Foreign profits outside British India remained untaxed despite a resident buying agent, as machinery provisions could not widen the charge.

A non-resident firm's profits accrued and received in France were not taxable in British India merely because it carried on buying operations through a resident agent in Madras. Section 5 was treated as the charging provision, while section 33(1) was confined to machinery for assessment through an agent and could not, without clear words, expand the tax charge to income arising wholly outside the taxing territory. The Court applied the rule that a tax burden must rest on express statutory language and held that a buying agency in British India did not by itself create taxability of the foreign profits.

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Issues: Whether profits earned and received in France by a non-resident firm were chargeable to income-tax in British India merely because the firm carried on buying operations through a resident agent in Madras and whether section 33(1) operated as an independent charging provision.

Analysis: The relevant provisions were read together to determine the scope of liability. Section 5 was treated as the charging provision, taxing income derived from business, while section 33(1) was held to belong to the special-liability machinery for assessment through an agent. The words "business connexion in British India" were not accepted as widening the tax net to profits accruing and received wholly outside British India. Applying the rule that a taxing burden must be imposed by clear and express words, and following the analogous authorities on non-resident taxation, the Court held that the existence of a buying agent in British India did not by itself make foreign profits taxable there.

Conclusion: The non-resident principal's profits realized in Paris were not chargeable in British India, and the Madras Export Company was not liable to be assessed on those profits as agent.

Ratio Decidendi: A provision placing liability on an agent is a machinery provision and cannot be construed, in the absence of clear words, as extending a taxing charge to profits accruing and received wholly outside the taxing territory.

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