Q: Describe the case of Wallace Brothers and Co. Ltd Vs The Commissioner of Income- Tax ?

Ans: The laws for extra territorial operation will be based on territorial nexus test.

Wallace Brothers And Co. Ltd. vs The Commissioner Of Income-Tax on 17 February, 1948.

There was a company which was registered in England and its partnership was in India.

Since the major income of this company is from India, the Indian Income Tax Authority has the power to put tax on it.

If the parliament would like to make laws and if the parliament would like to make laws on  subject matters of extra territorial jurisdiction, there must be reasonable connections between the subject matters.

The parliament has the power to make laws for the centre as well as for extra territorial jurisdiction .

The state can not make laws for extra territorial jurisdiction.

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