Judgement Appeal (No. 65 of 1945), by leave of the Federal Court of India, from a judgment of that court (January 15, 1945) which affirmed the judgment of the High Court at Bombay in its original civil jurisdiction (July 22, 1943) on a case stated by the Income Tax Appellate Tribunal on questions of law arising out of the order of the Appellate Tribunal (March 21, 1942). The following facts and statutory provisions are taken from the judgment of the Judicial Committee. Two questions were in issue in this appeal; first, the validity of certain provisions of the Indian Income-tax Act, 1922- 1939, by virtue of which there was made on the appellant company an assessment to income tax on income which included income arising without British India, and second, the jurisdiction of a particular income tax officer to make that assessment. The directly relevant provisions of the Income-tax Act, 1922- 1939, were contained in ss. 3, 4, 4a and 64. Those, so far as it is necessary to state them, were as follow. "3. Where any Act of the Central Legislature enacts that " income-tax shall be charged for any year at any rate or " rates tax at that rate or those rates shall be charged for "that year in accordance with, and subject to the provisions "of, this Act, in respect of the total income of the previous "year of every individual, Hindu undivided family, company " and local authority, and of every firm and other association "of persons or the partners of the firm or members of the "association individually." "4.—(1) Subject to the provisions of this Act, the total " income of any previous year of any person includes all " income, profits and gains from whatever source derived "which— " (a) are received or are deemed to be received in British " India in such year by or on behalf of such person, or " (b) if such person is resident in British India during " such year— " (i.) accrue or arise or are deemed to accrue or arise " to him in British India during such year, or " (ii.) accrue or arise to him without British India "during such year, or . ..." " 4a. ..." " 4a. For the purposes of this Act— " (c) a company is resident in British India in any year " (a)if the control or management of its affairs is situated "wholly in British India in that year, or (b) if its income " arising in British India in that year exceeds its income " arising without British India in that year." "64.—(1.) Where an assessee carries on a business, profession or vocation at any place, he shall be assessed by the " Income-tax Officer of the area in which that place is situate " or, where the business, profession or vocation is carried " on in more places than one, by the Income-tax Officer of " the area in which the principal place of his business, " profession or vocation is situate.” The material facts were that the appellant company was incorporated in the United Kingdom and that the control and management of its affairs were situate exclusively in that country. It was a member of the firm of Wallace and Co., which carried on business in Bombay. The Income Tax Appellate Tribunal found as a fact that the appellant company was a " sleeping partner" in that firm, which was understood to mean that the appellant company took no part in the management of the firms affairs. In the year 1938- 1939— " the previous year " for the purposes of this case—the income of the appellant company arising in British India was Rs. 17,85,831, and its income arising without British India was Rs. 7,48,427. On February 12, 1941, the appellant company was assessed to tax for the assessment year 1939- 1940 on the whole of its income. That assessment was made by the additional income tax officer within whose district the firms place of business was situate. On those facts, which were to be found in the case stated by them, the tribunal referred the following questions of law to the High Court " (i.) Whether in the circumstances found by the tribunal " in its order under s. 33, the assessee company was taxable "to income tax and super-tax for the assessment year 1939-" 1940 in respect of the income (Rs. 7,48,427 less Rs. 4500) "which accrued or arose to it without British India in the " previous year ? 7,48,427 less Rs. 4500) "which accrued or arose to it without British India in the " previous year ? " (ii.) Are the provisions of s. 4a (c) and 4 (1.) (b) (ii.) "of the Income-tax Act ultra vires the Indian Legislature? " (iii.) Is sub-cl. (6) of cl. (c) of s. 4a of the Amended Act "applicable to the assessment of the assessee company "for the year 1939- 1940? "(iv.) Whether on the facts found by the Tribunal the "additional income-tax officer, Companies Circle, Bombay, "had jurisdiction under s. 64, sub-s. 1, or s. 64, sub-s. 2, to "make the assessment? The High Court (Beaumont C.J. and Rajadhyaksha J.) and the Federal Court (Spens C. J., Varadachariar and Zafrulla Khan JJ.) answered all four questions in favour of the respondent. In the appeal before the Board the appellant company did not challenge the answer to the third question. 1937. Nov. 13, 17, 18, 19, 21, 24 and 25. Sir David Maxwell Fyfe K.C., Joseph Nissim and J. H. Barrington for the appellant company. The question is whether the appellant company, neither incorporated nor controlled or managed in British India, has been validly assessed to income tax there in respect of its income from sources outside British India. The first submission is that s. 4a (c) (b) of the Indian Income-tax Act read with s. 4, sub-s. 1 (b) (ii.) ands. 4b (c) is ultra vires the Indian legislature under the Government of India Act, 1935, because it is extra-territorial in its effect and purports to tax a non-resident company on its foreign income by the device of declaring it fictitiously resident. In other words, it is submitted that the Indian legislature cannot get round its territorial limitations by attaching a meaning to "residence" which is unrecognized and unknown in the British Parliament or in th word "residence" itself. Assuming that the first submission is wrong, the second point is that the appellant company does not carry on business in Bombay, and there is therefore no jurisdiction to assess it under s. 64, sub-ss. 1 and 2. On the first submission, a subordinate legislature has not the power to legislate extra-territorially unless that power is given by the Constitution Act either expressly or by implication. 1 and 2. On the first submission, a subordinate legislature has not the power to legislate extra-territorially unless that power is given by the Constitution Act either expressly or by implication. The general power conferred on the Indian legislature by s. 99, sub-s. 1, of the Government of India Act, 1935, to " make laws for the " whole or any part of British India restricts the scope and operation of Indian legislation to the territories of British India, except as provided by sub-s. 2 or as required by necessary implication from other provisions of the Act. The power to make laws for British India with respect to taxation does not extend to subject-matter of taxation wholly situate outside British India, in the case of persons resident and domiciled outside British India. The Federal Courts judgment adopts the principle in certain Australian decisions that if a " connexion " within the meaning of those decisions is found, then it is not extra-territorial legislation. The Federal Court should have held that the power to make laws for British India should be " construed conformably to a general presumption "against authorizing extra-territorial legislation." The Federal Courts reasoning in Governor-General in Council v. Raleigh Investment Co., Ld. ([ 1944] F.C.R. 229, 261.) that the power to make "laws for " British India " is in itself effective to confer powers of extraterritorial legislation, is a misconstruction of s. 99, sub-s. 1, of the Act of 1935 and overlooks the scheme of that Act. In short, the submissions are (a) prima facie, a subordinate legislature has no power of extra-territorial legislation. (b) There is no weakening of this proposition in the decision in Croft v. Dunphy ([ 1933] A.C. 156, 162.). (c) There is nothing in the Government of India Act which gives extra-territorial powers beyond s. 99, sub-s. 2, and the " fringe powers." (d) The line of Australian cases relied on by the Federal Court either do not support the use made of them, or are contrary to decisions of the Privy Council. (c) There is nothing in the Government of India Act which gives extra-territorial powers beyond s. 99, sub-s. 2, and the " fringe powers." (d) The line of Australian cases relied on by the Federal Court either do not support the use made of them, or are contrary to decisions of the Privy Council. The following authorities support proposition (a) (supra) MacLeod v. Attorney-General for New South Wales ([ 1891] A.C. 455, 458.) ; Commercial Cable Company v. Attorney-General for Newfound land ([ 1912] A.C. 820, 825.); Nadan v. The King ([ 1926] A.C. 482.) ; British Coal Corporation v. The King ([ 1935] A.C. 500, 514, et seq.) ; British Columbia Electric Ry. Co., Ld. v. The King ([ 1946] A.C. 527, 542.) ; London and South American Investment Trust v. British Tobacco Co. (Australia) ([ 1927] 1 Ch. 107, 117-18.) ; Releigh Investment Co., Ld. v. Governor-General in Council (( 1947) L.R. 74 I.A. 50, 54.) ; Inland Revenue Commissioners v. National Mortgage and Agency Co. of New Zea land ([ 1938] A.C. 524, 555.) and Trinidad Lake Asphalt Operating Co., Ld., v. Commissioners of Income Tax for Trinidad and Tobago ([ 1945] A.C. 1, 6.). The next stage of the argument point (b) (supra), is that Croft v. Dunphy ([ 1933] A.C. 156, 162.) did not alter the position ; it is impossible to extract from the judgment in that case that the extra-territorial disability had disappeared until the Statute of Westminster was passed. With regard to point (c), the Indian legislature being a subordinate one is under a restriction, and cannot make laws having an extra-territorial effect unless by the Constitution Act it is given that power expressly or by necessary implication. There is nothing in the Government of India Act which authorizes extra-territorial legislation except where it is expressly permitted in s. 99, sub-s. 2. The Indian legislature is subject not only to the reserved powers of the Crown, but of the Governor-General. It is not even a sovereign Parliament in internal affairs, and therefore it is extremely unlikely, unless there are express words, that it is given a right to legislate extra-territorially. The Indian legislature is subject not only to the reserved powers of the Crown, but of the Governor-General. It is not even a sovereign Parliament in internal affairs, and therefore it is extremely unlikely, unless there are express words, that it is given a right to legislate extra-territorially. The provisions in the Legislative List which correspond to the words " without prejudice to the "generality of the powers conferred by the preceding subjection," i.e., matters which come from sub-s. 1 and not sub-s. 2 of s. 99 of the Act of 1935, are all complementary powers of the type dealt with in Croft v. Dunphy ([ 1933] A.C. 156, 162.). There is nothing anywhere in the Act to indicate specifically that extraterritorial powers are granted in relation to taxation. On point (d) (supra) reference was made to the following cases Commissioner of Stamps (Queensland) v. Wienholt (( 1915) 20 C.L.R. 531, 540-1.) ; Nathan v. Federal Commissioner of Taxation (( 1918) 25 C.L.R. 183, 186-8.) ; Murray v. Federal Commissioner of Taxation (( 1921) 29 C.L.R. 134.); Commissioner of Stamp Duties (N. S. W.) v. Millar (( 1932) 48 C.L.R. 618, 629.) ; Trustees Executors & Agency Co., Ld. v. Federal Commissioner of Taxation (( 1933) 49 C.L.R. 220, 225.); National Trustees Executors and Agency Co. of Australasia, Ld. v. Federal Commissioner of Taxation (( 1916) 22 C.L.R. 367, 379.); Ashbury v. Ellis ([ 1893] A.C. 339, 344.); Colonial Gas Association, Ld. v. Federal Commissioner of Taxation (( 1934) 51 C.L.R. 172, 189.) and Broken Hill South, Ld. v. Commissioner of Taxation (N. S. W.) (( 1937) 56 C.L.R. 337, 355, 361.). The above cases fairly put the view which has commended itself to the Australian courts—that any connexion with the territory is sufficient to found the jurisdiction for taxation—but it is submitted that there is no support for that point of view in any case before this Board, and also that it is contrary to the implications of s. 99 of the Government of India. Act. Apart from that, it is submitted that there is nothing in the Commonwealth Constitution Act or in the State Constitution Acts to justify that view. Act. Apart from that, it is submitted that there is nothing in the Commonwealth Constitution Act or in the State Constitution Acts to justify that view. Summarizing on the first point; it is submitted that there is a rule that subordinate legislatures are subject to a territorial limit; that the Australian rule of any connexion with the territory is insufficient to found the jurisdiction for taxation ; that it is not enough to say that taxation must be for peace, order and good government. The Trinidad Lake Asphalt Operating Co.s case ([ 1945] A.C. 1, 6.) lays down that taxation is extraterritorial unless either the assessee is resident or the income is derived from property inside the taxing country. In these circumstances the Indian legislature has not got unlimited power to get round these difficulties by its definition of residence. The power is limited to making variations within the concept of residence which was in the contemplation of the Imperial law at the time, and does not permit a different artificial concept to be created. There is no doubt that the conception of residence of a company, which is clearly implied in s. 108 of the Act of 1935, and the words are repeated in s. 4a (c) (a), is that of where is the control and management of the company. Residence of a company in English law nas grown up on the analogy of the residence of a natural person, and the English courts have eventually come down on the side of the residence of the company being determined by the situation of its control and management. There is no doubt that that conception keeps the geographical residence in being. Clause (ii.) of s. 4, sub-s. 1 (b), and sub-cl. (b) of s. 4a (c) are ultra vires Indian legislature in their application to companies which are neither incorporated nor controlled and managed in British India. On the second point, under s. 64 of the Income-tax Act, it is submitted that s. 4 of the Indian Partnership Act indicates that the business can be carried on by less than the full number of partners in the firm, and that the others, although they are partners, do not carry on the business within the meaning of s. 64, sub-s. 1, of the Income-tax Act. Secondly, on s. 64, sub-s. 2, even if s. 4a (c) (b) is intra vires, so that the appellant company is resident in British India, that is not the same thing as being resident in Bombay. The remaining point is as to the year, because the assessee shall be assessed in the year two in respect of income of the year one—the previous year. Section 4a (c) (b) only attributes the fictitious residence in the accounting year, so during the assessment year there would be no evidence that the appellant company was fictitiously resident in that year. Joseph Nissim followed, and submitted the following definitions of extra-territorial legislation (1.) Legislation is extra territorial in so far as it applies to the citizens of another state and either imposes liabilities enforceable in the legis lating State in respect of their possessions situate, or activities exercised, wholly outside its territorial limits, or regulates matters concerning their personal status outside such limits. Citizens mean domiciled residents or nationals of a State, including legal entities treated as having a similar status. (2.) Taxation is extra-territorial in so far as it extends to subject-matter of taxation wholly situate outside the territorial limits of the taxing State and operates on persons who are resident and domiciled outside that State. Section 4, sub-s. 1 (b) (ii.), if properly interpreted in its context and in relation to s. 4, sub-s. 1 (b) (i.), is entirely ultra vires in its operation on a non-domiciled company. There is no power in the Indian legislature to tax non-domiciled residents on their income from foreign possessions not brought into British India. As to the legislative practice of the Imperial Parliament in respect of income from foreign possessions generally, foreign income is not taxable unless the owner is resident in the United Kingdom. If the foreign possession is a trade actively carried on by a resident here, the full profits are taxable because control and management of the trader is the real source, and it is here. But, in the case of foreign possessions merely owned beneficially by a resident, the only portion of foreign income taxable is the amount received here, with certain exceptions. There is no provision in the Government of India Act or in any of the legislative lists which gives power to impose taxation, expressly or impliedly, on a subject-matter situated wholly outside the jurisdiction. There is no provision in the Government of India Act or in any of the legislative lists which gives power to impose taxation, expressly or impliedly, on a subject-matter situated wholly outside the jurisdiction. [Reference was made to Attorney-General for British Columbia v. Attorney-General for Canada ([ 1914] A.C. 153, 173.).] Tucker K.C. and B. McKenna for the respondent, were not required to deal with the point tinder s. 64. It was said for the appellant that the assessee must also be resident in the assessment year. In England he is not assessed unless he is resident in the year of assessment, but in India it is different ; it is a tax imposed in he year; income of year one can be taxed in year two In re Behari Lai Mullick (( 1927) I. L. R. 54 C. 630, 635.) ; Maharajah of Pithapuram v. Commissioner of Income-Tax, Madras (( 1945) L. R. 72 I. A. 141, 146.). The Act imposes tax on any person who is resident in the previous year even though he is not resident in the second year. It was contended for the appellant that it has been charged to tax under provisions which have the effect of subjecting to tax some of the income arising outside India of a company which, according to some tests, is not resident and, assuming a company has domicile, is not domiciled. It is within the legislative competence of the Indian legislature to pass effective legislation which has that effect. The first objection taken against the respondent is that this is " legislation having extra-territorial operation." True extra-territorial legislation is something which has no connexion whatsoever with the territory—does not concern a person in it, or an offence committed in it, or anything to be done in it, or given to or taken away from the territory. MacLeod v. Attorney-General for New South Wales ([ 1891] A.C. 455, 458.). Within its own territory the Indian Legislature is sovereign, restricted only by the terms of the grant of its power. It is a fatal mistake to confuse what is impracticable or harsh with what is ultra vires. The Act itself presupposes that non-residents may be taxed s. 108 (f) of the Act of 1935. The Government of India are given power to tax all earnings of residents and non-residents. It is a fatal mistake to confuse what is impracticable or harsh with what is ultra vires. The Act itself presupposes that non-residents may be taxed s. 108 (f) of the Act of 1935. The Government of India are given power to tax all earnings of residents and non-residents. The words in the Act of 1935, " taxes on " income" are perfectly general. It is submitted that s. 99, sub-s. 1, has the same effect as the words " peace, order and " good government" in the Australian Constitution Act, and while the Indian legislature cannot make a law which has no connexion whatsoever with British India, it can do so if there is such connexion Trustees Executors & Agency Co., Ld. v. Federal Commissioner of Taxation (49 C.L.R. 220, 230.); Broken Hill South, Ld. v. Commissioner of Taxation (NSW.) (56 C.L.R. 337.), where it was said that once you show a connexion between the subject-matter or the person and the territory then there is no limit to taxing powers with regard to that person or matter. [Reference was also made to Overseas Trust Corporation, Ld. v. Commissioner for Inland Revenue ([ 1926] S. A. L. R. (A. B.) 444.).] What is for the peace, order and good government is for the legislature to decide. The words " the Federal Legislature may make laws for the " whole or any part of British India " are at least as wide as " peace, order and good government" of the territory, and there is no qualification of them. With regard to the point on legislative practice, the argument against the respondent is that having the expression " taxes on " income" in the Federal Legislative List, it is permissible and necessary to see what the Mother country did in the field of taxation legislation, and then to limit the subordinate legislature to the same extent. It is all based on one sentence in Croft v. Dunphy ([ 1933] A.C. 156, 162.). The first answer is that in Croft v. Dunphy ([ 1933] A.C. 156, 162.) the Board were using those words to extend the scope of the subject and not to restrict ; the second answer is that to some extent the United Kingdom legislature has taxed income of a non-resident which is not in this country. The first answer is that in Croft v. Dunphy ([ 1933] A.C. 156, 162.) the Board were using those words to extend the scope of the subject and not to restrict ; the second answer is that to some extent the United Kingdom legislature has taxed income of a non-resident which is not in this country. There are three views (A) The widest view, namely, that there is no limit, except as laid down in the three legislative lists, and India is given full soverign power of legislation. Within the subject-matters in the lists they have the widest powers, and the legislative practice of the United Kingdom cannot be called in aid to restrict, but to give width. (B) The other extreme—that India cannot legislate for any thing or any circumstance, or make any thing or any circumstance happening outside India the subject-matter of its legislation. That is a possible view, and it means that there must be a middle course. (C) The only middle course that can be suggested is, again, complete power to legislate for British India, but subject to the restriction that it may not pass laws having extraterritorial operation, and that at once leads one to inquire what that expression means. I adopt the view that it is based on connexion between the subject-matter of the legislation and the territory. There is no definition of extra-territorial operation—it is a purely negative view. It is not extraterritorial legislation if in bringing about the result which the legislature directs shall be brought about there is taken into account some thing, fact, circumstance, property, right, liability, or even person, outside the territory, if the result which the legislature wishes to bring about is something to be done in the territory and is in fact for the benefit of the territory. It is not extra-territorial if the foreign thing or matter or person is in some way concerned or connected with the territory itself, or if it is some thing, fact or person or circumstance in respect of which the territory has clearly power to legislate. In selecting, therefore, a person on whom to impose liability for tax, there is, it is submitted, no restriction on extra-territorial legislation except that either the person or the income has to have some connexion with British India. In selecting, therefore, a person on whom to impose liability for tax, there is, it is submitted, no restriction on extra-territorial legislation except that either the person or the income has to have some connexion with British India. Here there is a person who draws the greater part of his income from British India and, therefore, presumably has property in India and requires the protection of Indian law, and the extent to which he must pay for it is entirely within the discretion of the legislature of India. B. MacKenna followed. The important matter is to show that there is a connexion between the taxed person and British India, and the real dispute in this case is as to the nature of the connexion which must be shown. If one had to choose between the country where the control and management is situate and the country from which the greater part of the income is derived, it would be preferable to choose the latter —it is more reasonable to make your choice for taxing purposes of the country where the income is earned. The country from which the greater part of the income is derived cannot therefore be excluded as being one country which ought to have the taxing power. It was sought to distinguish the Australian cases on the ground that the words " peace, order and good government" appear in the Australian constitution and not in the Indian constitution. The first submission is that the words " peace, order and good government" do not expand the ambit of the power with respect to taxation, they merely define the purpose for which the power may be exercised. Secondly, the Indian legislature has power to make laws for the peace, order and good government of India. [Reference was made to Broken Hill South, Ld. v. Commissioner of Tax ation (N. S. W.) (56 C.L.R. 337.), and Colonial Gas Association, Ld. v. Federal Commissioner of Taxation (51 C.L.R. 172.).] Australasian Scale Co., Ld. v. Commissioner of Taxation (Queensland) (( 1935) 53 C.L.R. 533.) is in point, because there a foreign company was held to be taxable on income earned outside the territory—it was held to be (justifiable on the ground of peace, order and good government. v. Federal Commissioner of Taxation (51 C.L.R. 172.).] Australasian Scale Co., Ld. v. Commissioner of Taxation (Queensland) (( 1935) 53 C.L.R. 533.) is in point, because there a foreign company was held to be taxable on income earned outside the territory—it was held to be (justifiable on the ground of peace, order and good government. Lastly, the observations in the Trinidad case ([ 1945] A.C. 1, 6-7.) were purely obiter, i.e., that residence is the only permissible basis for taxation of world income. Sir David Maxwell Fyfe K.C. replied. 1948. Feb. 17. The judgment of their Lordships was delivered by LORD UTHWATT, who stated the facts and statutory provisions set out above and continued Their Lordships will deal first with the subject-matter raised by the first two questions of law stated by the Income Tax Appellate Tribunal. The sub-sections referred to in the second question contain only definitions of " total income" and u residence of a "company." By themselves these definitions do nothing. Taken in isolation they raise no question of vires. But the use of the defined terms in the charging section of the Act (s. 3) may result in ultra vires legislation. The question at issue here is but one question only, namely, the effectiveness in law of the charging section in its application to companies which satisfy the test set forth in the definition of residence, as respects their total income computed as including income arising without British India. The general nature of the charging section is clear. First, the charge for tax at the rate fixed for the year of assessment is a charge in respect of the income of the " previous year," not a charge in respect of the income of the year of assessment as measured by the income of the previous year. That has been decided and the decision was not questioned in this appeal. Second, the rate of tax for the year of assessment may be fixed after the close of the previous year, and the assessment will necessarily be made after the close of that year. But the liability to tax arises by virtue of the charging section alone, and it arises not later than the close of the previous year, though quantification of th amount payable is postponed. But the liability to tax arises by virtue of the charging section alone, and it arises not later than the close of the previous year, though quantification of th amount payable is postponed. The fact of residence or non-residence of a company as gathered from the application of the statutory test has become established, though not formally ascertained, at the close of the previous year. The legislation therefore purports to tax a company which, when the liability arose, satisfied one or other of the conditions set forth in the definition of residence. The precise question at issue can now be stated. The particular circumstances affecting the appellant company—namely, that it was a member of a partnership carrying on business in British India and the size of the excess of its British Indian , income over its other income are, of course irrelevant in considering the validity of the legislation. Further, it is not disputed that it is competent to the Central Indian Legislature to subject to income tax all income arising in British India the relevant definition of residence does not apply to individuals and the legislation does not affect to impose a lien on income arising without British India but to tax companies in respect of income which includes such income. The second limb of the definition of residence is alone in issue. It is to be assumed that there is no connexion between the companies and British India except the derivation from British India of the major part of their income during the previous year. Are such companies in respect of their total income for that year persons subject to the power of the Central Indian Legislature to legislate as respects taxes on income ? The contentions of the appellant company were that legislation in regard to income tax having an extra-territorial operation was ultra vires the Central Indian Legislature and that the impugned legislation had that operation. Both contentions were disputed by the respondent. Their Lordships do not approach the matter on the formal lines embodied in these contentions. There is no rule of law that the territorial limits of a subordinate legislature define the possible scope of its legislative enactments or mark the field open to its vision. The ambit of the powers possessed by a subordinate legislature depends on the proper construction of the statute conferring those powers. There is no rule of law that the territorial limits of a subordinate legislature define the possible scope of its legislative enactments or mark the field open to its vision. The ambit of the powers possessed by a subordinate legislature depends on the proper construction of the statute conferring those powers. No doubt the enabling statute has to be read against the background that only a defined territory has been committed to the charge of the legislature. Concern by a subordinate legislature with affairs or persons outside its own territory may therefore suggest a query whether the legislature is in truth minding its own business. It does not compel the conclusion that it is not. The enabling statute has to be fairly construed. The relevant power (s. 99, sub-s. 1 and s. 100 of The Government of India Act, 1935) is a power to make laws for the whole or part of British India or any Federated State with respect to " taxes on income other than agricultural "income." The power to tax agricultural income is given to the Provincial legislatures and the exception throws no light on the construction of the phrase "taxes on income." None of the other provisions of the Act affords any guidance as to the income or persons who may be subjected to tax. Only sub-s. 2 of s. 99 need be particularly referred to. That sub-section provides that " without prejudice to the generality of "the powers conferred by the preceding sub-section, no Federal "law shall, on the ground that it would have an extra-territorial " operation, be deemed to be invalid in so far as it applies to " certain persons and things. In their Lordships view, this sub-section does no more than assume that there may be some laws having an extra-territorial operation validly made pursuant to sub-s. 1. It is no help one way or another in determining the authorized area of taxes on income. Where Parliament has conferred a power to legislate on a particular topic it is permissible and important in determining the scope and meaning of the power to have regard to what is ordinarily treated as embraced within that topic in the legislative practice of the United Kingdom (see Croft v. Dunphy ([ 1933] A.C. 156, 165.)). Where Parliament has conferred a power to legislate on a particular topic it is permissible and important in determining the scope and meaning of the power to have regard to what is ordinarily treated as embraced within that topic in the legislative practice of the United Kingdom (see Croft v. Dunphy ([ 1933] A.C. 156, 165.)). The point of the reference is emphatically not to seek a pattern to which a due exercise, of the power must conform. The object is to ascertain the general conception involved in the words used in the enabling Act. Income tax legislation in the United Kingdom has—putting the matter broadly—proceeded on the lines that there is subjected to income tax all income arising within the United Kingdom and (independently of remittance to the United Kingdom) some, but not all, income arising abroad belonging to a person resident in the United Kingdom. The resulting general conception as to the scope of income-tax is that, given a sufficient territorial connexion between the person sought to be charged and the country seeking to tax him, income tax may properly extend to that person in respect of his foreign income. In their Lordships view, that general conception finds a place in the phrase " taxes on income " as used in the Government of India Act, 1935. That conclusion marches with the construction which their Lordships would, without the aid of a consideration of the British legislation, have placed on the Government of India Act, 1935. The provisions of the British Income Tax Acts do not, in their Lordships view, give any further definition of the scope of the power to impose taxes on income. The distinction drawn in British legislation between those foreign incomes which are, and those foreign incomes which are not, taxable in the hands of a " resident" does not mark any matter of principle which can be considered as imported into the phrase "taxes on income." In their Lordships opinion—they confine their attention to companies—the necessity that the territorial connexion should be residence as understood for the purpose of the British Income Tax Acts, is not embedded in the terms of the power. It is artificial, in any event, to attribute residence to a company. It is artificial, in any event, to attribute residence to a company. No less artificial is the selection, as a matter of judicial construction of the British Income Tax Acts, of the place at which central control is exercised as the residence of a company. The principle— sufficient territorial connexion—not the rule giving effect to that principle—residence—is implicit in the power conferred by the Government of India Act, 1935. The result is that the validity of the legislation in question depends on the sufficiently for the purpose for which it is used of the territorial connexion set forth in the impugned portion of the statutory test. Their Lordships propose to confine themselves to that short point and do not propose to lay down any general formula defining what territorial connexion is necessary. In their view, the derivation from British India of the major part of its income for a year gives to a company as respects that year a territorial connexion sufficient to justify the company being treated as at home in British India for all purposes relating to taxation on its income for that year from whatever source that income may be derived. If it is so at home in British India it is a person properly subject to the jurisdiction of the Central Indian Legislature. Unlike an individual, a company has an economic existence only. No activities other than the making and spending of money are open to it. When a company in any particular year derives the major portion of its income from a country, it is a legitimate conclusion that the company has rooted itself there for that year. The connexion that results is at least as solid as the connexion given by the place of central control ; and in a search for a home for income tax purposes as respects that year that connexion might well be thought more pertinent than the connexion, readily changeable and often changed, given by the place of central control. In such a search the place where commercial activities yield the result is at least as relevant as the place where they are conceived. A company which in substance lives on a country may rationally be treated as living in it. It is unnecessary to consider whether the statutory test is a satisfactory definition of residence. That is an abstract question. A company which in substance lives on a country may rationally be treated as living in it. It is unnecessary to consider whether the statutory test is a satisfactory definition of residence. That is an abstract question. It is sufficient to come to the conclusion that a company satisfying the statutory test is a person within the territory of British India, so far as concerns taxes on its income accruing during the period when the test is satisfied. The remaining question relates to procedure. The submission of the appellant is that, assuming the challenged provisions not to be ultra vires, the assessment was not made by the proper officer. The relevant provision is s. 64, and the facts have already been stated. The contention of the appellant company was that by reason that it took no active part in the partnership business it did not carry on business at the partnership place of business. There is no substance in this contention. There is no particular provision in the partnership articles which needs consideration. The essence of partnership is that each of the partners is the agent of the others for the purpose of carrying on the partnership business. Failure by any one partner to take part in the management of the business does not therefore have the result that he is not carrying on business as a partner. Their Lordships will humbly advise His Majesty that this appeal be dismissed. The appellant company will pay the costs of the appeal.