HON’BLE SUPREME COURT · SOURCE-REVIEWED NOTE
Commissioner of Income Tax, Punjab v. R. D. Aggarwal & Company
Civil Appeals Nos. 808 and 809 of 1963
[1965] 1 SCR 660 ·
Indian Income Tax Act, 1922: sections 40(2), 42(1) and 43(1)
Sources & disclosures includedDownload original judgment / order
3-judge bench · K. Subba Rao, J. · J. C. Shah, J. · S. M. Sikri, J.
Assessment years: 1952-53
01 · Facts of the case
The Amritsar firm canvassed orders for Belgian and Italian woollen-yarn manufacturers and forwarded the offers abroad. The foreign manufacturers could accept or reject them; contracts, payment and delivery occurred outside taxable territories. Revenue added five per cent of the non-residents’ Indian sales value on the premise that the local firm created a business connection.
02 · Discussion by the Hon’ble Court
The Court explained that business connection requires a real and intimate relation between the non-resident’s overseas trading activity and activity within taxable territories that contributes to earning the non-resident’s trading income. Its forms can vary, but a label such as sole agent is not decisive. Here the firm did not conclude sales, procure raw materials or conduct a sales operation for the foreign manufacturers; it merely generated offers that the manufacturers were free to reject.
03 · Judicial decision
The Court dismissed Revenue’s appeals with costs and upheld the finding that no section 42(1) business connection existed on the proved facts.
Source: Holding and operative order
04 · Outcome / in whose favour
In favour of the assessees and non-residents. The proposed deemed-profit addition failed.
Source: Operative result
05 · AKHB REVIEW POINT
AKHB analysis: for cross-border agency files, map each function—solicitation, authority to bind, contracting, payment, delivery and after-sales work—by person and jurisdiction. The written agreement, actual conduct and modern domestic/treaty rules must all be tested.
Source & verification
Download original judgment / order · Open cited source rendition
Full 11-page SCR report read and checked. The editorial headnote was distinguished from the judgment text and operative order.
- Exact source bytes, SHA-256 and 11-page count match catalogue asset 1965_1_660_670; the full extracted report and operative pages were reviewed.
- The source verifies Civil Appeals Nos. 808 and 809 of 1963, the stated bench, issues, reasoning and operative result.
- No published AKHB note or archived reviewed record with this source hash, case identity and operative decision was found.
Statutory scope
The ruling construes “business connection” under section 42 of the 1922 Act. Present permanent-establishment, significant-economic-presence, treaty and section 9 rules require separate analysis.
Later treatment
Source checked 2026-10-10. Later judicial treatment and current statutory applicability have not been comprehensively checked; no current-law or citator clearance is represented.
Page references identify the supplied PDF; paragraph references identify the judgment unless stated otherwise.
Coverage, AI disclosure & professional disclaimer
Selected Supreme Court income-tax decisions and procedural orders checked against their identified sources. This collection is not exhaustive. The research catalogue has 2,569 indexed PDF assets, including alternate copies and incidental matches; that is not a count of unique or reviewed judgments. Historical and unreported coverage remains open.
AI-assisted research checked against the identified source. Extraction, interpretation or omission errors remain possible. Source review does not mean independent approval by a practising professional. Verify every material statement against the complete original judgment.
General research information only; not legal or tax advice, a certified judgment or a substitute for the full order. Applicability depends on facts, assessment year, statutory version and jurisdiction. Subsequent treatment is unverified unless a note expressly identifies the sources checked. Downloading does not create a professional engagement. Obtain case-specific advice before reliance.
The official 1961–2025 structural correspondence does not establish that a precedent applies under the new Act. Verify the enacted wording, commencement and transitional provisions separately.