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Issues Involved:
1. Whether the Income Tax Officer was precluded by any provision of the Income Tax Act from serving a notice on a non-resident without appointing an agent within the meaning of Section 43. Issue-wise Analysis: 1. Service of Notice on Non-Resident Without Appointing an Agent: The primary question was whether the Income Tax Officer could serve a notice directly to a non-resident without appointing an agent as per Section 43 of the Income Tax Act. The Commissioner of Income Tax opined that the question should be answered in the negative, asserting that Section 43 is a machinery section that facilitates assessment and collection of tax from non-residents but does not create new liabilities beyond those in Section 4(1) of the Act. This section allows the Income Tax Officer to address notices directly to the non-resident assessee, even without appointing an agent, as long as the notices reach the assessee and are complied with. The judgment referenced several cases to support this interpretation: - Chief Commissioner of Income Tax, Madras v. Bhanjee Ramjee & Co.: The Madras High Court held that profits or gains are chargeable if they can be got at in British India, whether assessed in the name of an agent or not. The latter part of the section provides machinery for tax collection when the non-resident cannot be directly reached. - Commissioner of Income Tax, Bombay and Aden v. The National Mutual Life Association of Australasia Ltd.: The Bombay High Court supported the view that a principal could be assessed under Section 42 without the necessity of appointing an agent under Section 43. The court noted distinctions between the Indian Income Tax Act and the English law cited in previous cases, emphasizing that Section 42 of the Indian Act mandates that income is chargeable in the name of the agent, and such agent is deemed the assessee. This provision excludes the principal from being treated as the assessee, except for recovering arrears of tax from the principal's assets in British India. The court concluded that the Income Tax Officer is not competent to serve notices directly on a non-resident principal. Instead, notices must be served on the agent in British India or a person deemed to be the agent under Section 43. The proviso to Section 42 allows for the recovery of tax from the non-resident's assets in British India but does not support direct notice to the non-resident. Conclusion: The court answered the primary question in the affirmative, indicating that the Income Tax Officer must serve notices on the agent of the non-resident, not directly on the non-resident principal. Consequently, the other questions raised were not addressed as they were rendered moot by this conclusion. The judgment was sent to the Commissioner, and counsel for the Department was allowed six weeks to file the certificate, with fees fixed at Rs. 200. Reference Answered Accordingly.
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