9911796707
|
Home
Issues involved: Interpretation of clause 29 of an agreement between a non-resident company and the Indian Railways regarding tax liabilities of expatriate employees, applicability of section 201(1A) of the Income-tax Act, prosecution under section 276B of the Act.
Interpretation of clause 29: The petitioner, a non-resident company, entered into an agreement with the Indian Railways for consultancy services, with clause 29 stating that Indian Railways would be responsible for tax liabilities of expatriate employees under the Income-tax Act. The Income-tax Appellate Tribunal held that Indian Railways was the agent for the non-resident company and responsible for compliance with tax laws, thus quashing the tax levy on the petitioner. Prosecution under section 276B: Despite the Tribunal's ruling, the petitioner faced prosecution under section 276B for delayed tax payments on expatriate employees' remuneration. The petitioner argued that Indian Railways, as per the agreement and section 10(6)(viia) approval, was responsible for tax payments. The Magistrate dismissed the petitioner's application to quash the proceedings, citing the petitioner's role as an employer and the Tribunal's findings on different aspects. Legal considerations: The High Court considered the Tribunal's final and unchallenged ruling that Indian Railways bore tax liabilities, emphasizing the significance of this finding. The Court noted precedents where prosecution was quashed based on tax assessment outcomes. Referring to Uttam Chand's case, the Court highlighted the unfairness of prosecuting when authorities found no contravention. The Court concluded that the Tribunal's finding absolving the petitioner of tax liabilities rendered the prosecution unjust and unfair, leading to the quashing of proceedings under section 276B. This judgment highlights the importance of contractual agreements in determining tax liabilities and the impact of tribunal rulings on criminal proceedings related to tax matters.
|
