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TMI Blog1963 (4) TMI 81X X X X Extracts X X X X X X X X Extracts X X X X ..... agents of the non-resident firms. The facts which are not in dispute may be briefly stated as follows: The petitioners are a limited company incorporated under the Indian Companies Act, 1913, and carry on the business of manufacturing and selling diesel trucks and bus chassis, locomotives and other heavy engineering products. The manufacture of locomotives is carried on by the petitioners in collaboration with a German firm called "Krauss--Maffei A.G." and the manufacture of diesel trucks and bus chassis is carried on in collaboration with another German firm called "Daimler Benz A.G." For each of the assessment years from 1955-56 to 1961-62 notices had been issued to the petitioners under section 43 of the Indian Income-tax Act, intimating to them (the petitioners) that they would be treated as agents of the two non-resident firms, and for the said years orders were passed under section 43 of the Act, treating the petitioners as agents of the said firms. For the assessment year 1962-63, with which we are concerned in the present case, there was no notice under section 43 of the Act served on the petitioners and no order under that section was passed by the re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... demanded from the petitioners unless they were appointed agents of the non-resident firms by orders properly passed under section 43 of the Indian Income-tax Act for the assessment year 1962-63. For the assessment year 1962-63 there was no notice issued by the Income-tax Officer to the petitioners under section 43, intimating to them his intention of treating them as agents of the non-resident firms and they had also not been given an opportunity of being heard as to their liability as such agents. According to the petitioners, therefore, they could not be deemed to be the agents of the non-resident firms and no advance payment of tax could be demanded from them. It is also their case that in view of the scheme of sections 40(2), 42 and 43 of the Indian Income-tax Act no vicarious liability in respect of the income of a non-resident for any year can be imposed on an agent until after the close of that year and, therefore, the petitioners could not be called upon as agents of the non-resident firms, to pay advance payment of tax under section 18A of the Act. In the affidavit, which the respondent has filed in reply to the petition, the position taken by the respondent is that inasm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wanji Laxmidas & Co. v. Commissioner of Income-tax (Income-tax Reference No. 40, decided on 17th February, 1955), that for the legal and valid appointment of a statutory agent under section 43 the requirements as to the giving of a notice and as to the opportunity of being heard with regard to his liability must both be complied with and, in the absence of such compliance, there would be no valid and legal appointment. A view has been taken by this court in Govindram Seksaria, In re [1943] 11 I.T.R. 104 and in Harakchand Makanji & Co. v. Commissioner of Income-tax [1948] 16 I.T.R. 119., that having regard to the scheme of the Income-tax Act, which says that assessment for each year is self-contained, notice under section 43 has got to be served in respect of each assessment year and the notice given in respect of the earlier years of the appointment made in the earlier years will not hold good for the subsequent years also. Relying on the provisions of section 43 and the aforesaid decisions, it is contended on behalf of the petitioners that in the absence of a proper order passed under section 43, after the observance of due formalities in respect of the assessment year 1962-63, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 21st October, 1961, while the notices of demand issued in the present case were on the 2nd and 3rd of November, 1961, and, therefore, subsequent to the said appointment. According to Mr. Joshi, therefore, the advance payment of tax called for from the petitioners was after their appointment as statutory agents for the non-residents and the demand, therefore, was perfectly good and proper. Mr. Joshi says that although the scheme under the Indian Income-tax Act is to levy tax on the income of the previous year, it is not as if the income-tax is not to be charged in respect of the income of any period other than the previous year. Sections 18 and 18A of the Indian Income-tax Act provide for the charging of income-tax for periods other than the previous year and section 60B of the Act authorises such charging. Now, under section 18A of the Indian Income-tax Act, an assessee who is previously assessed, is required to make an advance payment of tax during the financial year itself. In the present case, the petitioners were previously assessed as the statutory agents of the non-residents. They were also the assessees during the financial year. Because they have been appointed as the statu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arged not in respect of the previous year for which the financial year is the proper assessment year, but it is charged for the tax liability of the subsequent year. The notices of demand issued in the present case in terms say that the amount called for is payable during the financial year 1962-63. Unless the liability of the petitioners as the statutory agents for the said financial year has been properly established by an order made under section 43, no such demand can be made on them for the payment of any sum towards the tax liability of the said period. Mr. Joshi's argument that because the petitioners were the assessees as agents of the non-residents during the previous year and since they have been appointed as agents for the assessment year 1961-62 they are also properly the assessees for the purposes of section 18A for the financial year 1961-62, cannot be accepted. The appointment of the petitioners as agents for the assessment year 1961-62, as we have already pointed out, enures only for the purposes of imposing the tax liability on the petitioners for the previous year for the said assessment year. They are by reason of the said appointment assessees in respect of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the relevant previous year for the assessment year 1961-62 and for no other liability. Since the advance payment of tax demanded is not towards the liability for which the appointment of the petitioners as agents enures, the demand could not be justified on the basis of the said appointment. In our opinion, therefore, the petitioners are right in their contention that the notices of demand issued to them by the respondent in the present case are illegal and void, and without jurisdiction. The petitioners have in their petition also raised another contention, namely, that having regard to the scheme of sections 40(2), 42 and 43 of the Act no vicarious liability in respect of the income of a non-resident for any year can be imposed on an agent until after the close of that year, and, therefore, the petitioners could not be called upon to make an advance payment of tax under section 18A of the Act. Since we are in favour of the petitioners on the first contention which was raised by them and which we have already dealt with, we have not found it necessary to consider the merits of the further contention urged by them. We have, therefore, heard no argument on the said contention ..... X X X X Extracts X X X X X X X X Extracts X X X X
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