them on the ground that it had accrued and arisen in Egypt, The reason underlying this view perhaps is that although the manufacturing process may contribute to the profits by increasing the value of the goods, no profits can be said to arise out of them before sale, because prices may fall before the goods are sold and therefore profits arise only out of asides, when sales are made at a profit. The point, however, has been settled by the decision of the Supreme Court and it is not open to any one to take or entertain a contrary view. As I read the judgments on their Lordships, Kania, C.J. at pp. 341-42 of the report, Mahajan J. at pp. 368, 372, Fazl Ali, J. concurring with him, and Mukherjea, J, at p. 389, all proceed on the general ground that the profits of a business, consisting in manufacture and sale of goods, do not arise solely at the place of sale, but the portion attributable to the process of manufacture arises where that process take place.

The second argument of Dr. Pal was that Ahmedbhai''s case (supra) only decided that the profits did not arise exclusively in India, but a part arose in the Hyderabad State which was all that was necessary to decide for the purposes of the third provision to Section 5. The decision, it was contended, did not exclude the view that the whole of the profits might nevertheless arise in India because the same income could arise at two places. It was pointed out that the third proviso to Section 5 made the part of the business carried on in an Indian State a separate business and since the manufacturing operations of a business were held to be a "part" within the meaning of the proviso, the apportionment of the profits between manufacturing operations and sales was an artificial apportionment, necessitated by the statutory division of the business itself. I have already pointed out that the Supreme Court did not proceed as if it was giving effect to an artificial apportionment of the profits under a particular scheme of taxation, but proceeded on general principle''s and on its view of the true concept of profits arising out of a business, involving operations of both manufacture and sale. Nor do I find it easy to agree that if certain profits do arise at one place, they may also arise at another place. Different portions of the profits of business may arise at different places or a portion of profits arising at one place, may be attributable to certain operation carried out at another place. But if a portion of the profits realised at one place, is held not only to be attributable to some processes carried out at another place but also to have arisen a that place, I am unable to see how they can at the same time arise again at the place where they are realised. The Supreme Court held a portion of the profits, realised by the sales in Bombay, to be attributable to manufacturing operations and to have arisen at Hyderabad where the manufacturing operation had taken place. That the very same portion of the profit could not arise in Bombay and could not be chargeable to the Indian tax was due not merely to the fact that the operations on sale at Bombay were to be treated as a separate business under the proviso, but also to the fact that it had already arisen a Hyderabad.

I may also point, out that if Section 42 of the income tax Act applies to profits of the kind we have here discussions as to whether a portion of the profits could rightly be said to arise at the place of manufacture are pointless, because under the rule in Section 42(3), only the portion reasonably attributable to the sales can be deemed to have accrued or arisen in India, whatever the place of accrual of the remaining portion may be under the true concept of business profits. But it must be admitted that before Section 42 can be held to apply, the contention of Dr. Pal that the whole of the profits actually arise in India must be got over, as otherwise there could be no scope for the application of Section 42. It was, however, held by this Court in Turner Morrison and Co. Ltd. Vs. Comr. of I.T., : on appeal Turner Morrison and Co. Ltd. Vs. Commissioner of Income Tax, West Bengal, that so far as excess profits tax was concerned, Section 42 did apply to profits derived from sales made in India of goods manufactured, outside and in the case of Ahmedbhai''s before the Supreme Court also all of their Lordships referred to the applicability of Section 42. In Turner Morrison and Co. Ltd. Vs. Comr. of I.T., : on appeal Turner Morrison and Co. Ltd. Vs. Commissioner of Income Tax, West Bengal, the Assessee was a non-resident and in Commissioner of Income Tax, Bombay Vs. Ahmedbhai Umarbhai and Co., Bombay, , the Assessee was a resident, but no distinction between residents and non-residents is made in the first part of Section 42(1).

For all the reasons given above, I am unable to accept the contentions of Dr. Pal.

In the result, the answers to the questions referred should, in my opinion, be as follows:

Questions originally referred.

Does not arise for purposes of income tax, as the whole if the profits was received in British India.

Yes, so far as assessment to income tax is concerned.

Additional Questions.

The whole of the profits was received in India within the meaning of Section 4(1)(a) of the income tax Act.

Yes, where Section 4A(c)(b) applies and it is necessary to apply it, but does not arise in the case of assessment to income tax in the present case, as the sale proceeds were received in India.

Does not arise for purposes of income tax, since the sale proceeds and therefore the profits are received in British India.

Do.

Do. The sale proceeds being received in India, the whole of the profits must be included in the total income u/s 4(1)(a) of the income tax Act and no question under 4(1)(b) Section 4(1)(c) arises.

Profits other than those reasonably attributable to the

operations of sale and other operations if any, carried out in India.

As the Department succeeds on income tax and the Assessee succeeds on excess profits tax, there will be no order for costs.

Lahiri, J.

I agree.