Section 42(1) of the Indian Income-tax Act, 1922

Section 42(1) of the Indian Income-tax Act, 1922 — the law in short

What the courts have decided on section 42(1) of the Indian Income-tax Act, 1922, in one screen. Read this first; open an entry when you need the facts, the reasoning and the source.

• CIT v R.D. Aggarwal & Co Supreme CourtHelps taxpayer
  I canvass orders in India for foreign suppliers and pass them on for acceptance abroad. Does that give the foreign supplier a business connection here, so that I can be taxed as its agent?
  No, on these facts. The Supreme Court held there was no business connection between the Amritsar firm and the two non-resident yarn exporters. The contracts of sale were made outside India, the price was received outside India and delivery was given outside India. Nothing - procuring raw materials, manufacture, sale or delivery against price - happened here. The firm merely procured orders which were offers it had no authority to accept, and which the non-residents were free to reject. Business connection postulates a real and intimate relation between the trading activity outside India and trading activity within it, contributing to the non-resident's income.

Listed strongest first: Supreme Court, then High Court, then Tribunal, then CBDT. Nothing here has yet been read in full by a chartered accountant — open an entry to see where it came from.