ANGLO-FRENCH TEXTILE CO. LTD. vs COMMISSIONER OF INCOME-TAX, MADRAS,

The Supreme Court held that under Section 4(1)(a) of the Income-tax Act, 1922, the entire profits of a foreign company, incorporated in the UK and operating a mill in Pondicherry, were liable to tax in India as they were received in British India. The Court clarified that Section 42(1) was not relevant since the profits were fully received in India, and that income allocation between operations in and outside British India was necessary under Section 4A(c)(b). The judgment affirmed the High Court's decision regarding the tax liability of the assessee.