Banerjee, J. - (1.) This is a Reference under Section 66, Indian Income-tax Act made at the instance of the Commissioner of Income-tax, Calcutta. The question on which we are to express our opinion has been formulated as follows: "Whether on the facts found by the Tribunal, the Tribunal was right in holding that the commission payable to the assessee under 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 assessee?"
(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 United Kingdom & was the managing agent of Attock Oil Company which was also incorporated in the United Kingdom. These companies have their respective offices in London. There were several agreements between the assessee & the Attook Oil Company which were all made in London. Whereby the remuneration payable to the assessee was fixed. It is not necessary to set out the agreements in extenso. The relevant, portions are as follows:;