Grover, J. - (1.) These appeals are by certificate from the common judgment of the Mysore High Court on the following questions of law which were referred by the Income-tax Appellate Tribunal under S. 66 (1) of the Income Tax Act 1922, hereinafter called the Act."(1) Whether, on the facts and circumstances of the case, the income of the assessee did not arise in Bangalore (Mysore State) in respect of sales effected by the assessee to the Burma Teak Trading Co. Ltd.; Colombo (2) If the answer to the above question is in favour of the assessee, then whether, on the facts and circumstances of the case, the assessee is entitled to the concession under Part B States (Taxation Concessions) Order, 1950 and (3) Whether, on the facts and circumstances of the case, the apportionment of profits of business is calle for pursuant to assessee's trading activities in Bangalore (Mysore State) -
(2.) The assessee is a firm carrying on business in Bangalore in Mysore State. It was appointed as the sole selling agent for Ceylon except Jaffina Peninsula and the town of Trincomalee for the purpose of marketing, selling or distributing Lotus Brand tiles and ridges manufactured by M/s. Modern Tile and Clay Works of Feroke.
(3.) According to an agreement dated August 10, 1949 between the parties all prices quoted by the manufacturer were to be F. O. B. Beypore Port and for loading into country crafts; the right to charter or engage vessels was to be with the agents. Beypore is in the taxable territory as also Feroke where the tiles manufacturers carried on their business. One of the employees of the assessee stayed at Calicut during the season to supervise the operation of delivery of articles and to engage vessels. The bills of lading were obtained by the assessee's representative at Beypore and sent to Banglore where the hundis together with the invoices and shipping documents were handed over by the assessee to the Indian Overseas Bank Ltd., Bangalore. Pursuant to the letter of credit opened by the Burma Teak Trading Co., Ltd., Colombo, which was the purchaser, payments were made by the aforesaid bank to the asseessee. It is unnecessary to state the details about the profits which the assessee made during the relevant assessment years 1951-52, 1952-53 and 1953-54. The assessee claimed that since its registered office was in Bangalore and as the agency agreement with the purchaser at Colombo was entered into in Bangalore the entire income should be treated as income accruing or arising in Part B State and concession regarding rates and allowances as provide in Part B States (Taxation Concessions) Order, 1950, hereinafter called the "Order", should be allowed to it. The income-tax authorities as also the Appellate Tribunal decided against the assessee. It was held that hardly any activity took place at Bangalore in the matter of earning the profits from the transactions in question.;