Judgment

KAPUR, J. : These two appeals pursuant to a certificate are from the decision of the High Court of Bombay in Income tax Reference No. 16 of 1955 answering the qustion referred by the Income-tax Appellate Tribunal in the Affirmative and against the assessee company. The appellant in both the appeals is assessee company and the Commissioner of Income-tax is the respondent.

2. The facts of these appeals are shortly as follows; The assessee company was registered in the erstwhile Baroda State and its status during the assessment years was that of a non resident. The relevant assessment years were 1941-42and 1942-43 the previous years being the calendar years 1940 and 1941.It carried on the business of dyeing and selling dyed yarn. It effected sales of dyed yarn of the total value of Rs. 14,22,995/- and Rs. 19,22,107/- in the previous years relevant to the assessment years 1941-1942 and 1942-43 respectively. The sales were made to purchasers both in the Indian States and in what was British India. During the previous year relevant to 1941-42 out of the total sales of the value of Rs. 14,22,996/Rs. 11,88,063/- were, to merchants in British India and out of these some sales were to