Deeming provision for income accrual applies to residents where statutory language is general, despite contrary marginal note.

Section 42(1) of the Indian Income-tax Act, 1922 was held to apply in general terms, so its deeming fiction was not confined to non-residents and could operate against a resident assessee. The provision, read with Sections 4 and 14 and supported by its amendment history, showed legislative intent to treat income arising from a business connection in British India as income deemed to accrue or arise there. The marginal note could not limit the plain statutory language. The referred question was answered in the affirmative, in favour of the Revenue and against the assessee.

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Issues: Whether Section 42(1) of the Indian Income-tax Act, 1922 applied to a resident assessee so as to deem profits arising from a business connection in British India as income accruing or arising in British India.

Analysis: Section 42(1), as amended, was framed in general terms and defined income deemed to accrue or arise within the taxable territories without restricting its operation to non-residents. The structure of the provision, the contrast between its general opening part and the later non-resident-specific language, and the interplay with Sections 4 and 14 showed that the legislative object was to bring within charge income deemed to accrue in the taxable territories even in the case of residents. The marginal note could not control the plain language of the section, and the amendment history supported the broader construction.

Conclusion: Section 42(1) applied to a resident assessee as well, and the profits in question were liable to be treated as income deemed to accrue in British India. The answer to the referred question was in the affirmative, against the assessee and in favour of the Revenue.

Ratio Decidendi: Where the language of a deeming provision is general and not confined by express words to non-residents, it applies according to its plain terms to residents as well as non-residents, and marginal notes cannot cut down that substantive operation.

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