Non-resident trade through controlled local entity was treated as UK trading, with subsidiary acting as regular agent.

For income-tax purposes, a non-resident carries on a trade within the United Kingdom where the actual commercial operations are conducted in England through a controlled local entity, with orders accepted, fulfilled, delivered, and paid for there. The court looked to the real course of dealing rather than the formal distribution structure and held that the business was not merely trading with the United Kingdom from abroad. On that basis, the English subsidiary was treated as the authorised regular agent through whom the non-resident carried on the trade, and the assessment was upheld against the assessee.

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Issues: (i) whether the non-resident company was exercising a trade within the United Kingdom through sales of tyres arranged and executed through the English subsidiary; (ii) whether the English subsidiary was the non-resident company's regular agent for the purposes of the income-tax rules.

Issue (i): whether the non-resident company was exercising a trade within the United Kingdom through sales of tyres arranged and executed through the English subsidiary.

Analysis: The statutory scheme charged profits from a non-resident's trade exercised within the United Kingdom and, under the relevant rules, taxed such profits through an authorized regular agent. The contracts were not to be tested only by the formal distributor arrangements, but by the actual course of dealing. Orders were placed directly with the English subsidiary, accepted and fulfilled in England, delivery and payment took place in England, and the English subsidiary acted under the non-resident company's directions in a controlled, integrated distribution system. On that footing, the business was not merely trading with the United Kingdom from abroad; it was carrying on a trade within the United Kingdom as part of a deliberate world-wide marketing structure.

Conclusion: The issue is answered in the affirmative and against the assessee.

Issue (ii): whether the English subsidiary was the non-resident company's regular agent for the purposes of the income-tax rules.

Analysis: Once the trading activity in the United Kingdom was established, the English subsidiary was the only local entity through which that trade was conducted. It dealt with orders, manufactured or supplied the goods, fixed the practical incidents of execution under the parent company's control, and remitted the profits to the non-resident company after retaining only a service margin. In substance, it was not an independent trader for this purpose but the authorized regular agent through whom the non-resident carried on the relevant trade.

Conclusion: The issue is answered in the affirmative and against the assessee.

Final Conclusion: The income-tax assessment on the non-resident company was upheld because the trading operations in question were carried on in the United Kingdom and were conducted through the English subsidiary as a regular agent.

Ratio Decidendi: For income-tax purposes, a non-resident carries on a trade within the United Kingdom where the actual commercial operations are carried on in England through a controlled local entity under which orders are accepted and fulfilled there, and the local entity is then the regular agent for assessment.

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