Sir Lancelot Sanderson:-

This is an appeal from a judgment of the High Court of Madras dated 17th November 1938, which was given upon a reference of a question of law made to the High Court by the Commissioner of Income-tax under S. 66 (2), Income-tax Act 11, of 1922. The question was as follows :

Whether on the facts of this case the income-tax authorities were entitled to hold that the income from the first six items of loans referred to in para. 21 of the Income tax Officer's assessment order accrued and arose to the Pudukottai Bank directly or indirectly through or from a business connection in British India within the meaning of S. 42 (1), Income-tax Act, between the Kanadukathan Bank and the Pudukottai Bank.

The Commissioner of Income-tax submitted that this question should be answered in the affirmative. The High Court (consisting of Sir Lionel Leach C. J., Madhavan Nair and Varadachariar JJ.) decided that the submission of the Commissioner was right and answered the question in the affirmative. From this decision the appellant, the Bank of Chettinad, Ltd., has appealed to His Majesty in Council. The reference arose out of the assessment of the Bank of Chettinad, Ltd., Kanaduka