Accrual of managing agency commission depends on where the right to receive it arises, not where work is done.

Managing agency commission was held to accrue where the right to receive it came into existence, not where parts of the work were performed. Because the commission was calculated on the company's net profits as a whole and became payable only after all operations were aggregated and accounts were submitted to the head office in Bombay, the local supervision and work at Kandla did not create separate accruals. The decisive legal test was the situs of the right to receive the commission. On that basis, the commission accrued and arose in British India, not in the State of Kutch, for income-tax and excess profits tax purposes.

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Issues: Whether the managing agency commission of Rs. 88,065 accrued or arose in the State of Kutch or in British India for the purposes of income-tax and excess profits tax.

Analysis: The commission under the managing agency agreement was calculated on the net profits of the company as a whole and became payable only after the profits of all its operations were ascertained. The work done at Kandla formed only one part of the managing agents' overall obligations and did not split the commission into separate local accruals. The decisive factor was where the right to receive the commission came into existence, not where individual business activities or supervision took place. That right arose only when the accounts were submitted to the head office in Bombay and the overall profits were determined.

Conclusion: The commission accrued and arose in British India, not in the State of Kutch.

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