Receipt in British India determines taxability of foreign profits; payment abroad to a creditor was not taxable income.

Foreign profits remitted directly from the Malacca branch to a creditor outside British India were not taxable under section 4(2) of the Indian Income Tax Act, 1922 because the decisive test was receipt in British India. The payment never reached British India, and a mere discharge of liability by payment abroad did not amount to receipt of income within the taxable territory. On that basis, the remitted sum could not be brought into total income in British India and was wrongly included in the assessee's assessment.

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Issues: Whether the sum of $6,290 remitted from the Malacca branch to a creditor outside British India could be included in the assessee's total income under section 4(2) of the Indian Income Tax Act, 1922.

Analysis: The remittances were made out of profits earned abroad, but the money was paid directly to the creditor outside British India and never reached British India. The decisive test was receipt in British India, and a mere reduction of the assessee's liability by payment abroad did not amount to receipt of income within the taxable territory. On that footing, the foreign profits could not be brought to tax in British India.

Conclusion: The sum of $6,290 was wrongly included in the assessee's total income and was not taxable in British India.

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