Receipt of income in taxable territories independently triggers tax on non-residents, and credited commission can count as receipt in India.

Income received in British India by or on behalf of a non-resident was chargeable under section 4(1)(a) of the Income-tax Act, 1922 even if the income had accrued abroad, because that clause operated independently of section 4(1)(c). The statutory scheme also supported assessment through a statutory agent where there was a business connection with the non-resident. Commission credited in the assessee's books under the agreement was treated as receipt in the taxable territories because the sums were placed at the non-resident's disposal and held on its behalf. The practical effect was that such commission income was taxable in India in the hands of the assessee as statutory agent.

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Issues: (i) Whether section 4(1)(a) of the Income-tax Act, 1922 operated independently of section 4(1)(c) so that receipt of income in British India by or on behalf of a non-resident was taxable even if the income had accrued abroad; (ii) Whether the commission amounts credited in the assessee's books under the agreement amounted to receipt by the non-resident company in the taxable territories.

Issue (i): Whether section 4(1)(a) of the Income-tax Act, 1922 operated independently of section 4(1)(c) so that receipt of income in British India by or on behalf of a non-resident was taxable even if the income had accrued abroad.

Analysis: Section 4(1)(a) dealt with income received in British India, while section 4(1)(c) dealt with income accruing or arising in British India to a non-resident. The provisions were held to be distinct and capable of operating separately. Receipt within the taxable territories was itself sufficient to attract charge under section 4(1)(a), and that clause was not limited by the accrual rule in section 4(1)(c). The statutory scheme under sections 42 and 43 also supported assessment through a statutory agent where there was a business connection with a non-resident.

Conclusion: Yes. Section 4(1)(a) applied independently, and receipt in British India by or on behalf of a non-resident was taxable notwithstanding foreign accrual.

Issue (ii): Whether the commission amounts credited in the assessee's books under the agreement amounted to receipt by the non-resident company in the taxable territories.

Analysis: Under the agreement, the assessee was required to credit the commission to the non-resident company's account and hold it until instructions were received. Once credited, the money ceased to be a mere debt and became money held for and on behalf of the non-resident and at its disposal. The credited sums were therefore treated as received in the taxable territories, and the fact that the company later directed application of part of the amounts reinforced that character.

Conclusion: Yes. The credited commission amounts were received by the non-resident company in the taxable territories within section 4(1)(a).

Final Conclusion: The commission income was taxable in India in the hands of the assessee as statutory agent, and the challenge to the assessment failed.

Ratio Decidendi: Income received in the taxable territories by or on behalf of a non-resident is chargeable under section 4(1)(a) of the Income-tax Act, 1922 independently of where it accrued, and amounts credited under an agreement so as to place them at the non-resident's disposal amount to receipt in India.

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