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TMI Blog1984 (6) TMI 80X X X X Extracts X X X X X X X X Extracts X X X X ..... the same prayer was addressed to the ITO. The latter sought certain information by letter dated 9-7-1973. After receipt of the information, the ITO by letter dated 9-10-1975, informed that the assessee was liable to pay Rs. 22,21,065 under section (sic) of the Act, in respect of gross taxable amount of Rs. 30,95,561 and after taking note of the fact that the sum of Rs. 15 lakhs had already been paid by the assessee on 30-9-1975, he directed the assessee to pay the balance of Rs. 7,21,065 immediately. He also drew attention of the assessee to the fact that the above mentioned payment was subject to payments of interest under section 201(1A) of the Act and that under the said provision interest would be payable at 12 per cent per annum on Rs. 22,21.065 from the date on which the tax was deductible to the date on which tax was actually paid. 4. After this letter was received, the assessee paid Rs. 7,21,065 on 18-10-1975. Thereupon, by letter dated 23-12-1975, the ITO directed the assessee to pay Rs. 9,50,000 towards interest subject to adjustment on final determination of quantum of interest. By letter dated 12-10-1976, the ITO informed the assessee that the tax deductible from pay ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for and on behalf of Zimmers A.G. under section 163(1)(c) of the Act. " 9. The Commissioner (Appeals) first dealt with the additional ground raised in the course of hearing of the appeal before him. He observed that before the ITO, the assessee had proceeded throughout on the basis that the assessee had liability under section 195. The assessee had never disclosed before the ITO that the assessee was the agent of the non-resident and was liable to pay tax in the capacity of the agent. The assessee paid the entire tax which was payable under section 195 and also the major portion of the interest under section 201(1A). It was not open to the assessee to contend for the first time by an additional ground in the appeal that the assessee was the agent and had no liability to deduct tax under section 195. He further observed that the question whether the assessee was an agent was a mixed question of fact and law and investigation into a question of that nature could not be made at the appellate stage. He, therefore, rejected the additional ground. 10. As regards the ground of merits, the Commissioner (Appeals) observed that the assessee had paid tax under section 195, long after he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ult that until and unless one is appointed as a statutory agent in this manner, one cannot be fastened with any liability whatsoever, including payment of advance tax because doing so will amount to giving retrospective effect to these provisions which are not warranted in the absence of express provisions in that regard---CIT v. Belapur Sugar Allied Industries Ltd. [1983] 141 ITR 404 (Bom.). Keeping in view of the provision of section 163(2) regarding opportunity of being heard to be given to the agent as also to the provisions of sections 246(1)(g), 246(2)(a) and 246(2)(b) of the Act regarding filing of an appeal against an order made under section 163 treating the assessee as an agent of a non-resident, it is necessary that a written order must be passed by the taxing authorities for treating a person to be an agent of non-resident before any liability as an agent could be fastened on the said person. Besides, having regard to the scheme of the Act, the assessment for each year is self contained and as such vicarious liability imposed by an appointment under section 163(2) only extends to the liability of the assessment of the year for which the appointment is made and cannot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n National Newsprint Paper Mills Ltd. v. CIT [1961] 41 ITR 60 (MP) is very instructive. The Madhya Pradesh High Court in that case was construing the provisions of sections 18(3B) and 43 of the Indian Income-tax Act, 1922 ('the 1922 Act') which correspond to sections 195 and 163 of the 1961 Act. The High Court observed the expression 'unless he is himself liable to pay any income-tax . . . thereon as an agent' introduces in sub-section (3B) an exception for the benefit of the person sought to be made liable for deduction under that sub-section. The expression does not mean that unless the person has been declared not to be an agent in accordance with section 43, he cannot be made liable for deduction under sub-section (3B). If the department has not treated him as an agent, it must be taken that for the purpose of sub-section (3B) of section 18, the person has not been made liable to pay income-tax as an agent of the non-resident. No enquiry and adjudication is necessary for determining whether a person has or has not been treated as an agent under section 43 before making him liable under section 18(3B) for deduction of tax. The above principle would apply in the present case. A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... here is nothing to section 195(2) to indicate that the person concerned would make payments to the non-resident without deducting the tax at source under sub-section (1). Consequently, the date from which the interest would be chargeable would be the date on which the tax was deductible and that date would be the date on which the amount was remitted to the non-resident. The alternate contention must, therefore, be rejected. 21. Reliance was placed on behalf of the assessee on the decision of the Bombay High Court in CIT v. Premier Tyres Ltd. [1982] 134 ITR 17. The ratio of that decision is that a person who is liable to pay tax as an agent of the non-resident is not required to deduct tax under section 195 before making payment to non-resident and such person cannot be deemed to be in default under section 201. The ratio of this decision is not applicable to the facts of the present case. In the case before the Bombay High Court, the ITO under section 163(2) had passed an order that the assessee was the agent of the non-resident. Consequently, it was an admitted position in that case that the assessee was an agent of the non-resident. It was on this admitted position that the Hi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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