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TMI Blog1983 (11) TMI 328X X X X Extracts X X X X X X X X Extracts X X X X ..... wo independent and separate companies having their registered offices at Mcleod House, 3, Netaji Subhas Road, Calcutta, and additional places of business in several parts of the country including one at Kendupatna, P.O. Kendupatna, District Cuttack, in the State of Orissa. These two public limited companies primarily carried on the business of jute manufacturing and owned jute mills in different parts of the country, such as, Nellimarla Jute Mills Co. Ltd., owning jute mills at Elore in Andhra Pradesh and Chitavalsah Jute Mills Co. Ltd. owning Jute mills at Chitavalsah in Andhra Pradesh. The appellant-company (M/s. Mcleod & Co. Ltd. having its registered office at Mcleod House, 3, Netaji Subhas Road, Calcutta), by virtue of agreements with the said two jute mills was appointed the "managing agent" for Chitavalsah jute Mills Co. Ltd. and the "secretary and treasurer" for Nellimarla jute Mills Co. Ltd. The appellant- company did not do any business nor had any place of its business in any part of the State of Orissa. But as the managing agent of Chitavalsah and as the secretary and treasurer of Nellimarla looked after the work of storing their jute in their godowns at Kendupatna, Dis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... boats at Kendupatna in District Cuttack, State of Orissa, and the appellant-company received a notice of demand along with the said assessment orders claiming a total amount of Rs. 74,125 inclusive of penalty. Against the said assessment orders the appellant-company preferred appeals under section 12(1) of the Act to the Assistant Commissioner of Taxes but the appeals failed. The appellant-company preferred revisions under section 12(3) of the Act to the Commissioner of Taxes, Orissa, but the Commissioner of Taxes by his order dated 15th October, 1965, dismissed the revisions and confirmed the assessment orders made against the appellant-company. Aggrieved by the order of the Commissioner of Taxes the appellant-company approached the High Court by means of a writ petition under article 226 of the Constitution and challenged the assessments made against them on the basis that as agent of two jute companies it was not a "dealer" within the meaning of section 2(5) read with the explanation thereto of the Orissa Taxation Act. The assessment orders were also challenged on the ground that these had been passed without following the principles of natural justice inasmuch as the appellant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er" by means of a deeming clause had been provided with the object of facilitating the assessment proceedings against nonresident principals which could not be achieved if the agent was also a non-resident in the State of Orissa. Secondly, the counsel contended that the jute companies (principals) were not "non-resident dealers" as required by the explanation since each one had a place of business of its own at Kendupatna, District Cuttack. Relying on these aspects the counsel for the appellant- company contended that on a true construction of the relevant provision the appellant-company could not be held to be a dealer and as such the assessing authority had no jurisdiction or power to proceed against or assess the appellant- company in respect of the business of the principals (the jute companies). For the reasons which we shall indicate presently we do not find any substance in either of the contentions and both these are liable to be rejected. Obviously the two contentions urged by the counsel for the appellant- company have a bearing on the proper construction to be placed on section 2(5) read with the explanation of the Orissa Taxation Act. It was not disputed before us that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of a "dealer" who resides outside the State is also deemed to be a "dealer" for the purpose of the Act irrespective of whether he resides inside or outside the State. In other words the place of residence or of business of the manager or the agent is utterly irrelevant. The artificial definition of a "dealer" under the explanation is merely an enabling provision which facilitates the assessment against a non-resident dealer but the provision does not require that the manager or the agent should have either a residence or a place of business within the State of Orissa. Emphasis was laid by the counsel on the phrase "who stores such goods" occurring in the explanation as referring to manager or agent and it was submitted that the said phrase suggests that the manager or the agent should have either residence or place of business within the State of Orissa. It is not possible to accept this submission for the reason that all that the explanation requires is that the manager or the agent should store such goods of the non-resident "dealer" within the State of Orissa but that does not mean that for such purpose the manager or the agent must either reside or have a place of business wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d Edn.), Vol. 1, these three concepts in relation to a company have been dealt with in paragraphs 8.10, 8.11 and 8.12 at pages 101 to 103 thus: "8.10. Nationality, domicile and residence of company. The situation of the registered office determines the nationality and domicile of the company but it does not determine its residence. Where legal rules use these criteria and it is obvious that the rules have to be applied to legal persons, it becomes necessary to apply these criteria by way of analogy from the case of natural persons. It is obvious that a corporation can no more have a domicile or residence than it can marry or have children. On the other hand, effect must be given to the legal prescript, which is clearly intended to cover the case of the artificial person as well as that of the natural person. Here the task of the courts is to interpret the enactment in question in relation to the artificial person...... ........................... Nationality. The nationality of a company is determined by the law of the country in which it is incorporated and from which it derives its personality. In English law, nationality is rarely adopted as a legal test. Domicile. The p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eets here, is no doubt resident here. But also a company registered abroad, whose head office and directors' meeting are here, is resident here. The test of residence is not registration, but where the company does its real business, where the central management and control abides. It is the actual place of management of the company and not the place where it ought to be managed which fixes its residence." The underlined portion in the passage quoted from Buckley is based on the decision of the House of Lords in the leading case of Egyptian Delta Land and Investment Co. v. Todd (1929) AC 1. In that case the company was incorporated in England, had its registered office in England and fulfilled its statutory obligations in that country but had transferred the whole of its business to Egypt which was entirely controlled and managed from Cairo where the director and the secretary permanently resided and the question arose whether for the purposes of the Income-tax Acts the company could be regarded as a resident in England. After exhaustive survey of the earlier case law on the point the House of Lords took the view that the incorporation under the Companies Acts, with the attendant ..... X X X X Extracts X X X X X X X X Extracts X X X X
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