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TMI Blog2016 (5) TMI 543X X X X Extracts X X X X X X X X Extracts X X X X ..... , deleted. 3. On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in deleting the addition made of Rs. 97,35,04,000 3. When this appeal was called out for hearing, learned counsel for the assessee fairly accepted that so far as the core issue, on merits, is covered, against the assessee, by decision of a coordinate bench of this Tribunal, in the case of Carbijet Inc Vs DCIT [(2005) 4 SOT 18 (Mum)]. The short issue that we have to, therefore, decide is whether or not the learned CIT(A) was justified in holding that the assessment could not be framed on the assessee, as an agent, when the nonresident is also assessed to tax in respect of the same. 4. So far as this issue is concerned, the relevant material facts are like this. The assessee before us is a public sector undertaking engaged in the business of civil aviation. It had entered into a wet lease agreement, with an company by the name of Carbijet Inc. based in Antigua and Barbuda- a twin island country in West Indies, on 16th November, 1994. This agreement was initially valid upto 30th June 1995, but it was later extended upto 31st December 1995. In the meantime, on 22nd October 1995, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the context of issues requiring our adjudication, most significant is that he admitted certain additional grounds of appeal in respect of the issue as to whether the Assessing Officer is justified in making assessment of the same income of Rs. 97,35,04,000 simultaneously in the hands of the Carbijet Inc as also Air India as representative assessee of Carbijet Inc. Learned CIT(A) also called for, vide letter 12th July 2006, report of the Assessing Officer on "comments and justification for making assessment of the same income twice- first in the hands of the Carbijet Inc and then in the hands of the Air India as a representative assessee of the Carbijet Inc". In response, vide detailed report dated 19th July 2006, the Assessing Officer narrated the sequence of events and the related facts, and submitted, inter alia, that "the same income has been taxed simultaneously in the hands of the principal as well as its representative assessee mainly to safeguard the interests of the revenue. Air India would stand absolved of its liability to pay the demand for AY 2000-01 when Carbijet Inc pays the corresponding demand in its own case". Learned CIT(A) then took note of the detailed argume ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tiny and the notice u/s.143(2) was issued on 28.11.2001 and the proceedings were carried on by issue of notices subsequently leading to completion of assessment on 28.03.2003 u/s.143(3). Simultaneously notice was issued to AI on 15.03.2001 calling upon AI to show-cause why not it should be treated as agent of CI u/s.163. Order u/s.163 holding AI as agent of CI was passed only on 06.03.2003. . Notice u/s.148 was issued on 07.03.2003. Notice u/s.142(1) was also issued on 07.03.2003 calling AI to file certain details. Second notice was issued on 19.03.2003 calling upon AI to file details. Assessment has been completed on 27.03.2003 u/s. 144 r.w.s. 147 & 163. Perusal of the assessment order of CI and that of AI passed on 28.03.2003 and 27.03.2003 respectively for A.Y.2000-01 reveals that both the orders are same. These have been passed simultaneously. Income assessed by both orders is same i.e. Rs. 97,35,04,000/-. Reasons given for the assessment of this income are also same. It is therefore a clear case of double assessment of same income first in the hands of non-resident and secondly in the hands of agent. Appeal against the assessment in the case of CI has been decided by my predec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . While dealing with this situation, Their Lordships have, inter alia, observed as follows: 6. The second point urged before us is that when the ITO had taken the assessment proceedings against the Indian agent of the assessee, it was not open to him to take assessment proceeding against the assessee. It is open to an ITO to assess either a non-resident assessee or to assess the agent of such non-resident assessee. It cannot be disputed also that if an assessment is made on one, there can be no assessment on the other, and therefore, in this case if the assessment had been made on the Indian agent, the assessment could not have been made on the assessee. However, facts show that the reassessment proceedings commenced against the agent were found to be barred by time by reason of s. 149(3) of the Act. The issue of notice under s. 148 of the Act to the agent after the expiry of two years from the end of the relevant assessment year is prohibited by the statute. The ITO dropped the proceedings when he was made aware of that prohibition. The assessment proceedings taken by him against the agent have to be ignored and cannot operate as a bar to assessment proceedings directly against ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eference for assessment directly on the principal, and the only limitation on the assessment vis-àvis these two parties, i.e. agent and the principal, are concerned, that once an assessment is made on one of them, the assessment for the same income thereafter cannot be made on the other. In the present case, the assessment is on two different dates, and the date of assessment on the Air India in a representative capacity is a day earlier than the assessment on the Carbijet Inc directly. Therefore, the assessment in the hands of Air India, in the representative capacity, cannot be said to be legally unsustainable. It is only the assessment in the hands of Carbijet Inc which may not be sustainable in law but that aspect of the matter is wholly academic since, in view of the provisions of Section 165 of the Act, even though the assessment may be in the hands of a representative assessee under section 163(3), there is no bar on direct recovery, of taxes so held to be leviable, from Carbijet Inc. It is important to bear in mind the fact that, as section 165 categorically provides, nothing, inter alia, in Section 163, "shall prevent either the direct assessment of the person on wh ..... X X X X Extracts X X X X X X X X Extracts X X X X
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