Decided on January 14,1976

Jardine Henderson Ltd. Appellant


D.C.BHATTACHARYA, J. - (1.) These two appeals are against a judgment of a Bench of the Dacca High Court deciding a question as to the taxability of certain income of the appellant, as referred by the Income-tax Appellate Tribunal under section 66(i) of the Income-tax Act. Civil Appeal No. 16 of 1974 is in respect of the appellant's income during the four assessment years, viz. 1954-1955 to 1957-1958 and Civil Appeal No. 17 of 1974 is in respect of the appellant's income during the- next five assessment years, viz. 1958-59 to 1962-63.
(2.) The appellant is a public limited Company incorporated in India having its registered office in the city of Calcutta in India. By virtue of an agreement made on 19-3-47 the appellant became the Managing Agent of another Indian Company, namely, Kanknarrah Co. Ltd., hereinafter referred to' as- the managed company which operated several mills in India and also owned some godowns, situated in Pakistan, now Bangladesh. In accordance with the terms of the agreement the appellant was vested with the power of general management of the managed Company's business transactions as well as property affairs in consideration of a commission at the rate of 2 % of the gross proceeds arising from the sale-of the goods produced by the mills of the managed company and any other goods sold by the managed company and also an office allowance of Rs. 200/- per mensem. The appellant's case is that the managed company had no business in Pakistan and the commission received by it from the managed company's- business in India having had no connection, with, any business transaction in Pakistan was riot taxable in Pakistan. The Kanknarrah Co. Ltd. had, no doubt, certain immovable properties in Pakistan which the appellant had, under the terms of the agreement, to look after but such properties having been under requisition no income accrued from the said properties in Pakistan and entire commission payable to the appellant, had to be calculated on the basis of the sale of the goods which were manufactured arid sold in India. According to the appellant, the only income which may be said to have any business connection in Pakistan was the monthly allowance of Rs. 200/- per mensem.
(3.) The Revenue authorities viz. the Income-tax Officer and the Appellate Assistant Commissioner took the view that the commission earned by the appellant as well as the office allowance received by it, for the works done in India as well as Pakistan and as such assessable under section 42 of the Income-tax Act and the appellant's income attributable to the operations in Pakistan was computed on the basis of what was called the Two-man Committee's decision. The Income-tax Appellate Tribunal after rejecting the appeal preferred against the orders of the Appellate Assistant Commissioner referred the following questions for the opinion of the Dacca High Court under section 66(1) of the Income-Tax Act: (i) Whether on the facts and in the circumstances of the case income could be deemed to have accrued or arisen to the applicant within the meaning of sub-section (1) of Section 42 of the Income-tax Act, 1922. (ii) Whether on the facts and in the circumstances of the case commission received by the applicant on the goods sold by Kanknarrah Co. Lid. was assessable in Pakistan. ;

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