Residence and receipt for tax purposes turn on central management control and actual bringing of income into British India.

Residence of a firm depends on the place where its central management and control abides, and a registration certificate naming Bombay as the principal place of business was treated as relevant evidence supporting residence in British India. For income tax receipt, section 4(2) required actual receipt in or bringing into British India of income, profits or gains in cash or a realisable asset. Payment made at Indore to discharge creditors out of local shop funds, without any cash or tangible asset coming into British India, was not treated as receipt there. Constructive remittance or mere reduction of liability outside British India was insufficient.

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Issues: (i) whether the Commissioner's finding that the assessee firm was resident in British India was supported by evidence; (ii) whether payment made at Indore to the assessee's creditors out of the Indore shop funds amounted to receipt in or bringing into British India of the profits so applied.

Issue (i): whether the Commissioner's finding that the assessee firm was resident in British India was supported by evidence.

Analysis: Residence of a firm depends on where its central management and control abide. The registration certificate stating Bombay as the principal place of business was treated as a material admission by the assessee and was relevant evidence on which the Commissioner could rely. Other materials either related to different periods or were otherwise insufficient to displace that evidence. The finding was therefore not shown to be without evidence.

Conclusion: The finding of residence was supported by evidence and stood against the assessee.

Issue (ii): whether payment made at Indore to the assessee's creditors out of the Indore shop funds amounted to receipt in or bringing into British India of the profits so applied.

Analysis: Section 4(2) required actual receipt in or bringing into British India of income, profits or gains, whether in cash or in a realisable asset. Mere reduction of liability in British India or constructive remittance was insufficient. Where money was paid outside British India to discharge debts there, and no cash or tangible asset came into British India, the amount was not received in British India. The authorities relied on by the revenue involved either payment by negotiable instrument in British India or receipt of tangible assets in British India, which were distinguishable.

Conclusion: The sum paid at Indore was not received in or brought into British India and the question was answered in the negative in favour of the assessee.

Final Conclusion: The reference was answered by upholding the finding on residence but rejecting the revenue's contention on receipt in British India, so the taxable remittance question was decided for the assessee.

Ratio Decidendi: For Section 4(2), income is received only when it comes into British India in cash or a realisable asset, and a mere constructive adjustment or discharge of liability outside British India does not amount to receipt there.

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