9911796707
TMI Blog1971 (6) TMI 10X X X X Extracts X X X X X X X X Extracts X X X X ..... titioner, the petitioner and three others are the directors of the company which is functioning wholly outside the taxable limits of India, and is outside the reach of the arm of taxation under the Indian Income-tax Act. Originally, the petitioner and three others as above were carrying on business in partnership under the name of S.V.M. Mohamed Jamaludeen & Bros. at Colombo. On December 12, 1946, S.V.M. Mohamed Jamaludeen & Bros. (Ceylon) Ltd. was incorporated. The first directors and the promoters of the company were the four persons mentioned in these writ petitions. The question arose whether the provisions of section 44D were applicable to the assessments of the assessee-firm (quondam firm of S.V.M. Mohamed Jamaludeen & Bros.) for all ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 44D of the old Act. Here again, a Division Bench of our High Court held that the Income-tax Officer had no power to proceed under section 35(5) of the Act as the firm had ceased to exist and there could be no assessment on the firm, and that if at all the income can be deemed to have escaped assessment, it could only be done by initiating proceedings under section 34 of the Act. In fact, the last observation was based on the argument of the learned counsel for the petitioners in that case that the items of income referred to, which were derived from the company, could only be regarded as income escaping assessment and could not be brought in except by resort to section 34. Apparently being encouraged by the said observation which was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aging the company's affairs from India. (ii) The company is assessable to income-tax under the Indian Income-tax Act, not as a company but as an association of persons. (iii) The company as an association of persons is to be assessed as a resident and ordinarily resident person in India since the control and management of its affairs is not wholly outside India. (iv) The said association of persons as per its own balance-sheets and profit and loss accounts had taxable income and hence an assessee under the Indian Income-tax Act. (v) The association had not filed returns of income before the Income-tax Officer for purposes of assessment for the assessment years in question. (vi) Hence the proceedings under section 147 have to be started ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id that all these factors put together would show that there is concentration of management and administration in the hands of the petitioners and others and it should be deemed that the petitioner and three others conjointly taken together should be treated as an association of persons and the corporate personality of the company as such should be lightly brushed aside. Reliance is placed upon section 2(17) of the Act. Section 2(17) defines a company as meaning any Indian company, or any association whether incorporated or not and whether Indian or non-Indian which is or was assessable or was assessed under the Indian Income-tax Act, 1922, as a company for the assessment year commencing on the 1st day of April, 1947, or which is declared ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... een an escapement of any income factually or otherwise of the shareholders, namely, the petitioner and others, and they having been assessed to such tax from 1947-48 till date and their status as an individual shareholder and as an assessee in the eye of law having been recognised by the department, they cannot on irrelevant considerations assume that the petitioner and others taken together must be considered as an association of persons and that such association of persons should not be called upon to answer the alleged escapement of income of an incorporated company which is a totally different legal entity. I am unable to agree with the learned counsel for the revenue that the notice gives out an impression that the respondent intends ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see who is assessable to tax, yet that would not mean that the Indian authorities have global jurisdiction over every non-resident in the world. It would be to vest an extraordinary jurisdiction in the revenue if they are to be permitted or authorised to issue notices to persons or incorporated companies who are admittedly dealing as non-residents and as persons outside India. Again, what is sought to be done, or at any rate what is sought to be explained is that the revenue wants to treat the petitioner and others as an association of persons who are earning income within Indian territory and which income is referable to an incorporated company outside India. This is not what the notice says. The notice is, directed against the incorporate ..... X X X X Extracts X X X X X X X X Extracts X X X X
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