COMMISSIONER OF INCOME-TAX, PUNJAB vs R. D. AGGARWAL & COMPANY

The Supreme Court held that Section 42(1) of the Income-tax Act, 1922, pertains to taxing profits of a non-resident arising from a 'business connection' within taxable territories. The Court clarified that 'business connection' implies a real and intimate relationship between trading activities inside and outside the territories, which contributes to the non-resident's income. In this case, the Court found no such connection as the assessees merely canvassed orders without acting as agents for the non-resident exporters, thus upholding the High Court's decision.