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TMI Blog1953 (9) TMI 23X X X X Extracts X X X X X X X X Extracts X X X X ..... from this particular assessee. The assessee is an agent of a non-resident of the Hyderabad State. The assessee admitted that he was the agent of the non-resident in respect of certain transactions effected by the non-resident principal in the taxable territories and these transactions constituted a business connection between the agent and the non-resident. But what was contended by the taxing Department was that the agent was liable to pay tax in respect of all the income of the non-resident under Section 42 although the non-resident had done business through other agents in respect of which the assessee had nothing whatever to do. The assessee contended that he should be assessed in respect of those transactions only in which there was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f which a non-resident can be charged to tax. Therefore the first thing that has got to be ascertained under Section 42 is whether a nonresident is liable to tax in respect of one or more heads mentioned in Section 42. Having determined that, the next question is whether he has an agent, and if he has an agent the taxing Department has been given the option to charge the tax either in the name of the non-resident or in the name of his agent, and if the taxing Department assesses his income in the name of his agent certain important consequences follow and those consequences are that the agent shall be deemed to be for the purposes of the Act the assessee in respect of such income-tax. In our opinion, it is clear that in order that the agent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were correct, it would mean this that although a person may be the agent of a non-resident in respect of a small business where his principal may earn profits to the extent of a few thousands and the liability to tax in respect of that business may be very small, if that principal has other large businesses in respect of which the assessee has nothing whatever to do, if he has properties in the taxable territories, if he is earning interest in the taxable territories, the agent can be assessed in respect of all that income and can be made liable to pay tax although what he could retain under the second proviso might be a very small amount of the tax which the nonresident might become liable to pay. But the difficulties do not cease there be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bility is as such agent and that liability must be determined on the terms of Section 42 and not on the terms of Section 43, and it is clear reading Section 42 itself and looking at the scheme of the Indian Income-tax Act that the liability of the agent under Section 43 is not in respect of all income earned by the principal under the various heads under Section 43. but his liability is restricted and limited to the income earned through his agency, income arising the respect of heads qua which he is an agent. It is rather surprising that such an almost impossible claim was put forward by the Department. Recently, in a case reported in Abdullabhai Abdul Kadar v. Commissioner of Income-tax, Bombay City [1952] 22 I.T.R. 311, we were consider ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... paid interest and this interest was sought to be taxed in the name of the assessee on the ground that the non-resident had earned this amount through a business connection in the taxable territories. Now, the Nizam also had property in Bombay in respect of which other agents had been appointed, but the Department having taxed Currimbhoy Ebrahim & Sons Ltd. in respect of the interest on the loan also sought to tax the company on the income earned by the Nizam from his property in Bombay, The Privy Council held that no business connection had been established and therefore Currimbhoy Ebrahim & Sons Ltd. were not agents of the Nizam. It is true that on that decision no further question arose, but at page 403 their Lordships say this: "It ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the name of his agent, then in respect of each agency there must be a separate assessment because each agent is a separate assessee and treated as an assessee for all purposes under the Act. Therefore it is not a case of multiplicity of assessments in respect of one assessee. What Sir Nusserwanji overlooks is that each agent in respect of each business or each head under Section 42 is a separate assessee and there must be a separate assessment in respect of every assessee under the Indian Income- tax Act. Therefore we see no objection on principle to several agents of the non-resident being assessed and there being separate assessments. Therefore, in our opinion, the Tribunal, with respect to it, was in error when it took the view that ..... X X X X Extracts X X X X X X X X Extracts X X X X
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