BARENDRA PRASAD RAY & ORS. versus THE INCOME-TAX OFFICER 'A' WARD FOREIGN SECTION AND ORS.

Citation: [1981] 3 S.C.R. 387 · Decided: 07-04-1981 · Supreme Court of India · Bench: R.S. PATHAK · Disposal: Dismissed

Cited by 2 judgment(s) · see the full citation network in Lexace

Judgment (excerpt)

} 
BARENDRA PRASAD RAY & ORS. 
v. 
THE INCOME-TAX OFFICER 'A' WARD 
FOREIGN SECTION AND ORS. 
April 7, 1981 
(R.S. PATHAK, A.P. SEN AND E.S. VENKATARAMJAH, JJ.] 
387 
In:ome Tax Act, 1961, Sections 2(13), 2(36), 9(1), 163(1} and 195(2). scope 
of-Words and 
phrases-"Business" 
and 
"having business connection"-
explained-Presumption of obligation of the agent to deduct the tax payable under 
the Income Tax Act at source on paym!nt m1de to a n?n-resident. 
The appellants are partners of a firm of Solicitors at Calcutta and they had 
been engaged by a German Corporation to act on its behalf in three suits pending 
before the High Court at Calcutta. A firm of Solicitors in London, namely M/s. 
Ashurst, Morris, Crisp & Co., which was also acting on behalf of the German 
Corporation instructed the appellants to retain Mr. Blanco White Q.C., a resident 
of the United Kingdom, who was a barrister having considerable practice in the 
branch of patent law, to argue the case in the aforesaid three suits. The appellants 
did not deliver any briefs to him and also did not pay or undertake any obligation 
to pay any fees for his services. The briefs had been earlier delivered by the 
London Solicitors. Mr. Blanco White left India on February 17, 1970 after 
arguing the cases for 13 days commencing from January 27, 1970 to February 16, 
1970, without making any arrangement regarding the payment of the Income 
Tax on the fees earned by him. 
The Income Tax Officer informed the appellants that he proposed to proceed 
against them under section 163(1) of the Act treating them as the agents of Mr. 
Blanco White on the ground that the income arising out of professional charges 
had arisen on account of the business connection that existed between the 
appellants and Mr. Blanco White. Thereafter the appellants challenged the 
said order of the Income Tax Officer by filing a petition under Article 226 
of the Constitution before the High Court of Calcutta. The learned Single 
Judge dismissed the petition on the ground that it was a premature one 
taking the view that the question whether the case came within the purview of 
section 163(1) of the Act had to be determined after ascertainment of facts by 
the Income tax Officer. The appeal preferred by the appellants was dismissed 
by a Division Bench holding (a) there was business connection (directly or 
indirectly through correspondence) between the appellants' firm and their non-
resident British Counsel Mr. Blanco White and that an agency could very well 
be said to have been established between them ; (b) there was busine's connection 
between them and (c) income di:! either accrue or arise to Mr. Blanco White in 
India. However, the Division Bench granted certificate to the appellants under 
Article 133 of the Constitution and hence the appeal. 
A 
B 
c 
D 
E 
F 
G 
H 
A 
388 
SUPREME COURT REPORTS 
(1981] 3 S.C.R. 
Dismissing the appeal, the Court 
HELD : I. From the facts and other material on 1ecord there was con-
nection between the appellants and Mr. Blanco White. The said connection 
cannot also be termed as a casual one h1ving regard to the period over which it 
had existed. It was real and intimate an<l Mr. Blanco White earned the fees for 
arguing the case in India only through the said connection. From the year 
B 
1965 there was correspondence between the appellants and the London Solicitors 
who in their turn had engaged Mr. Blanco White in connectbn with the suits in 
question. 
Mr. Blanco White appeared before the High Court along with Indian 
counsel engaged by the appellants, though with the leave of the Co"Jrt granted 
presumably under section 32 of the Advocates Act, 1951. 
Mr. Blan~o White 
could appear only with the consent of the appellants who were the Solicitors 
on record. 
[398 A-Fl 
c 
D 
E 
F 
G 
H 
Commissioner of Income-tax, P11niab v. R.D. Aggarwal and Co. and Anr., 
56 I.T.R. 20, applied. 
2. It is incorrect to suggest that it was the intention of the Parliament to 
exclude non-residents engaged in learned professions from the operation of section 
9(1). 
The words in section 9(1) land section 163 are comprehensive enough to 
include all heads of income mentioned in section 14 of the Act. 
[399 F DJ, 
3. 
The expression "business" does not necessarily mean trade ~or manufac-
ture only it is being used as including within its scope professions, vo;ations, and 
callings from a fairly long time. From section 2(b) of the Indian Partnership 
Act, 1932, it is

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