Tax Deduction at Source: payer must deduct income-tax and super-tax where payment is to a non-resident despite a nominated agent.

Payment made under an arrangement entitling a non-resident to receive consideration triggers the payer's statutory duty to deduct income-tax and super-tax at source; nomination of a local agent to receive the funds does not alter the payer's responsibility. The legal operation of the super-tax provision mirrors the income-tax withholding rule. Any tax liability of the nominated agent does not relieve the payer from the withholding obligation. Consequence: failure to deduct renders the payer liable for the income-tax and super-tax that should have been withheld.

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Issues: Whether the assessee was legally required to deduct income-tax and super-tax under section 18(3A) and section 18(3C) of the Income-tax Act when making payment of Rs. 1,16,000 in respect of a consignment to a non-resident, notwithstanding that payment was made to a nominated agent in the taxable territories.

Analysis: The payment arose from an arrangement under which the non-resident was entitled to receive Rs. 1,16,000; the nominated agent in the taxable territories was merely the mode of receiving payment. The statutory obligation under section 18(3A) is triggered by a person being responsible for paying any sum chargeable under the Act to a person not resident in the taxable territories; a nomination of an agent to receive payment does not alter the payer's responsibility to the non-resident. The position under section 18(3C) for super-tax is identical in operation to section 18(3A) for income-tax. The liability of the agent to tax, if any, does not relieve the payer of its statutory duty to deduct tax at source when the payer is responsible for payment to a non-resident.

Conclusion: The assessee was legally required to deduct income-tax under section 18(3A) and super-tax under section 18(3C) when making the payment; failing to do so renders the assessee liable for the tax and super-tax.

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