9911796707
TMI Blog1981 (12) TMI 91X X X X Extracts X X X X X X X X Extracts X X X X ..... les (Rs. 9,140). He also had individual income from other sources of Rs. 1,450. 2. In the assessment made by the ITO, purporting to be under section 182(3) of the Income-tax Act, 1961 ('the Act'), he, on the basis of return of income filed on behalf of the non-resident partner, computed the total income of Shri P.R. Srinivasan at Rs. 46,867, made up of his share from the assessee's firm of Rs. 29,260 and the aggregate of the other share and individual income mentioned above, and demanded tax, referable to Rs. 29,260 as share income from the assessee-firm, at the average rate applicable to the total income of Rs. 46,867. The assessee's case, which has not been accepted by the AAC, in the appeal before him, is that the ITO was not justified ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0 and section 161 of the Act, which contemplate assessment on a representative assessee and the extent of his liability, afford a close parallel to the language used in section 182(3) and the decision of the Calcutta High Court in ITO v. Eastern Scales (P.) Ltd. [1978] 115 ITR 323 interpreting the two sections support the assessee's claim in the present appeal. It is submitted that the words 'if it were assessed on him personally' clearly shows that what is to be assessed for the purpose is the share income, the word 'it' referring to the share income from the assessee-firm. According to the submission of the learned counsel, the word 'it' plainly restricts the subject-matter of inclusion in the assessment to only the amount of share income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ting the section. The Legislature, it is submitted, has expressed itself in clear language by so providing, wherever it is warranted, that the particular amount should be considered by itself alone for coming at the total income for the purpose of finding out the tax thereon. 5. Having carefully considered the facts and the contentions of the parties, we are of the view that the assessee's case must be accepted. In the first place, though the decision of the Calcutta High Court referred to and relied on by the assessee was rendered in the context of different sections, viz., sections 161 and 162 of the Act concerning representative assessee, the ratio according to us lends support to the assessee's contention. Section 161 provides that ev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income received by the representative assessee that alone should be considered as it is quite unreasonable to think that the Legislature intends to impose a tax on representative assessee at the rate applicable to the total income received by the non-resident from the representative assessee and also from other sources and not at the rate applicable to the amount of income received by the non-resident from the representative assessee. It was also observed that it may so happen that compared with the total income received by him from all sources, the non-resident receives only a paltry sum of money through the representative assessee and in such a case, to apply the rate of tax applicable to the total income of the non-resident would be to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yable on such total income of each partner in his individual total income for the purpose of assessment to tax. Sub-section (3) provides that when any of the partners of a registered firm is a non-resident, the tax on his share in the income of the firm shall be assessed on the firm at the rate or rates which would be applicable if it were assessed on him personally and the tax so assessed shall be paid by the firm. The section clearly contemplates assessment of tax in regard to the share of non-resident partner in the hands of the firm and it also prescribes the rate or rates which should be applicable to the said share income. In the context of the sequence and the setting of the provisions, it appears to us that by the use of the words, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Sub-section (4) contemplates liability of the firm for payment of tax of the partners up to the extent of 30 per cent of their share and apparently it applies to both ; resident and non-resident partners. Whatever be the case, the point to be noted here is that a direct assessment is also contemplated on the partners in sub-section (4) and so far as sub-section (3) is concerned, it provides for the collection of the tax on the share income of the partner, who is a non-resident, at the earliest opportunity and on a rough and ready basis at the rates applicable to the share income alone but with reference to the status and other things. The rate is mentioned to fix the quantum of tax that could be recovered from the firm and the fact that ..... X X X X Extracts X X X X X X X X Extracts X X X X
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