1962 (8) TMI 104 - HC - Income Tax

Summary

Issues Involved:
1. Validity of assessment orders under section 44B of the Indian Income Tax Act.
2. Applicability of section 44C for refund claims.
3. Determination of the correct provisions under which the assessment orders were made.
4. Obligation to assess agents under section 44A.
5. Definition of "assessee" under Chapter V-A of the Act.

Detailed Analysis:

1. Validity of Assessment Orders under Section 44B:
The primary issue was whether the orders made by the Income Tax Officers at Bombay and Calcutta under section 44B were valid. The court examined the facts and found that the East and West Steamship Company, a non-resident firm, had its agents in India who collected freight on its behalf. The assessment orders were made based on statements of freight earned, submitted by these agents. The court noted that the assessments were made during the accounting year, except for one, which was made after 31st March 1948. The court concluded that these orders were indeed made under section 44B(2) and not under the general provisions of the Act.

2. Applicability of Section 44C for Refund Claims:
The court examined whether the refund claim made by the company under section 48 was barred by the limitation period specified in section 44C. The Commissioner of Income Tax had set aside the refund order, arguing that the claim should have been made within one year as per section 44C. The court agreed with this reasoning, stating that since the assessment orders were made under section 44B, the provisions of section 44C applied, making the refund claim time-barred.

3. Determination of the Correct Provisions Under Which the Assessment Orders Were Made:
The court scrutinized the assessment orders to determine whether they were made under section 44B or other provisions of the Act. It was found that the orders were made during the accounting year for each shipment, and the tax was calculated based on 5% of the freight earnings, as specified in section 44B. The court held that these orders fell within the scope of section 44B and not under the general provisions of the Act.

4. Obligation to Assess Agents under Section 44A:
The court considered whether it was obligatory for the Income Tax Officer to assess the agents under the latter part of section 44A. It was argued that the freight agents were statutory agents under section 43 and should have been assessed accordingly. The court concluded that section 44A did not make it mandatory to assess the agents under the general provisions of the Act. The Income Tax Officer had the discretion to choose whether to proceed under section 44A or Chapter V-A.

5. Definition of "Assessee" under Chapter V-A:
The court addressed the argument that the assessee under Chapter V-A should only be the master of the ship, as the master is responsible for paying the tax. The court referred to the definition of "assessee" in section 2(2) of the Act, which includes both the person liable to pay tax and the person in respect of whom any proceedings are taken. It was concluded that the non-resident principal (the shipping company) was the assessee under Chapter V-A, and the assessment orders could be made against the company, not just the master.

Conclusion:
The court affirmed that the assessment orders were validly made under section 44B(2) of the Indian Income Tax Act. Consequently, the refund claim made under section 48 was barred by the limitation period specified in section 44C. The assessee was liable for the tax, and the orders were correctly made against the company. The court concluded that the Tribunal was right in holding that the refund application was time-barred and answered the question in the affirmative, with costs awarded to the department.