1975 (3) TMI 13 - HC - Income Tax

Summary

Issues Involved:
1. Whether the Tribunal rightly confirmed the cancellation of the order passed in respect of assessment year 1968-69 u/s 163 of the Income-tax Act, 1961, treating the assessee as agent of Lada Trading Corporation, Geneva, Switzerland.
2. Whether the Tribunal rightly confirmed the order passed in respect of assessment year 1969-70 u/s 163 of the Income-tax Act, 1961, treating the assessee as agent of Lada Trading Corporation.

Summary:

Issue 1: Assessment Year 1968-69
The Tribunal confirmed the cancellation of the order passed u/s 163 of the Income-tax Act, 1961, treating the assessee as an agent of Lada Trading Corporation. The Tribunal's decision was based on the fact that there was a prior order treating the assessee as an agent of Atlanta Trading Corporation for the same income and year, which was considered a bar for passing another order to treat the assessee as an agent of Lada. The Tribunal also found sufficient evidence, including an affidavit and a letter from the assessee, establishing a connection between the assessee and Lada. However, the High Court concluded that the Tribunal was not right in confirming the cancellation, as the prior order should not bar treating the assessee as an agent of Lada, especially since proceedings u/s 147 and 148 of the Act were initiated for reassessment.

Issue 2: Assessment Year 1969-70
For the assessment year 1969-70, the Tribunal confirmed the order passed u/s 163 of the Income-tax Act, 1961, treating the assessee as an agent of Lada Trading Corporation. Unlike the previous year, there was no prior order treating the assessee as an agent of Atlanta for the same income. The Tribunal found that the requirements of section 163(1)(d) were satisfied, and there was sufficient evidence to establish that Lada received income from the assessee indirectly. The High Court upheld the Tribunal's decision, agreeing that the connection between the assessee and Lada was sufficiently established and that the assessee could be treated as an agent of Lada for the purpose of the income received by the latter.

Conclusion:
The High Court answered the first question in favor of the department, stating that the Tribunal was not right in confirming the cancellation of the order for the assessment year 1968-69. For the second question, the High Court upheld the Tribunal's decision for the assessment year 1969-70, confirming the order treating the assessee as an agent of Lada Trading Corporation. Both questions were answered in favor of the department and against the assessee.