TMI Blog1994 (5) TMI 15X X X X Extracts X X X X X X X X Extracts X X X X ..... consultants and to provide consultancy services with regard to architecture and planning for integrated communication network for the Indian Railways. Since for the purpose of executing the said agreement, the petitioner-company required the services of expatriate employees, the question arose with regard to income-tax payable by them. Clause 29 of the agreement took care of that. The said clause reads as under: "I. R. (Indian Railways) shall take full responsibility for payment of all taxes for which the consultant or his expatriate employees are and/or shall be liable under the Indian Income-tax Act and other connected enactments only and not for any other tax. I. R. shall not withhold any payments to the consultant on this account." ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent of obtaining consultancy in regard to communication network, for speedy compliance and effective performance of the foreign company the Indian Railways have taken upon themselves the responsibility of compliance with the Indian income-taxes. Therefore, the proceedings as are initiated against the non-resident company, though it is the employer, would be wrong in view of the Indian Railways having stepped into the shoes as an employer." This, however, was not destined to bring to an end the troubles of the petitioner-company. Two show-cause notices dated March 6, 1989, and March 16, 1989, for the assessment years 1986-87 and 1987-88 were served calling upon the petitioner-company to show cause why prosecution be not initiated against i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from the responsibility of depositing the tax within the prescribed time-limit. (c) The finding of the Appellate Tribunal was of no help to the petitioner-company as the Tribunal too had held it to be the employer and as its findings were 'on different aspects and not with regard to the matter involved in these complaints'." Before I proceed further, a few facts may be noticed as, to my mind, they do have a bearing on the submissions made with which, of course, I shall be dealing in some detail in the succeeding paragraphs. A perusal of paragraphs 13 and 15 of the petition would reveal that as per the petitioner, the salaries and the taxes thereon used to be paid by the Indian Railways and that the petitioner-company acting merely "as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve taken upon themselves the responsibility of compliance with the Indian income-taxes", and that it is the Indian Railways who has "stepped into the shoes as an employer". The question is : Should the prosecution be allowed to continue in view of the finding of the Income-tax Appellate Tribunal? It was contended on behalf of the respondents that the finding of the Tribunal to which reference has been made above was erroneous and that the same deserved to be ignored. I am afraid, I cannot sit on such a judgment. Admittedly, the order of the Tribunal has not been challenged and consequently has become final. This being the position I neither see any escape from it nor find any reason as to why it should not be given the weight due to it. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th v. M. L. Khosla, ITO [1982] 134 ITR 397, wherein additions to income having been knocked down, prosecution on the basis of concealment of income was held to be not sustainable, and Sequoia Construction Co. P. Ltd. v. P. P. Suri, ITO [1986] 158 ITR 496 (Delhi), wherein penalty imposed under section 201(1) having been cancelled, the prosecution launched for an offence under section 276B based on the delay in depositing the tax deducted at source was quashed. My thinking on the matter is also persuaded by a decision of the Supreme Court in Uttam Chand v. ITO [1982] 133 ITR 909 which lends approval to the view taken in the abovenoted two judgments though the situation in the case was somewhat different. Therein, the Supreme Court found the g ..... X X X X Extracts X X X X X X X X Extracts X X X X
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