Transmission of dividend income to a non-resident can create statutory agent liability for the resident payer under territorial tax rules.

Dividend paid by cancelling a debt and making corresponding book entries was treated as a transmission of income to a non-resident for the purposes of section 30 of the Income-tax Ordinance, 1940. The non-resident shareholder remained chargeable on the dividend under section 5 because the income accrued in, or was derived from, the Colony. Section 30 was held to operate within territorial limits by imposing liability on the resident person in the Colony who transmits income to a non-resident, making that resident liable as statutory agent.

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Issues: Whether payment of a dividend by cancellation of a debt and corresponding book entries constituted a transmission of income to a non-resident within section 30 of the Income-tax Ordinance, 1940, so as to make the resident payer liable as statutory agent.

Analysis: The non-resident shareholder was chargeable on the dividend under section 5 because the income accrued in or was derived from the Colony. Section 30 was held to be within territorial limits because it imposed liability on the resident person within the Colony who transmitted income to a non-resident. The expression

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