LexH. L. SUD, INCOME-TAX OFFICER, BOMBAY versus TATA ENGINEERING & LOCOMOTIVE CO. LTD. BOMBAY
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H. L. SUD, INCOME·TAX OFFICER, BOMBAY
v.
TATA ENGINEERING & LOCOMOTIVE CO. LTD.
BOMBAY
September 6, 1968
[J, C. SHAH, V. RAMASWAMI AND A. N. GROVER, JJ.)
Income-tax Act (11 of 1922), ss. l8A and 43-Advance tax of non-
resident firm-Liability of agent of the firm-Whether notice to be given
each year.
The respondent-company, carried on manufacturing business in colla·
boration with some non-resident German firms.
For each of the assess-
ment years up to 1961-62, the Income-tax Officer issued a notice to the
respondent under s. 43 of the Indian Income-tax Act, 1922, intimating
that he intended treating the respondent as the agent of the non-resident
firms, and thereafter passed orders treating the respondent as agent of the
firms.
For the ass.,sment year 1962-63 no notice under s. 43 was issued
or served upon the respondent by the Income-tax Officer and no order
under that section was passed treating the respondent as their agent. The
respondent received from the Income-tax Officer notic°' df demand under
s. 29 together with an order under s. 18A(l) calling upon the respon-
dent to make advance payment of the tax for the assessment year 1962-63
as agent of the firms.
The respondent denied its liability to make advance
payment of tax.
The Commissioner of Income-tax rejected the respon-
dent's representation.
The respondent, thereupon, filed writ petitions in
the High Court challenging the demand of the advance tax and for quash-
ing the notices of demand. The High Court granted the writ. Dismissing
the appeals, this Court,
HELD : The respondent could not be treated as an agent df the non-
resident firms for the ass.,sment year 1962-63 as advance tax could not
be demanded under s. 18A for that assessment year treating the respon-
dent as such statutory agent.
Having regard to the scheme of the Income,tax Act, the assessment
for each year is self-<:ontained and the vicarious liability imposed by an
appointment under s. 43 only extends to the liability for the assessment
of the year for which the appointment is made and cannot extend to the
liability for any other ass .. sment. Nor can the expr.,sion ''for all pur-
poses" used in s. 43 extend the liability to any other assessment excepting
the liability for the assessment year for which the appointment is made.
The expression "for all pnrpo.es'', only indicates that when an appoint-
ment is made for a particnlar assessment year it is good for all purposes
as far as the assessment is concerned i.e., for all purposes for imposing
tax liability, determing the quantnm df the liability and for recovering it.
The liability songht to be imposed under s. 18A in the present case is not
in respect of the income-tax for the assessment year for which the
appointment is made, but for a subsequent assessment year.
Fdr the re-
covery of income-tax of the said subsequent year unless there is a fresh
appointment of the respondent under s. 43 of the Act as a statutory agent,
no such liability can be imposed on the respondent by the Income-tax
Authorities. [27 C-F]
·
In the present case, no notice was served on the respondent intimating
that it would be treated as the agent of the non-resident firms for the
21
·22
SUPREME COURT REPORTS
(1969] 2 S.C.R .
. assessment year 1962-63. No opportunity was given to the respondent to
be heard m the m.atter, nor was any formal order passed under s. 43 by
the appellant treatmg the respondent as the agent of the noncresident
firm~ for the assessment year 1962-63. Althongh a person may fail in a
part1c_u1ar year to resist the claim that he is an a.gent, circumstances may
alt~r m the next year and he may be able to resist the claim then. Hence
nol!ce shall have to be given by the Income-tax Officer for each assess-
ment year to appoint a person as agent. [27 G-28 A]
CIVIL APPELLATE JURISDICTION: Civil Appeals Nos.
688
and 689 of 1968.
Appeals by special leave from the judgment and order dated
April 17, 1963 of the Bombay High Court in Misc. Petitions Nos.
229 and 230 of 1962.
Sukumar Mitra,
S. K. Ai.var, R. N. Sachthey and B. D .
.Sharma, for the appellant (in both the appeals).
M. C. Chagla, B. Datta and P. C. Bhartari, for the respondent
{in both the appeals) .
Th.e Judgment of the Court was delivered by
Ramaswami, J. The respondent is a limited company incor-
porated under the Indian Companies Act, 1913 and carries on
business of manufacturing and sellExcerpt shown. Read the full judgment & AI analysis in Lexace.