1973 (2) TMI 7 - HC - Income Tax

This appeal is directed against the judgment and order of Sabyasachi Mukharji J. discharging a rule nisi obtained by the appellants in an application under article 226 of the Constitution on the ground that it is premature as an alternative remedy is provided under the Income-tax Act, 1961.

Issues Involved:
1. Prematurity of the application under Article 226 of the Constitution.
2. Jurisdiction of the Income-tax Officer under sections 160 and 163(1) of the Income-tax Act, 1961.
3. Existence of a "business connection" under section 9(1)(i) of the Income-tax Act, 1961.
4. Accrual of income to Mr. Blanco White.
5. Adequacy of alternative remedy under the Income-tax Act.

Detailed Analysis:

1. Prematurity of the Application under Article 226:
The appeal was directed against the judgment and order discharging a rule nisi obtained by the appellants under Article 226 of the Constitution on the grounds that it was premature as an alternative remedy was provided under the Income-tax Act, 1961. The learned trial judge found that the application was premature and that the Income-tax Officer had jurisdiction to decide the matter.

2. Jurisdiction of the Income-tax Officer:
The appellants challenged the jurisdiction of the Income-tax Officer to treat their firm as an agent of Mr. Blanco White under sections 160 and 163(1) of the Income-tax Act, 1961. The appellants contended that the conditions for treating the firm as an agent were not fulfilled. The court held that the Income-tax Officer had jurisdiction to decide the matter, and thus, the question of alternative remedy was relevant.

3. Existence of a "Business Connection":
The court examined whether there was a "business connection" between the appellant's firm and Mr. Blanco White. It was noted that the term "business connection" is not defined in the Act and is broader than merely carrying on a business. The court found that the appellant's firm acted as solicitors for the West German company and instructed Mr. Blanco White. This relationship constituted a "business connection" under section 9(1)(i) of the Act, as there was continuous correspondence and involvement over several years.

4. Accrual of Income to Mr. Blanco White:
The appellants argued that no income accrued to Mr. Blanco White as his fees were honorarium, and he had no legal right to recover them. The court rejected this argument, stating that the rule of English law, which prevents a barrister from suing for fees, does not apply in India. The court held that income did accrue to Mr. Blanco White as he was permitted to appear in court under section 32 of the Advocates Act, 1961, and his fees constituted income.

5. Adequacy of Alternative Remedy:
The appellants contended that the existence of an alternative remedy under the Income-tax Act was not adequate. The court held that the alternative remedy was appropriate, as the Income-tax Officer had jurisdiction to decide the matter. The court noted that allegations of infringement of fundamental rights were not substantiated before the trial judge or in the memorandum of appeal.

Conclusion:
The appeal was dismissed, and the court upheld the decision that the application under Article 226 was premature and that the Income-tax Officer had jurisdiction to treat the appellant's firm as an agent of Mr. Blanco White under sections 160 and 163(1) of the Income-tax Act, 1961. The court also found that there was a "business connection" and that income did accrue to Mr. Blanco White. The alternative remedy provided under the Income-tax Act was deemed adequate.

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