Norman Macleod, Kt., C.J.
1. The first plaintiff is the proprietor of the firm of Haji Tar Mahomed Hasan. The second plaintiff is the manager of the Broach shop of the firm, Plaintiff No. 1 resides in the town of Upleta in Gondal State in Kathiawar. He has various shops in the British territory, and three shops in the Baroda State. The income of each shop is received direct from the Shop by the plaintiff at Upleta. The Income Tax Collector of the Broach City assessed the income of the plaintiffs on the income which was earned accrued within the British territory, He also sought to levy income-tax on the income earned by the shops in the Baroda State, Eventually the plaintiff had to file those three suits for a declaration that the Income Tax Officer could not levy a tax on the income of the shops of the line of plaintiff No 1 situate at Miyagam, Karwan and Badharpur in the Native State of Baroda.
2. The first question is whether the plaintiff was not barred from bringing these suits by the provisions of a, 39 of the Indian Income Tax Act II of I886, which says that no suit shall lie in any civil Court to set aside or modify any assessment under this Act. If the assessment is clearly ultra vires then we do not think that the provisions of that Act will apply. In this Case the Income Tax Collector of Broach seeks to assess a resident of the Gondal State on the profits made in the Baroda State and unless he can prove that those profits arose, or were received, in British India, then clearly the assessment is ultra vires.
3. It is not suggested that the profits were received in British India, bat it is contended that the profits accrued or arose in British India The Judge hold that the plaintiff had proved that fact, but the argument upon which his conclusion is based is clearly fallacious, He says :-' Fur plaintiff it is contended that each branch is a separate entity, the branches in British India merely purchase to order and yet their commission on the market price and merely act as any other business would do. The decision is a different one, but I think this is a case in which the profits arise or ' accrue in British India indirectly for the profits arise from the growth of the crops, conversion into grain and purchase here though the ultimate profit is made in Baroda State.
4. If we take an instance, which must constantly be happening, of the manager of a Baroda. Branch of the plaintiff's firm Bending an order to his commission agent in Bombay for certain bales of cotton or bugs of wheat, and the cotton or wheat is sent to Baroda and sold there at a profit, it cannot possibly be said that, the profit arose in British India Because the goods may have come from Bombay or some other town in British India. It is quite clear that the profits are earned where the actual money earned m excess of the expenditure incurred,
5. That was decided in In re Auranyabad Mills Ltd. I.L.R.(1921) 45 Bom. 1288 : 23 Bom. L.R. 570 where the Court referred to the case of Commissioners of Taxation v. Kirk  A.C. 588 .
6. On the question where the ultimate profits arose which would entitle the Income Tax authority to levy a tax on profits, the Judge admits that the ultimate profits were made in the Baroda State.
7. We think, therefore, that the profits arose in the Baroda State. The decrees in all the three suits will be reversed on the ground that income tax was levied without authorization, and the appeal allowed with costs. Plaintiff will be entitled to refund of the money ho has paid, except in F.A. No. 32, where the refund will be limited to the amount claimed in the appeal, viz. Rs. 460.