TMI Blog1970 (6) TMI 7X X X X Extracts X X X X X X X X Extracts X X X X ..... nafter referred to as the "Japanese company") in consideration of the Japanese company providing the petitioner with all technical assistance and "know-how" for the erection of the petitioner's factory in India, the petitioner undertook to make certain payments and also to allot certain fully paid-up shares in the petitioner-company to the Japanese company. In terms of the said agreement certain amounts in U.S. dollars were remitted to the Japanese company by the petitioner after having obtained the requisite permission from the Reserve Bank of India, Exchange Control Department. Such remittances were as follows : 1954 ... 7,000 paid through the Bank of Bihar Ltd. 2nd February, 1956 ... 3,500 remitted through Lloyds Bank Ltd. 1st Dece ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sted to show cause in writing why it should not be treated as a defaulter in respect of the tax under section 18(7) of that Act. Regarding the proposed remittance the respondent was of the opinion that section 195(1) of the 1961 Act was applicable and the petitioner was, therefore, required to show cause why necessary deduction of tax should not be made before making any such remittance. By the second impugned letters dated the 19th January, 1966, the respondent-Income-tax Officer requested the petitioner to pay tax on the remittances already made and the value of the shares issued to the Japanese company without further delay. The petitioner was also requested to deduct tax and pay the same for the proposed remittance to Japan. This rule w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e must be an adjudication which would be appealable under section 30. Section 18 provides for payment by deduction at source. Sub-section (3A) requires any person responsible for paying to a person not resident in the taxable territories or to a company which is neither an Indian company nor a company which has made the prescribed arrangement for the declaration and payment of dividends within India any sum chargeable under the provisions of that Act to deduct at the time of payment, unless he was himself liable to pay income-tax and super-tax thereon as an agent, to deduct income-tax and super-tax at the prescribed rates. Sub-section (3A) which has since been repealed, provides for similar deductions in respect of payment of salary to non- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of tax and it must be held that so far as the past remittances are concerned four years have already elapsed from the end of the respective accounting year when the impugned letters were issued by the respondent and no demands could be made on the petitioner by the said letters. The next contention of Dr. Pal is also of substance. He has submitted that Chapter VI of the 1922 Act deals with recovery of tax and penalties. Section 46 lays down the various modes for the recovery of tax when an assessee is in default in making payment. These various modes are prescribed in sub-sections (2), (3), (4), (5), (5A) and (6) Section 46(7) enacts that no proceedings for the recovery of any sum payable under the Act shall be commenced after the expirat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce. Dr. Pal agrees that his remedy is to apply under the provisions of section 195 of the 1961 Act. Mr. Chowdhury, the learned counsel for the department, made no attempt to challenge Dr. Pal's submission that no recovery proceedings could be commenced in respect of the tax under section 18(3B) for non-deduction at the time of past remittances. He submitted that, apart from the recovery proceedings provided for in the Act the right of the department to recover any arrears of tax by a suit is not affected. Section 232 of the 1961 Act is a clear authority for this proposition. Mr Chowdhury submitted that the two impugned letters did not contain any proposals for starting recovery proceedings to realize the tax due from the petitioner in res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion other agencies for the actual recovery. The issue of a certificate of arrears of tax to the Collector under section 46(2) marks the commencement of recovery proceedings. Mr. Chowdhury pointed out that in this case no proceedings for recovery had yet been commenced by the respondent-Income-tax Officer. Mr. Chowdhury may be technically correct in saving that the two impugned letters do not show that any recovery proceedings had actually been commenced by the respondent-Income-tax Officer, but the two letters certainly contain a demand for payment of tax in respect of the arrear remittances. As agree with Dr. Pal that in 1966 no determination could have been made of the petitioner being an assessee in default in respect of the remittanc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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