Accrual of sales profits in British India upheld where canvassing, contracting, delivery, and collection formed part of the sale process.

A proportionate part of the profits from the impugned sales was treated as income accruing in British India and therefore taxable there. The Court relied on the combined commercial steps in British India, including canvassing, brokerage, personal visits, execution of contracts at Indore, delivery f.o.r. Indore, and endorsement of railway receipts through the bank, and followed earlier authority on similar delivery and collection arrangements. It rejected the argument that no profits could be taxed merely because delivery was f.o.r. Indore and sale proceeds were received at Indore through the bank, and answered the referred question in the affirmative in favour of Revenue.

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Issues: Whether a proportionate part of the profits from the impugned sales accrued or arose in British India and was therefore assessable to income-tax.

Analysis: The sales were effected through a combination of canvassing in British India, brokerage, personal visits to Indore, execution of contracts at Indore, delivery f.o.r. Indore, and endorsement of railway receipts through the bank. On the material before it, and following earlier authority on similar modes of delivery and collection, the Court held that the income accrued within British India. The Court rejected the contention that no part of the profits could be brought to tax merely because the goods were delivered f.o.r. Indore and the sale proceeds were received at Indore through the bank.

Conclusion: A proportionate part of the profits was assessable to income-tax, and the answer to the referred question was in the affirmative, in favour of Revenue.

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