Judgment

MAHAJAN J. : This is an appeal from the Judgment of the High Court of Judicature at Bombay delivered on a reference under S. 66(1) of the India Income-tax Act, 1922, whereby the High Court answered the first referred question in the negative.

2. The assessment in question concerns the year 1943-44. A Hindu undivided family was carrying on business in Bombay, Madras and the Mysore State. Its business was taken over by a registered firm on 17th March 1942. For the purpose of this appeal however this circumstance is not material. The case has been dealt with on the assumption that a single assessee carried on business from 10th October 1941 to 8th November 1942, the relevant accounting year. According to the assessee, during this period the Mysore branch purchased goods form the Bombay head office and the Madras branch of the value of Rs. 2,45,455. The Income-tax Officer estimated these purchases of the Mysore branch in British India at Rs. 3,00,000 and its profits at Rs. 75,000 on the sale of these goods in Mysore. In view of the provisions of S. 42 of the Act half of this profit i. e., to the extent of Rs. 37,000, was deemed to accrue or arise in British India, because of the