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2012 (12) TMI 78 - HC - Income TaxAgent of the non-resident u/s 163 – Representative assessee - Assessee enter into an agreement with foreign company for purchase of certain machineries – Assessee had to pay only contract price for supply, installment and erection of the machinery - Foreign company deputed one its employees for supervising the work in India – Salary payment was made by the foreign company – According to AO such employee was employed in India, on such receipts, he was liable for taxation therefore assessee should be treated as the agent u/s 163 of such employee – Held that:- When the impugned notice was issued, assessee was described as an agent of the foreign company. This, in our view, is a vital defect in the notice itself. Foreign company & its employee were two different entities. It can, however, not be denied that the foreign company and its employee were legally completely in different position vis-a-vis the petitioner-company. Therefore the notice was wholly defective. In favour of assessee Validity of notice u/s 148 – AO issued notice u/s 148 came to be issued treating the assessee as an agent of the foreign company – Held that:- Mere passing reference or remark in the reasons recorded which ordinarily unless the assessee demands, are not supplied to the assessee, cannot be seen as a formal order against which the assessee could exercise his right of appeal. Following the decision in case of Kanhaya Lal Gurmtjkh Singh (1970 (12) TMI 33 - PUNJAB AND HARYANA HIGH COURT) that before issuing notice u/s 148, the AO must pass an order u/s 163(2) treating the assessee as an agent. In favour of assessee
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