TMI Blog1973 (6) TMI 19X X X X Extracts X X X X X X X X Extracts X X X X ..... artners, Mr. Davis, to Kothagudem for supervising the erection of the plant and machinery. Mr. Davis was at Kothagudem for about three months and left India on June 24, 1969. A certain sum of money was paid to the non-resident firm, as agreed, towards remuneration. This amount was paid after obtaining the necessary sanction from the Reserve Bank of India. It was all paid in foreign currency, and no part of it was paid in Indian currency. The Income-tax Officer, Kothagudem, felt that some income, profits and gains assessable under the Income-tax Act (hereinafter referred to as "the Act") had accrued or arisen to the non-resident firm and, therefore, it was liable to be assessed under the Act. The Income-tax Officer, therefore, issued notice to the petitioner to show cause why it should not be treated as an agent of the non-resident firm. The petitioner objected to its being treated as an agent of the non-resident firm. Nevertheless, the Income-tax Officer passed an order on June 5, 1969, and regarded the petitioner as an agent of the non-resident firm. During the pendency of the said proceedings, on May 31, 1969, the petitioner brought to the notice of the Income-tax Off ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roceed against the petitioner for assessment and recovery of the tax. Taking the first argument for consideration, it is seen that section 160(1) of the Act defines the term " representative assessee " to mean, in respect of the income of a non-resident specified in clause (i) of sub-section (1) of section 9, the agent of the non-resident, including a person who is treated as an agent under section 163. Section 163(1)(c) of the Act enjoins that, for the purposes of the Act, " agent ", in relation to a non-resident, includes any person in India, from or through whom the non-resident is in receipt of any income, whether directly or indirectly. It was not disputed before us that the petitioner herein was regarded as an " agent " of the non-resident firm under the said provision of law. Section 166, which is more relevant for our purposes, then reads : " 166. Nothing in the foregoing sections in this Chapter shall prevent either the direct assessment of the Person on whose behalf or for whose benefit income therein referred to is receivable, or the recovery from such person of the tax payable in respect of such income ........ " Even a casual reading of section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he non-resident principal, still they can be continued as against the agent of the non-resident principal or, simultaneously, action for assessment and recovery of tax can be taken both against the non-resident principal as well as its agent. The argument, therefore, that having exercised his option to proceed against the non-resident firm, the Income-tax Officer could not continue the proceedings against the petitioner, i. e., the agent of the non-resident firm, is misconceived and we find no difficulty in rejecting it. Reliance, however, was placed upon a decision of the Bombay High Court in Chaturbhuj Raghavji Trust v. Commissioner of Income-tax. That case can be distinguished easily on the facts. In that case, an amount of Rs. 25,000 was paid by the trustees to Bai Champavahoo. The amount was treated as an income and was brought to tax from the hands of Bai Champavahoo directly. The argument was that the same amount could not be brought again to tax in the hands of the trustees. The above case could have been disposed of on one short ground that the beneficiary having already been assessed and tax recovered from the beneficiary, a fresh assessment and recovery of ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Their Lordships said that section 41 is a special enabling provision which not only permitted the assessment in the hands of the trustees, but also did not preclude the direct assessment in the hands of the beneficiaries. We do not, therefore, think that this decision goes, in any manner, against the view which we have taken. If that decision is to be understood as taking any contrary view, then, with due respect, we must say that section 166 of the Act does not permit of any such interpretation. Our attention was drawn by the learned standing counsel for the income-tax department to an unreported decision of this court dated 4th August, 1971, given in R. C. No. 12 of 1968 (Commissioner of Income-tax v. Claggett Brachi Co. Ltd. We do not, however, think that that decision is, in any way, inconsistent with what we have said. In fact, it lends support, to a great extent, to what we have said above. The question involved in that case really was, whether the reassessment proceedings can be directly initiated against the assessee when the original assessment was made on the agents. What had happened was that two years had elapsed by the time notice of reassessment was given to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... so proceed against the non-resident firm has, by implication, relieved the petitioner of its obligation to pay the tax. We are afraid, we cannot accept this contention. Section 174 of the Act, no doubt, provides a particular machinery for the assessment of persons leaving India. We do not propose to consider the question whether the said section is applicable only to Indian citizens who leave India with no intention to return to India, or it is applicable even to persons who are not Indian citizens but have come to India and are about to leave India with no intention to return to India. Assuming that this section is applicable even to persons who come from outside India and leave India with no present intention of returning to this country, even then the question is whether any omission on the part of the Income-tax Officer, to take immediate proceedings under section 174, would absolve the petitioner of its liability to be assessed to tax. Admittedly, section 174 does not say that such a result would follow either expressly or by necessary implication. As stated earlier, if it is merely an enabling provision authorising the Income-tax Officer to have recourse to that section in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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