Territorial source of income depends on the real and practical source of the receipt, not merely payment mechanics.

Under a territorial income-tax charging provision, the real and practical source of a receipt must be identified from the transaction as a whole. A sum realised by a liquidator on the sale of mining claims was held not to be shown as a capital receipt, because the claims had been acquired and developed as part of a profit-making scheme and the liquidation sale was the culmination of that scheme rather than a mere capital realisation. The source of the receipt was also within Southern Rhodesia, since the company's business activity and the property that generated the money were situated in the territory. The appeal therefore failed on both the capital-receipt and territorial-source issues.

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Issues: (i) Whether the amount assessed was a receipt proved to be of a capital nature. (ii) Whether the amount was received from a source within the territory.

Issue (i): Whether the amount assessed was a receipt proved to be of a capital nature.

Analysis: The assessment arose under the income-tax charging provisions of the Southern Rhodesia Ordinance of 1918, which distinguished between taxable income and receipts of a capital nature. The transaction concerned the sale by a liquidator of the whole undertaking of the company, including mining claims acquired and developed in Southern Rhodesia. The surrounding facts showed that the company had acquired the claims as part of a scheme of profit-making and that the liquidation and sale were the culminating steps in that scheme rather than a mere realisation of a capital asset in the ordinary sense.

Conclusion: The amount was not shown to be a capital receipt, and this issue was decided against the appellant.

Issue (ii): Whether the amount was received from a source within the territory.

Analysis: The taxing provision charged income received from any source within the territory, and the source had to be identified as a practical matter of fact. The Court rejected the submission that the only source was the place where the contracts were made or where payment was received. On the facts, the company's sole business operation was the purchase, development, and intended profitable transfer of immovable mining claims in Southern Rhodesia. The mining claims themselves, acquired and developed in the territory for the purpose of producing the receipt, were the real source of the money received.

Conclusion: The receipt was from a source within Southern Rhodesia, and this issue was decided against the appellant.

Final Conclusion: The appeal failed in full because the assessed sum was treated as income and was held to arise from a territorial source within Southern Rhodesia.

Ratio Decidendi: In determining the source of income under a territorial charging provision, the real and practical source of the receipt must be identified from the facts of the transaction, and a receipt arising from the development and sale of property within the territory is derived from a source within that territory.

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