Judgement

N. H. BHAGWATI J. : This appeal with special leave arises out of a judgment and order of the High Court of Judicature at Bombay dated 23-9-1955, delivered in Income-tax Reference No. 19 of 1955 made by the Income-tax Appellate Tribunal (hereinafter referred to as "the Tribunal") to the High Court under S. 66 (1) of the Indian Income-tax Act (XI of 1922) (hereinafter referred to as "the Act ) whereby the High Court directed the Tribunal to submit a supplementary statement of case on the points mentioned therein.

2. The appellant is a limited liability company manufacturing textile goods at Bhavnagar which was an Indian State during the assessment years 1943-44 and 1944-45. For the said assessment years the appellant was held to be a non-resident, its years of account being calendar years 1942 and 1943. For the assessment years 1943-44 and 1944-45 (account years 1942 and 1943), the Income-tax Officer computed the British Indian Income of the appellant on a proportionate basis under S. 4 (1) (a) of the Act. In the account year 1942 its total sales amounted to Rs. 66,14,852 out of which sale proceeds amounting to Rs. 35,92,157 as detailed below were held by the Income-tax Offi