Profits from foreign sale do not accrue in British India merely because the goods were purchased there.

Profits from the foreign sale of goods purchased in British India were not taxable there because liability under the Income Tax Act, 1922 depended on where income accrued, arose, or was received. The sale abroad was the place where the profits materialised, and no part of the income was received or brought into British India. Mere purchase of goods in British India was too remote to constitute accrual, and the non-resident deeming rule could not be applied by analogy to a resident assessee without express statutory language. Taxing liability could not be extended by equitable construction.

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Issues: Whether profits derived from the sale in a foreign country of goods purchased in British India accrued or arose in British India so as to be taxable under the Income Tax Act, 1922.

Analysis: Liability under the Act depended on the place where the income accrued, arose, or was received, not on the assessee's residence. The relevant charging provision applied to income accruing or received in British India, and no part of the profits in question was received or brought into British India. The special deeming provision for non-residents had no application, because the assessee was resident in British India and the statute contained no corresponding fiction treating the place of purchase as the place of accrual. The sale abroad was the effective place where profits materialised, while the mere purchase of goods in British India was too remote a circumstance to be treated as the source of accrual. In a taxing statute, liability cannot be extended by analogy or equitable construction.

Conclusion: No part of the profits realised from the foreign sale of the goods was taxable in British India.

Ratio Decidendi: Under the Income Tax Act, 1922, profits accrue where they are realised by sale, and the mere purchase of goods in British India does not create a taxable accrual there in the absence of an express statutory deeming provision.

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