Commission income accrual turns on actual lending and bill acceptance in Mysore, supporting tax exemption.

Commission income under financing agreements was held to accrue in Mysore because the decisive events were the actual advancement of funds, operation of the Mysore bank account, and submission and acceptance of final bills there. The place of execution of the agreements or the assessee's residence was not treated as controlling. On that basis, the income was regarded as arising in Mysore and fell within the exemption under section 14(2)(c) of the Indian Income-tax Act, 1922.

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Issues: Whether the commission income on advances made under the financing agreements accrued or arose in the State of Mysore so as to be exempt from tax under section 14(2)(c) of the Indian Income-tax Act, 1922.

Analysis: The commission was not a mere incidental receipt tied only to the place where the agreements were executed or where the commission was later settled in books. Its accrual depended on the actual advancement of money under the agreements and on the submission and acceptance of final bills for the works, both of which were integral to the performance of the arrangement. The advances were in fact made at Mysore, the funds were operated from the Mysore bank account, and the final bills were submitted and accepted by the Mysore authorities. In such a money-lending transaction, the decisive factor for accrual was the place of actual lending and the contractual conditions governing liability to commission, rather than the place of execution of the agreements or the assessee's residence.

Conclusion: The commission income accrued in Mysore and was exempt under section 14(2)(c) of the Indian Income-tax Act, 1922.

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