TMI Blog1954 (9) TMI 25X X X X Extracts X X X X X X X X Extracts X X X X ..... sment year he sent to Mattancherry in the Cochin State, where Messrs. A. N. Guna Shenoy Bros. were carrying on business, goods of the value of ₹ 3,56,990. These goods were supplied from time to time in the course of the assessment year. The Income-tax Department treated the assessee as the agent of Messrs. A. N. Guna Shenoy Bros. and assessed him to tax in respect of the income of Messrs. A.N. Guna Shenoy Bros. and this reference raises the question of the liability of the agent to be assessed in respect of income of this firm of Messrs. A. N. Guna Shenoy Bros. The first contention raised by Mr. Palkhivala is that inasmuch as the assessee is a non-resident he cannot be appointed the agent of another non-resident. According ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and this section provides : Any person employed by or on behalf of a person residing out of the taxable territories, or having any business connection with such person, or through whom such person is in receipt of any income, profits or gains upon whom the Income-tax Officer has caused a notice to be served of his intention of treating him as the agent of the non-resident person shall, for all the purposes of this Act, be deemed to be such agent. Now, the first significant feature of this section is that the Legislature has not placed any limitation or qualification upon the person who can be treated as an agent under Section 43 if he satisfies the conditions laid down in that section. The Legislature could well have provided tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of a non-resident as an agent, because if Mr. Palkhivala is right his argument must go to the length of suggesting that there is a prohibition in Section 43 against the appointment of a non-resident by the Department as an agent. Mr. Palkhivala says that the Legislature must have contemplated that only residents would be employed as agents. We see no such indication in Section 43 at all. The only indication that we see and the only indication we are prepared to act upon is that the Legislature was anxious that the revenue to be realised by the tax imposed under Section 42 should be realised by some means or other and the Legislature was entirely indifferent if the Taxing Department could realise that revenue by appointing a non-resident as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion, the more so as the Explanation was incorporated after Section 43 had been enacted. In the second place, it is difficult to understand why in construing the expression any person in the light of the Explanation preference should be given to one part of the description of the expression a person and not the other part. , In the Explanation the Legislature has used the expression whether residing in or out of the taxable territories. Mr. Palkhivala wants to take part of that expression, viz., residing in the taxable territories and wants to qualify the expression any person in Section 43 only by that part of the expression. In our opinion there is no warrant whatsoever for that interpretation. Therefore it is clear that the expr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r and there is no finding that any goods were supplied by the assessee in earlier years, and Mr.Palkhivala says that in order to establish continuity goods must be supplied over a period of time which according to him must mean more than at least a year. It is difficult to understand why there should be no continuity if a large number of orders are given by the principal and executed by the agent, even though those orders are within a period of one year or even within the period of one month. What constitutes continuity is not necessarily the length of time during which the connection has been maintained, but the nature of the connection, and if a large number of orders are given from time to time even within a short period, then that may i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the agent, and the Tribunal has taken the view that it may be necessary for the Department to assess both the principal and the agent in order to obviate the possibility of Section 34 preventing assessment against the principal if the agent is held not to be liable. We express no opinion as to whether the Tribunal is right in the view it is taking because in our view if notice is served upon the principal for assessment under Section 42 it would be open to him to challenge the assessment on the ground that his agent has already been assessed and therefore he is not liable. If that contention is not accepted by the Income-tax Officer, it would be open to him to appeal to the Appellate Assistant Commissioner and ultimately to the Appellat ..... X X X X Extracts X X X X X X X X Extracts X X X X
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