Viswanatka Sastri, J.-The question that has been referred to us is as follows: “Whether in the circumstances section 42 of the Income-tax Act, as amended in 193c, would apply to ‘residents as well?”

The facts out of which this reference arises may be briefly stated. The assessee is a merchant carrying on business in Madras in paper and stationery and has been assessed as an individual resident and ordinarily resident in British India. In February, 1942, the assessee opened a branch of his business at Mysore where paper and articles of stationery were sold. It is common ground that there have been no remittances of money or profits from Mysore to British India. The Income-tax Officer, however, found that there was an intimate business connection between the head office at Madras and the branch at Mysore, and held that a portion of the profits earned by the business at Mysore should be deemed to have accrued or arisen in British India by reason of section 42(1) of the Income-tax Act of 1922 as amended. The business connection found was that the assessee regularly purchased paper and other articles of stationery in British India and sent them over to his branch at Mysore for sale. In t

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