@Ichabod There is no vagueness actually. As the rules speak of “territories controlled” by UK. Otherwise the rules would indicate “territories originally controlled” by UK.
Also there are no “UK India Forces”, as “All combat moves, combat, and noncombat moves are made or conducted as any other power’s single, united force.” (page 35 Pacific rulebook). So when talking about gaining income from captured territories it is totally irrelevant where the capturing units once have been mobilized. For gaining income the only relevant question is on which side of the map the captured territory is.
Iraq is on the Europe side of the map, so UK Europe will get the income, unless London is in enemy’s hands - as it is in your scenario. UK Pacific can’t get that income.
HTH :slightly_smiling_face: