ANGLO-FRENCH TEXTILE CO. LTD versus COMMISSIONER OF INCOME-TAX, MADRAS.

Citation: [1954] 1 S.C.R. 523 · Decided: 08-12-1953 · Supreme Court of India · Bench: MEHR CHAND MAHAJAN · Disposal: Appeal(s) allowed

Judgment (excerpt)

S.C.R. 
SUPREME COURT REPORTS 
523 
section 10 or took no active part in the proceedings 
under section 11(2). In the view that we have taken 
it is not necessary to decide the question whether the 
High Court was right in not exercising its powers under 
Order XLI, rule 20, in impleading the creditors as res-
pondents to 'the appeal. 
For the reasons given above we allow this appeal, 
set aside the judgment of the High Court and remand 
the case to that court for hearing the appeal in accord-
ance with law on its merits. If the High Court 
thinks fit that the presence of any creditors would 
help the court in arriving at a true decision of the 
matter it in its 
discretion may give notice 
to the 
creditors of the date of hearing. We leave the parties 
to bear their own costs of this appeal. 
Appeal allowed. 
Agent for the appellant : C. P. Lal. 
Agent for respondent No. 5 : S. S. Shukla. 
' ANGLO-FRENCH TEXTILE CO. LTD. 
ti. 
COMMISSIONER OF INCOME-TAX, MADRAS. 
!MEHR CHAND MAHAJAN, S. R. DAs, 
VIVIAN BosE and BHAGWATI JJ.] 
Income-tax Act, 1922, ss. 4 (1) (a), 4A (c) (b), 42 (1) and (3) 
-Foreign cornpany-A1anufacture of goods outside British 
India 
--Sale of goods and receipt of sale proceeds in British lndia-
Assessment 
under 
s. 4 (1) (a)-Applicability 
of s. 
42 (1)-
Determinatiotz 
of residence 
of company-Allocation 
of inconie 
between operations carried on toithin and outside 
British 
lndia-
W hether permissible. 
The assessee, a con1pany incorporated in the United King<lom 
:111d having its 
registered office 
in London, nlanufactured yarn and 
.cloth in their mill at Pondicherry. 
The 
assessee 
had 
appointed 
anorher company in 
Madras as their agents. The manufactureo. 
goods \Vere sold inostly 
in British India and partly 
outside British 
India. 
All the contracts 
in resoect of the 
sales in 
British India 
\Vere entered into in 
British I~dia and deliveries were n1:1de and 
paytnents were received in 
British India. 
In regard to sales ollt-
:side 
British 
[ndia 
also, 
pay1nents 
\\Tre 
received 
in 
.iVfadras 
1953 
Deputy 
CDmmi.ssioner, 
Hardoi · 
v. 
Rama Jlrishna 
JVarain ·and 
Ot"4rs. 
Mahaja•J. 
1953 
Dec. 8 
1953 
Anl{lo.J<rench 
Textile Co. Ltd. 
v. 
Commissiorln' of 
lncCJtne-Jax, 
Madras. 
524 
SUPREME COURT REPORTS 
[19541 
through the agents 
and it 
was found as a fact that 
the entirr 
profits were received in India : 
Held, (i) that in view of the finding of fact that the entire 
profits were 
received in India 
and the assessec 
v.·as 
liable to tax 
under s. 4 (!)(a), the provisions of s. 42 (1) had no relevancy; 
(ii) that the income received in British India could not be s::iid 
to 
v.•holly 
arise 
in 
British 
India 
within 
the 
meaning of 
s. 
4A (c) (b) and that there should be allocation of the income 
between the 
various 
business 
operations 
of the 
assessce den1ar-
cating the income arising in the taxable 
territories 
in 
the 
parti-
cular year from the income arising without 
the taxable territories 
in that year for the purposes of s. 4A ( c) ( b) of the Act. 
Commissioner 
of Income-tax, 
Bombay v. Ahmedbhai Un1ar-
bhai & Co. 
((1950) S.C.R. 335), Pondicherry Railway Company v. 
Commissioner of Income-tax, Madrar (1931) (58 I.A. 239), Turner 
Morriron and Co. v. Commissioner of Income-tax [1951) ( 19 l.T.R. 
451 ; [ 1953] 23 l.T.R. 152), referred to. 
CtvIL 
APPELLATE 
JurusoICTION : Appeal No. 11 of 
1952. 
Appeal from the Judgment and Order dated January 
18, 1950, of the High Court of Judicature at Madras 
(Satyanarayana Rao and Viswanatha Sastri JJ.) in Case 
Referred No. 25 of 1947. 
O.T.G. Nambiar (Samarendra Nath Mukherjee, with 
him) for the appellant. 
M. C. Setalvad, Attorney-General for India, and C. K. 
Daphtary, Solicitor-General for India ( G. N. Joshi and 
P. A. Mehta, with them) for the respondent. 
1952. December 22. The Judgment of the Court w:» 
delivered by. 
BHAGWATI J.-This is an appeal from the judgment 
and order of the High Court of Judicature at Madras 
upon a reference made by the Income-tax _\ppellate 
Tribunal under section 66(t) of the Indian Income-
tax Act, 1922. The appellant company, the assessee, is 
incorporated in the United Kingdom under the Englis!-
Companies Act and has it registered office in London 
It owns a spinning and weaving mill at Pondicherry 
in French India where it manufactures yarn and cloth-
Messrs. Best and Co. Ltd., Madras, have bten appoint~d 
S.C.R. 
SUPREME COURT REPORTS 
525 
the agents of the asses

Excerpt shown. Read the full judgment & AI analysis in Lexace.