TMI Blog1962 (1) TMI 7X X X X Extracts X X X X X X X X Extracts X X X X ..... subjected to the limitation that the income must also accrue or arise in the taxable territories. To make clause (a) depend on clause (c) is to make the " accrual " the test, while clause (a) only considers receipt in the taxable territories sufficient. The clauses are capable of being read independently though, sometimes, they may operate together. The amount must be held, on the terms of the agreement, to have been received by the Japanese company, and this attracts the application of section 4(1)(a). Indeed, the Japanese company did dispose of a part of those amounts by instructing the assessee firm that they be applied in a particular way. In our opinion, the High Court was right in answering the question against the assessee. Appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the restrictions imposed by the exchange, control laws, they could not be sent to the Japanese company. The agreements between the assessee firm and the Japanese company, therefore, provided for this contingency by the inclusion of the following term : "In view of the difficulties in this country, it is requested that the first party credits all these amounts to the account of the second party with them without remitting the same until definite instructions are received by the first party." During the two account years, a total amount of Rs. 13,319-12-4 was paid to the Japanese company either directly or through others, to whom the assessee firm was instructed by the Japanese company to pay the amount. The Income-tax authorities trea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the question : "Whether the aforesaid sum of Rs. 26,255-0-0 and Rs. 11,272-0-0 being selling commission credited to the aforesaid non-resident company's account in the books of the assessee are chargeable in the hands of the assessee under section 4(1)(a) for the assessment years 1949-50 and 1950-51 ?" The High Court answered the question against the assessee firm. The High Court observed that the learned advocate for the assessee firm " confessed his inability to support the decision of the Tribunal on the grounds on which it rests ". The High Court further observed that the answer to the question did not " admit of any doubt or difficulty ". The High Court, however, granted a certificate, and these appeals have been filed. In our ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f any income, profits or gains is to be deemed to be such an agent, if 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. Such persons are conveniently described as " statutory agents ". In the present case, there is no doubt that the assessee firm must be treated as a statutory agent. In Turner Morrison Co. Ltd. v. Commissioner of Income-tax, this court held that a person who is not an agent of the non-resident person can be appointed an agent for the purposes of section 43, provided there subsists a " business connection " between him and the non-resident person. It was also held that such agent was vicariously liable for the tax on income described in sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t actually receive it in British India, and that there was only a relation of debtor and creditor between the assessee firm and the Japanese company. Till the money was actually paid over to the Japanese company, a mere entry in the account books of the firm was not a receipt by the Japanese company, and a mere entry of an item in the account books has not been deemed to be a receipt by any provision of the Act, which, it is said, always states clearly when a fiction is to be applied. It is also argued that clause (a) of section 4(1) is delimited by clause (c). Clauses (a) and (c) of section 4(1) are not interdependent. In Turner Morrison's case, it was observed by this court that : " The whole object of that section (section 42) is t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... must also accrue or arise in the taxable territories. To make clause (a) depend on clause (c) is to make the " accrual " the test, while clause (a) only considers receipt in the taxable territories sufficient. The clauses are capable of being read independently though, sometimes, they may operate together. This leaves over the question which was earnestly argued, namely, whether the amounts in the two account years can be said to be received by the Japanese company in the taxable territories. The argument is that the money was not actually received, but the assessee firm was a debtor in respect of that amount and unless the entry can be deemed to be a payment or receipt, clause (a) cannot apply. We need not consider the fiction, for it i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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