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20. One has therefore to look to the language of Section 4A(c)(b) and find whether the income in the present case can be said to arise wholly in British India because it was received here or it arises partly in British India and partly outside notwithstanding its receipt in British India by reason of the fact that the business carried on by the company consisted of operations carried out of British India. The manufacturing process was undoubtedly carried outside British India. This takes us to a consideration of the question whether or not the principle of the decision in ahmedbhai Umarbhai's case which arose under the Excess profits Tax Act applies to the present case. It must be mentioned that the business carried on by the assessee consisted of purchase of raw material on a large scale through an agent, conversion of it into yarn and cloth, and their sale through an organization which booked orders carried them out, all of which operations resulted in a receipt of profits in British India. Some of these operations were out side British India and some were inside it. In the recent case relating to this very assessee, which went on appeal to the Supreme Court in Anglo-French Textile Co., v. Commissioner of Income- tax and was disposed of on December 22, 1953, and in which again the decision of Ahmedbhai Umarbhai's case was considered by the Supreme Court, it was pointed out that by the mere purchase of raw materials or goods in British India and sale of the goods, it cannot be said that the profits of such sale arose or accrued only at the place where the sales were effected. In such a case the simple operation of purchase, which was also part of the business activity does not entitle either the assessee or the revenue authorities to claim an allocation of the profits between the place of purchase and the place of sale treating these two as operations which could be considered as profit producing operations to which Section 42(3) would apply. But as pointed out by Mahajan, J., in the course of the judgment :-

33. Our answer, therefore, to the second question is that the income received in British India cannot be said to wholly arise in India within the meaning of section 4A(c)(b) of the Act and that there should be allocation of the income between the various profit producing operations of the company in the light of the principles contained in the judgments in Ahmedbhai Umarbhai's case and in Anglo- French Textile Company v. Income-Tax Commissioner relating to the same assessee. The questions remitted to us are, therefore, answered accordingly

(2) Can the income received in India be said to arise in India within the meaning of Section 4A(c)(b) of the Act ? If not, should only those profits determined under Section 42(3) as attributable to the operations carried out in India be taken into account for applying the test laid down in Section 4A(c)(b),

36. and remanded the case to the High Court with the direction that it should give its opinion on these two questions. The High Court has accordingly considered these two questions which were referred to it for opinion and has answered Question No. 1 in the negative and against the assessee and Question. No 2 in the manner following, i.e., the income received in British India cannot be said to wholly arise in India within the meaning of Section 4A(c)(b) of the Act and that there should be allocation of the income between the various profit producing operations of the business of the company the light of the principle contained in the judgments in Ahmedbhai Umarbhai's case and in Anglo-French Textile Company v. Income-tax Commissioner relating to the same assessee.