Satyanarayana Rao, J. - Under the directions of this Court, under section 66(2) of the Income-tax Act the following four questions were referred to us by the Appellate Tribunal: - “(1) Whether on the facts and in the circumstances of the case, the profits on the sale of coal to (1) State-managed and company-managed railways in British India, (2) the Madras Electric Supply Corporation, Limited, and other customers in British India (marked out by the Appellate Tribunal) constitute profits accruing or arising in British India within the meaning of section 4 of the Indian Income-tax Act? (2) Whether on the facts and in the circumstances of the case the profits on the sale of coal were received by the assessee company in British India within the meaning of section 4(1)(a) of the said Act? (3) Whether on the facts and in the circumstances of the case, the profits on certain sales of coal to customers in British India, other than those mentioned in question (1) accrued or arose to the assessee company directly or indirectly through or from a business connection in British India within the meaning of section 42(1) of the Indian Income-tax Act? (4) Whether, on the facts and in the circumstances of the case, section 42(3) of the Indian Income-tax Act is applicable to the profits assessable as received under section 4(1)(a) and as accruing and arising under section 4(1)(c) of the Income-tax Act?” In the statement of the case and the Appellate Tribunal’s order the contention between the parties were narrowed down considerably in view of the elaborate orders of the Appellate Assistant Commissioner and the Income-tax Officer. The assessee is a limited company incorporated under the Hyderabad Companies Act. It has its registered office at Singareni Collieries, Deccan, outside British India. Messrs. Best &38; Company, Limited, Madras, were appointed under two deeds of 25th November, 1931, secretaries and managing agent of the company on a remuneration stated in the agreement. Extensive business in coal was carried on by Messrs. Best and Company on behalf of the company under which coal was sold under contracts to State-managed and company-managed railways in British India, to the Madras Electric Supply Corporation and also through brokers or agents in specified areas in British India. A large volume of business amounting to several lakhs was done by the company. Best and Company on behalf of the company under which coal was sold under contracts to State-managed and company-managed railways in British India, to the Madras Electric Supply Corporation and also through brokers or agents in specified areas in British India. A large volume of business amounting to several lakhs was done by the company. As the company is resident outside British India, the question raised was whether its income was to any extent assessable under the Indian Income-tax Act. Its income could be assessed to tax, if it accrued or arose or was received in British India, or if there was a business connection within the meaning of section 42, in which case there would be an apportionment under section 42(3). It was found by the Appellate Tribunal that the contracts for sale of the goods were accepted in British India, and that the cheques for the payment of the price were received in British India. In fact, it was admitted by the counsel who appeared before the Appellate Tribunal that the cheques or the treasury orders for payment of coal supplied by the assessee were drawn on the banks in India and were received by Messrs. Best and Company, Limited, who, however, passed them on to the colliery office situated in the State of H.E.H. the Nizam of Hyderabad for encashment. On these facts it was found that the profits not only accrued or arose in British India but that they were also received in British India. It was further found on the facts that there was a business connection to justify an apportionment in cases where it was not clear whether the income accrued or arose or was received in British India. It was contended on behalf of the assessee by Mr. Nambiar that on the facts as stated in the statement of the case it was not possible to sustain the conclusion, that the income was received in British India. We are not prepared to accept this contention. His contention was that the cheques were received no doubt in British India and were also drawn on banks in British India; but they were sent for collection to the Imperial Bank at Secunderabad, and thereafter there was nothing to show that they were received by the agents at Madras. It was pointed by Mr. His contention was that the cheques were received no doubt in British India and were also drawn on banks in British India; but they were sent for collection to the Imperial Bank at Secunderabad, and thereafter there was nothing to show that they were received by the agents at Madras. It was pointed by Mr. Rama Rao Sahib, the learned advocate for the Income-tax Commissioner, that before the Appellate Assistant Commissioner the assessee was asked to produce a copy of his account with the National Bank at Madras in order to determine the method and the manner in which the cheques were realised. It must be remembered that under the managing agency agreement Messrs. Best and Company were authorised to deposit the monies in the National Bank of India at Madras and in such other banks as the company may direct. There is no evidence of any direction by the company that Messrs. Best and Company were authorised to deposit monies in any other bank or banks than the National Bank of India. In answer to a querry put by the Appellate Assistant Commissioner as noted by him in his order it was stated on behalf of the assessee that he was not in a position to produce a copy of his account with the National Bank of India, and that he had no objection for any adverse inference that might be drawn against him by reason of the non-production of such account. In view of this very important circumstance it was rightly assumed by the revenue authorities that the amount after collection must have found its way into the National Bank at Madras, and the finding, therefore, that the receipt of the profits was in British India was perfectly warranted on the facts as found by the Appellate Tribunal. From this point of view it is unnecessary to go into the question, which has also been decided by the Appellate Tribunal, whether the profits did not accrue or arise in British India. However, on the facts as stated by them, we have no hesitation in agreeing with their conclusion. There is a business connection which has been found by the Appellate Tribunal, and in view of that, in cases in which it is not possible to determine whether the profits accrued or arose or were received in British India there was justification for applying section 42(3). There is a business connection which has been found by the Appellate Tribunal, and in view of that, in cases in which it is not possible to determine whether the profits accrued or arose or were received in British India there was justification for applying section 42(3). It follows that the questions which have been referred to us must be answered against the assessee. As the assessee has failed, he must pay the costs of the Income-tax Commissioner which we fix at Rs. 250. K.S. ----- Reference answered.