Agent liability under Income-tax Act cannot survive when non-resident income is held not taxable in India.

Where the non-residents' receipts were already held not taxable in India as fees for technical services under the applicable treaty, a finding treating the appellant as an agent for recovery of tax under section 163 of the Income-tax Act, 1961 could not survive independently. The Calcutta HC followed its earlier decision in the appellant's own case and held that the agency characterization could not stand once the underlying income was outside Indian tax net. The Tribunal's order was therefore set aside.

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Issues: Whether the appellant could be treated as an agent under section 163 of the Income-tax Act, 1961 when the Tribunal had held that the payments received by the non-residents were not taxable in India.

Analysis: The appellant was proceeded against as an agent only for recovery of tax from the payments made to the non-residents. The Tribunal had already found that the relevant receipts were not taxable in India as fees for technical services under Article 13(4) of the double taxation avoidance agreement. In those circumstances, the agency finding could not survive independently, and the dispute stood covered by the earlier decision of the Court in the appellant's own case.

Conclusion: The finding treating the appellant as an agent could not stand and was set aside.

Final Conclusion: The appeal succeeded and the Tribunal's order was set aside on the same reasoning as applied in the earlier decision.

Ratio Decidendi: Where the underlying income of the non-resident is held not taxable in India, a finding treating another person as agent for recovery of tax under section 163 of the Income-tax Act, 1961 cannot independently survive.

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