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TMI Blog1981 (4) TMI 1X X X X Extracts X X X X X X X X Extracts X X X X ..... the law of the Federal Republic of Germany) (hereinafter referred to as " the German Corporation ") in two suits filed on the original side of the Calcutta High Court-one Suit No. 511 of 1962, filed by the Bengal Chemical and Pharmaceutical Works Ltd., against the German Corporation and another Suit No. 1124 of 1962, filed by the German Corporation against the Bengal Chemical and Pharmaceutical Works Ltd., on the alleged infringement of a patent. The appellants were instructed by a firm of solicitors in London, namely, M/s. Ashurst, Morris, Crisp Co. (hereinafter referred to as " the London Solicitors "), who were also acting for the German Corporation, by a cable dated May 31, 1965, to retain in the said suits, Mr. Blanco White, Q C., a resident of the United Kingdom, who was a barrister having considerable practice in the branch of patent law. On his arrival in India, the appellants accordingly retained Mr. Blanco White as the counsel to argue the case of their clients the German Corporation even though they did not deliver any briefs to him and also did not pay or undertake any obligation to pay any fees for his services. The briefs had been earlier delivered by the London so ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id or promised to pay any fees to him and that, therefore, no income had accrued to Mr. Blanco White on account of any business connection that existed between them and Mr. Blanco White. The appellants further contended that as Mr. Blanco White was a barrister who was not carrying on any business but had only rendered professional service in Calcutta, and hence the connection, if any, could not be a business connection. They also questioned the jurisdiction of the ITO to make any assessment treating them as the representative assessees of Mr. Blanco White. The ITO by his letter dated March 25, 1970, rejected the plea of the appellants and called upon them to appear before him on April 18, 1970, to make any other submission that they had to make. Thereafter, the appellants filed a petition under art. 226 of the Constitution before the High Court of Calcutta and obtained a rule nisi on May 25, 1970, calling upon the ITO, the Commissioner, West Bengal-I, and the Union of India to show cause as to why the proposal to initiate proceedings under the Act as stated above should not be quashed and a writ in the nature of mandamus prohibiting them from proceeding against the appellants under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the non-resident British counsel, Mr. Blanco White. The Division Bench further held that there was business connection between them and that it was not possible to accept the contention of the appellants that no income either accrued or arose to Mr. Blanco White in India. The appeal was accordingly dismissed. On a certificate granted by the Division Bench under art. 133 of the Constitution, the appellants have come up in appeal to this court against the judgment of the Division Bench of the High Court. It should be stated here that along with the petition for a certificate under art. 133 of the Constitution, the appellants filed an application before the High Court for stay of further proceedings before the department. On that application, the High Court passed an order on March 12, 1973, stating that the order of stay already granted would continue subject to the following modifications: " (1) The respondents will be at liberty to decide after giving the petitioners a hearing whether the petitioners' firm should be treated as the agent of Mr. Blanco White under section 163 of the Income-tax Act, 1961: (2) if they so decide the respondents will be at liberty to issue notice u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... THER COMMITMENTS STOP PLEASE CABLE HEARING DATES IF KNOWN OR DATE WHEN INFORMATION AVAILABLE STOP OUR REF LCC. ASHURSTS LONDON COL BLANCO WHITE REF: LCC. " The above cable shows that the London Solicitors had sought information about the suits in Calcutta to enable them to engage Mr. Blanco White to plead on behalf of the German Corporation in the said suits. On December 23, 1969, the London solicitors wrote a letter to the appellants in which it was stated that the copies of certain documents sent by the appellants had been handed over to Mr. Blanco White in addition to copies of certain other documents which they themselves had handed over to him. A part of the aforesaid letter, which is relevant for the purpose of the present case, is reproduced below : " ...We are asking Mr. Divecha of Hoechst Pharmaceuticals Limited, Bombay, to arrange for copies of the evidence in the Bombay case to be sent to you. The formulation of the evidence can then be discussed between you and your counsel and Mr. Blanco White when he arrives in Calcutta. The remaining documents which we are sending you are three bound volumes of pleadings which you sent to us in the early stages but which will ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... suits came up for hearing on January 27, 1970. The appellants had engaged Mr. P. P. Ginwala, Mr. A. K. Basu and Mr. Sankar Ghose to appear on behalf of the German Corporation in the said suits. In para. 6 of the writ petition filed before the High Court out of which this appeal arises, the appellants have stated as follows: " On 27th January, 1970, the said suits were called on before his Lordship the Hon'ble Mr. justice K. L. Roy. It was decided to take up Suit No. 1124 of 1962 first. In the said suit Mr. Blanco White, Q.C., appeared with Mr. P. P. Ginwala, Mr. A. K. Basu and Mr. Sankar Ghose. The said Suit No. 1124 of 1962 was heard on 27th, 28th, 29th, 30th January, 1970, 2nd, 3rd, 4th, 5th, 6th, 9th, 12th, 13th and 16th February, 1970, and judgment was reserved. The other suits were adjourned until after the judgment. " In his letter dated March 21, 1973, written to the London solicitors, marked as annex. " E " to the writ petition, Mr. Blanco White, while attempting to make out a case supporting the appellants, admitted that he was not disputing that when he was actually in court in Calcutta, he was, formally, there on instructions from the appellants as attorneys. The re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the facts and in the circumstances of the case. For proper appreciation of the contentions advanced by the parties before us, it is necessary to refer to some of the provisions of the Act. Section 160(1)(i) of the Act provides that in respect of the income of a nonresident specified in sub-s. (1) of s. 9 of the Act, the agent of the non-resident, including a person who is treated as an agent under s. 163 is representative assessee. Section 161(1) of the Act stipulates that every representative assessee, as regards the income in respect of which he is representative assessee, shall be subject to the same duties, responsibilities and liabilities as if the income were income received by or accruing to or in favour of him beneficially, and shall be liable to assessment in his own name in respect of that income; but any such assessment shall be deemed to be made upon him in his representative capacity only, and the tax shall, subject to the other provisions contained in Chap. XV of the Act be levied upon and recovered from him in like manner and to the same extent as it would be leviable upon and recoverable from the person represented by him. Section 163(1)(b) and (c) of the Act prov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gh with the leave of the court granted presumbly under s. 32 of the Advocates Act, 1961. We are also of the view that there must have been discussion between the appellants and Mr. Blanco White before the case was argued by him. Moreover, Mr. Blanco White could appear only with the consent of the appellants who were the solicitors on record. In the circumstances, it cannot be said that the High Court was wrong in holding that there was connection between the appellants and Mr. Blanco White. The said connection cannot also be termed as a casual one having regard to the period over which it had existed. It was real and intimate and Mr. Blanco White earned the fees for arguing the case in India only through the said connection. The case satisfies the test laid down by this court in CIT v. R. D. Aggarwal and Co. [1965] 56 ITR 20 for holding that there was connection between the appellants and Mr. Blanco White. The finding of the High Court on the above question also appears to be well founded. The only remaining question which needs examination is whether the said connection was a business connection. The contention of the appellants is that a professional connection cannot amount to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o. In CIT v. Currimbhoy Ebrahim Sons Ltd. [1935] 3 ITR 395, Sir George Rankin, speaking for the judicial Committee of the Privy Council, while construing the expression " business connection " in s. 42(1) of the Indian I.T. Act, 1922, observed (p. 400): "The phrase 'business connection' is different from, though doubtless not unrelated to, the word ' business' of which there is a definition in the Act." The expression " business " does not necessarily mean trade or manufacture only., It is being used as including within its scope professions, vocations and callings from a fairly long time. The Shorter Oxford English Dictionary defines " business " as " stated occupation, profession or trade " and " a man of business " is defined as meaning " an attorney " also. In view of the above dictionary meaning of the word " business ", it cannot be said that the definition of business given in s. 45 of the Partnership Act, 1890 (53 54 Vict. c. 39), was an extended definition intended for the purpose of that Act only. Section 45 of that Act says: "........... The expression 'business' includes every trade, occupation, or profession." Section 2(b) of the Indian Partnership Act, 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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