Actual receipt in India by agents charged non-resident income under the receipt-based provision, not Section 42 alone.

Sale proceeds collected in India by agents for a non-resident were treated as income received in India on the principal's behalf, so they fell within the receipt-based charging provision. Section 42, being a deeming rule for income treated as accruing or arising in India, was not exclusive where actual receipt in India was established. The appointment of a statutory agent under Section 43 did not confine assessment to Section 42 alone, because the agency mechanism could operate with other charging provisions depending on the facts. The sums were therefore chargeable in India on the basis of actual receipt.

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Issues: (i) Whether the sale proceeds collected in India through the agents were income, profits and gains received in India on behalf of the non-resident assessee so as to fall under Section 4(1)(a) of the Indian Income-tax Act, 1922. (ii) Whether, where income was actually received in India, the case was confined to Section 42 of the Indian Income-tax Act, 1922 and therefore excluded assessment under Section 4(1)(a). (iii) Whether the appointment of a statutory agent under Section 43 of the Indian Income-tax Act, 1922 necessarily attracted only Section 42 of the Indian Income-tax Act, 1922.

Issue (i): Whether the sale proceeds collected in India through the agents were income, profits and gains received in India on behalf of the non-resident assessee so as to fall under Section 4(1)(a) of the Indian Income-tax Act, 1922.

Analysis: The agents were entrusted not merely with remittance of money but with sale of goods, handling of cargo, collection of sale proceeds and remittance after deduction of expenses and commission. The proceeds belonged to the principal subject only to the agents' right of retainer for commission and expenses. Receipt by the agents in the course of that business was receipt on behalf of the non-resident principal, and the gross sale proceeds carried with them the income embedded in the receipts when they came into India.

Conclusion: Yes. The income was received in India on behalf of the non-resident assessee and was chargeable under Section 4(1)(a) of the Indian Income-tax Act, 1922.

Issue (ii): Whether, where income was actually received in India, the case was confined to Section 42 of the Indian Income-tax Act, 1922 and therefore excluded assessment under Section 4(1)(a).

Analysis: Section 42 is a deeming provision designed to bring into charge income that is treated as accruing or arising in India. Where income is in fact received in India, resort to the legal fiction is unnecessary. Section 4(1)(a) is general in terms and applies even to non-residents when the receipt is in India. The existence of a business connection does not displace actual receipt as a charging basis.

Conclusion: No. Actual receipt in India brought the case within Section 4(1)(a), and Section 42 did not exclude its application.

Issue (iii): Whether the appointment of a statutory agent under Section 43 of the Indian Income-tax Act, 1922 necessarily attracted only Section 42 of the Indian Income-tax Act, 1922.

Analysis: Section 43 is an agency provision for the purposes of the Act and is not confined to the operation of Section 42. Its language extends to a person through whom the non-resident receives income, profits or gains, and such receipt may also attract Sections 40 or 4(1)(a) depending on the facts. The statutory agency mechanism therefore does not restrict the charging provision to Section 42 alone.

Conclusion: No. Section 43 did not limit the assessment to Section 42 and could operate alongside Section 4(1)(a).

Final Conclusion: The appeal failed because the sums collected in India through the agents were rightly treated as income received in India on behalf of the non-resident principal, and the statutory agency provisions did not oust the charging provision applicable to actual receipt.

Ratio Decidendi: Where income is actually received in India on behalf of a non-resident, it is chargeable under the receipt-based charging provision, and the deeming provision for accrual or arising in India does not become exclusive merely because the receipt occurred through a statutory agent or in the course of a business connection.

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