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TMI Blog1962 (8) TMI 104X X X X Extracts X X X X X X X X Extracts X X X X ..... the Port at Cochin, but are concerned only with the tax levied in respect of the business done by the company in the ports of Calcutta and Bombay. In the relevant assessment year the company had no office in the then British India and the territories of the Indian Dominion. It is common ground that the company was not a resident within the meaning of that expression as used in the Indian Income Tax Act. The company, however, had its agents in different places in India who collected the freight on behalf of the company. In the relevant assessment year whenever a ship owned or chartered by the said company touched the ports of Calcutta or Bombay, a statement of freight earned by the company was furnished by the respective agents of the company at those places to the respective Income Tax Officers of those places. On receipt of such statements, the Income Tax Officers at the said places made assessment orders on the basis of the statements of freight submitted to them by the respective agents. The tax due from the company on the basis of those statements of freight received by the company was neither assessed nor recovered before the ships left the ports, but the tax assessed was lat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the assessee that if it is held that the assessment order were made under section 44B of the Act, then the provision of 44C would come into play, and the assessee's application for refund was liable to be rejected on the ground of limitation. In substance, the contention was that the assessment orders which were made were not made against the company but were made against the agent of the company under the latter part of section 44A of the Act and, therefore, fell out of the provision of the Act. The Tribunal did not accept this contention of the assessee. It held that the agents at the ports, in India, of the company, who collected the freight on behalf of the company were not agents within the meaning of section 44A of the Act. In the opinion of the Tribunal, the agent referred to in section 44A does not mean a statutory agent within the meaning of section 43, but a contractual or factual one, and there was no proof that the said agents who collected freight were contractual or factual agents of the company. The Tribunal further held that the assessments made under section 44B of the Act, and, therefore, the application for refund made by the assessee was barred by time. A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the return, the Income Tax Officer shall assess the amount referred to in sub-section (1), and for this purpose may call for such accounts or documents as he may require, and one-sixth (then one-fifth) of the amount so assessed shall be deemed to be the amount of the profits and gains accruing to the principal on account of the carriage of the passengers, livestock and goods shipped at the port. (3) When the profits and gains have been assessed as aforesaid, the Income Tax Officer shall determine the sum payable as tax thereon at the rate for the time being applicable to the total income of a company, and such sum shall be payable by the master of the ship, and a port-clearance shall not be granted to the ship until the Customs-collector, or other officer duly authorised to grant the same, is satisfied that the tax has been duly paid. 44C. Nothing in this Chapter shall be deemed to prevent a principal from claiming, in the year following that in which any payment has been made on his behalf under this Chapter, that an assessment be made of his total income in the previous year, and that the tax payable on the basis thereof be determined in accordance with the other provis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ced on the observations at page 195 in Commissioner of Income Tax v. Provident Investment Co. Ltd. [1957]32ITR190(SC) . 6. Mr. Joshi, on the other hand, contends that the assessment orders in question are not assessment orders made on the agents under the general provisions of the Act. The orders contemplated to be made under the latter part of section 44A are to be made after the expiry of one year in respect of the entire income of the previous year. The orders in the present case are not made after the expiry of the accounting year, but during the course of the accounting year. Separate orders have been made in respect of each shipping. These orders could only be made under section 44B of the Act, and under no other provisions of the Act. According to Mr. Joshi, is true that the returns have not been filed by the master, nor has the tax been paid by the master of the ship. But this is only a concession granted as a result of an arrangement, as found by the Tribunal, and that concession would not vitiate the orders or take them out of section 44B of the Act. 7. The crux of the question which falls for consideration is whether the application for refund made by the company o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he provisions of the Act other than those of Chapter V-A. Now, the orders of the assessment which are made under the general provisions of the Act, i.e., the provisions of the Act other than the provisions of Chapter V-A, are made after the expiry of the account year in respect of the total income of the previous year. The rates at which the tax is levied on the computed income are the rates that are announced in the Finance Act which come into operation after the expiry of the accounting period. To this, there is no doubt - apart from the provisions of Chapter V-A - one exception. Those provisions are contained in section 24A of the Act. When it appears to the Income Tax Officer that any person may leave the taxable territories during the current financial year, or shortly after its expiry, and that he has no present intention of returning, section 24A empowers the Income Tax Officer to proceed to assess him on his total income of the period from the expiry of the last previous year of which his income has been assessed in his hands to the probable date of his departure, and the rate at which the tax is levied are the rates announced by the Finance Act then in force. Now, looking ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ade under the general provisions of the Act, i.e., under the provisions of section 23 of the Act, which are normally made after the expiry of the accounting year. Mr. Kolah, however, contends that these orders can be treated as under section 24A. We find it difficult to accept this contention of Mr. Kolah, because the condition precedent that gives an Income Tax Officer jurisdiction to make an order under section 24A is that it must appear to the Income Tax Officer that any person may leave the taxable territories during the currency of the financial year or shortly afterwards. In none of the orders, the Income Tax Officer has stated that he was making an assessment order because it appeared to him that the assessee was likely to leave the taxable territories during the currency of the financial year, and, therefore, he was making these assessment orders. On the contrary, the assessment orders specifically say that the orders are made under section 44B(2) of the Act. In our opinion, it is not possible to accept the contention that we should hold that these are the orders made against the freight agents under section 24A of the Act. However, our conclusion that the assessment orders ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lly appear to fall under section 44B(2) of the Act, and not under any other provisions of the Act. Mr. Kolah, however, contends that the two principal requirements of Chapter V-A are predominantly absent in this case. They are that the returns have not been furnished by the masters and the tax is not paid by the masters before the ships left Indian shores. But, on the other hand, the returns have been furnished by agents, and the tax has been paid by the agents after the ships had left the shores. The non-compliance of the provisions of Chapter V-A of the Act takes the assessment orders out of the provisions of Chapter V-A. We, however, find it difficult to accept this contention in view of finding of the Tribunal. We have already reproduced the finding of the Tribunal, and it is to effect that it was only a concession given to the company with a view to avoid inconvenience to the ships concerned in the matter of getting port clearance. As the Tribunal finds, an understanding was reached between the department, port authorities, and freight agents, according to which the freight agent held themselves responsible to pay tax that may be due from the masters before the respective ship ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee under the provisions of Chapter V-A of the Act is only the master of the ship and not any other person. None of the assessment orders has been made against the master, and, therefore, they are not orders under the provisions of Chapter V-A of the Act. In support of this contention, he argued that section 44B says that the tax is payable by the master. A person by whom tax is payable is the assessee under the definition clause of section 2(2) of the Act. That clause reads : Assessee means a person by whom income tax or any other sum of money is payable under this Act, and includes every person in respect of whom any proceedings under this Act has been taken for the assessment of his income or of the loss sustained by him or of the amount of refund due to him. Now, under this clause, two categories of persons have been included in the definition of assessee : (1) a person by whom Income Tax or any other sum of money is payable, and (2) a person in respect of whom any proceedings under this Act has been taken for the assessment of his income. It is clear that the person in respect of whom Income Tax is levied under the provisions of Chapter V-A is a non-resident who carries on ..... X X X X Extracts X X X X X X X X Extracts X X X X
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