1999 (4) TMI 52 - HC - Income Tax

Summary

Issues:
1. Whether the authorised controller can be considered a representative assessee under section 160(1)(iii) of the Income-tax Act.
2. Whether assessments can be made on the authorised controller for the industrial undertaking owned by a company after ceasing to be the authorised controller.

Analysis:

Issue 1:
The case involved determining if the person appointed as an "authorised controller" under section 18A of the Industries (Development and Regulation) Act could be seen as a representative assessee under section 160(1)(iii) of the Income-tax Act. The court highlighted that the authorised controller, in this case, managed an industrial undertaking owned by a company. Assessments were made in the name of the authorised controller, acting on behalf of the company, during the period of control. However, upon ceasing to function, the authorised controller was called upon to answer demands made by the Revenue. The Tribunal, supported by the Commissioner, held that the authorised controller could not be considered a representative assessee. The court emphasized that the authorised controller did not acquire the status of a representative assessee as the company continued to exist, and the ownership of assets remained with the company.

Issue 2:
Regarding the assessments made after the authorised controller ceased to function, the court examined the legal implications. The Tribunal's view that the authorised controller cannot be held liable as a representative assessee, successor, or others after ceasing to be the authorised controller was upheld. The court emphasized that the authorised controller, under section 18B of the Industries (Development and Regulation) Act, merely took the place of directors and did not become a representative assessee. The court clarified that assessments should be directed against the company, not the authorised controller, except as permissible by law during the period of representation. Additionally, any arrears of income tax during the authorised controller's tenure could only be recovered from the compensation provided under the Nationalisation Act, not from the authorised controller personally.

In conclusion, the court ruled in favor of the assessee, the Tamil Nadu Textile Corporation Limited, against the Revenue for the assessment years in question. The court answered all questions against the Revenue and in favor of the assessee, awarding costs to the assessee.

This detailed analysis of the judgment addresses the issues raised in the case comprehensively, providing a clear understanding of the court's decision and the legal principles applied.