Agency-based tax liability under Section 42(1) is confined to income linked to that specific non-resident agency.

An agent of a non-resident can be assessed under Section 42(1) of the Income-tax Act, 1922 only on income attributable to the particular agency or business connection through which the agent acted, not on the non-resident's entire taxable income. Section 42 creates the agent's vicarious liability only for income connected with that agency, and the machinery provision in Section 43 does not expand that liability. The scheme of the Act, including the second proviso to Section 42, supports separate assessments for different agencies because each agency is treated as a distinct assessee for this purpose.

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Issues: Whether an agent of a non-resident could be assessed under Section 42(1) of the Income-tax Act, 1922 on the entirety of the non-resident's taxable income, or only on income connected with the agency through which the assessee acted.

Analysis: Section 42 deems certain income of a non-resident to accrue or arise in the taxable territories and permits assessment either in the name of the non-resident or in the name of the agent. The liability of the agent, however, is governed by Section 42 itself and not by the machinery provision in Section 43. The scheme of the Act shows that vicarious liability can be imposed on the agent only in respect of the income with which that agency is concerned, not in respect of other income of the non-resident earned through different agencies or unrelated sources. The second proviso to Section 42 and the practical consequences of assessment also support a restricted construction. Separate assessments may be made for different agencies because each agency constitutes a distinct assessee for the purposes of the Act.

Conclusion: The agent was liable to be charged only on the income accruing to the non-resident through dealings with that agent, and not on the non-resident's entire income within Section 42.

Final Conclusion: The reference was answered by limiting the assessee's tax liability to income connected with his own agency, and the broader assessment made by the Department was rejected.

Ratio Decidendi: An agent's liability under Section 42(1) of the Income-tax Act, 1922 is confined to the non-resident income attributable to the particular business connection or agency through which the assessee acts, and does not extend to the non-resident's other income from unrelated agencies or sources.

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