TMI Blog2008 (8) TMI 388X X X X Extracts X X X X X X X X Extracts X X X X ..... o India Ltd. and M/s. Chicago Pneumatic Tool Co., USA, it entered into an agreement for purchase of 9,60,000 shares of Revathi Equipment Ltd. for a consideration of Rs. 22,46,40,000 which was paid by the company after deduction of tax at source of Rs. 2,08,73,792 in accordance the certificate issued under section 197 (1) of the Income- tax Act, 1961 bearing No. Dy. DIT.1(1)197-UIL/2002-03/30, dated 6-9-2002. The amount was remitted to MI s. Chicago Pneumatic Tool Co., USA with the permission of RBI vide letter dated 31-7-2002 and 5-8-2002. The assessee had, thus, purchased certain shares from the foreign company, a non-resident and had remitted certain amount after deduction of tax at source on obtaining necessary permissions. The Assessing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... remitted the amount. He relied on the judgment of the Hon'ble Supreme Court in the case of Transmission Corpn. of A.P. Ltd. v. CIT [1999] 239 ITR 587 for the proposition that income is embedded in the transfer of funds on the sale of shares from the foreign company to the Indian company. 5. Rival contentions heard. On a careful consideration of the facts and circumstances of the case and on perusal of the papers on record we hold as follows: 5.1 Section 163(1)(c) of the Income-tax Act, 1961 reads as follows: "163. (1) For the purpose of this Act, "agent", in relation to a non-resident, includes any person in India- (a) (b) ** (e) from or through whom the non-resident is in receipt of any income, whether directly or indirectly; o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt. The words "unless he himself is liable to pay income-tax as an agent" indicate that he should have an existing liability to pay tax as an agent. The ratio laid down by the Bench is that when a person is treated as an agent the tax liability is on him and for discharge of the same he need not deduct tax under section 195. Once deduction of tax is made under section 195, the question of the assessee being himself is liable to pay tax thereon as an agent, does not arise. During the impugned assessment year, the wording "unless he himself is liable to pay income-tax as an agent" is not present in section 195. Hence, that case law does not apply to the impugned assessment year. Thus, we apply the plain meaning of the section and confirm the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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