TMI Blog1938 (1) TMI 24X X X X Extracts X X X X X X X X Extracts X X X X ..... as a non-resident, was the Income Tax Officer precluded by any provision of the Act from serving a notice on him without appointing an agent within the meaning of Section 43 ? The Commissioners opinion is that the question should due answered in the negative. He says :- Section 43 gives an Income-tax Officer discretion to treat certain persons as agent of a non-resident for the enforcement of the liability in special cases under Section 42. This section does not create any liability that is not already there in Section 4(1) of the Act and is an extension of the meaning of this section; not a section that creates a new liability, but one that facilitates assessment and collection of the demand in the case of non-residents or in other words, a machinery section - not a section that lays down that the profits or gains are assessable to income-tax only in the name of an agent of the non-resident.... It was, therefore, open to the Income Tax Officer the address notices direct to the assessee even though he be a non-resident. That is what he has don and the fact that the notices were served on the representative of the assessee in British India without recourse to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as extended by Section 42. The point arose in Chief Commission of Income-tax v. Bhanjee Ramjee Co., and it was held that a principal was liable to assessment under Section 42 without an agent being appointed under Section 43. In my opinion this view is correct. In the case of the Chief Commissioner of Income-tax, Madras v. Bhanjee Ramjee Co. to which reference has already been made, the learned Judges cited as authority two English cases, namely, Tischler Co. v. Apthorpe (52 L.T. page 814) and Were Co. v. Colquhoun (20 Q.B.D. page 753). In each of the last named two cases the assessee was a firm of wine merchants in France doing business in England. In Were Co. v. Colquhoun (20 Q.B.D. at page 760) Lord Esher, M. R., observed : Another point was raised, that if no one could be found to be assessed under section 41 of 5 and 6 Vict. C. 35, as an agent or factor, that showed that no such trade was carried on as was intended by the statute. As to that, I agree with the judgment of Mathew, J., in Tischler Co. v. Apthorpe that if the Crown can find such an agent as is described in Section 41, they can assess him; but, supposing they cannot, they must take ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ps be based not the language of this heading, but we do not think that it is necessary to pursue this point. We will assumed that Section 42 is a machinery section. Now, section 4(1) of the Act provides : Save as hereinafter provided, this act shall apply to all income, profits or gains, as described or comprised in section 6, from whatever source derived accruing or arising, or received in British India or deemed under the provisions of this act to accrue, or arise, or to be received in British India. Section 6, which is a charging section, lays down that Save as otherwise provided by this Act, the following heads of income, profits and gains, shall be chargeable to income-tax in the manner hereinafter appearing.... Now we come to Chapter V. Section 40 deals with the guardian, trustee or agent of a minor, lunatic or idiot or of a person residing out of British India and provides that tax shall be levied upon and recoverable from such guardian, trustee or agent, being in receipt on behalf of the beneficiary of any income, profits or in like manner and to the same amount as it would be leviable upon and recoverable from any such beneficiary ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s only the assessee who can be called upon to pay income-tax. The only construction which we can place on the language of section 42(1) is that the agent alone and not his non-resident principal shall for the purposes of the Act be treated as the assessee, i.e., as the person to whom a notice under Section 22(2) shall issue and by whom the tax is payable. The word shall in Section 42(1) is significant : it shows that the provisions of that section are mandatory, and in our opinion the department is precluded from issuing notices to the principal and from treating the principal as the assessee except to the limited extent that any arrears of tax may also be recovered from assets of his which may be found in British India. If the Legislature had intended that the principal also might be treated as the assessee, one would have expected to find the word may instead of shall or the Legislator might have inserted a provision investing the non-resident principal also with the characters of assessee, if he could be got at, in the same way as it has provided for the recovery of arrears of tax from the assets of the principal in British India. When the agent in British India ..... X X X X Extracts X X X X X X X X Extracts X X X X
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