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Issues: (i) Whether the company was an agent of the non-resident shareholders within the meaning of the Income Tax Act so as to be liable to assessment in respect of their dividends; (ii) whether, if so, the company had rightly been assessed to super-tax on their account.
Issue (i): Whether the company was an agent of the non-resident shareholders within the meaning of the Income Tax Act so as to be liable to assessment in respect of their dividends.
Analysis: The majority treated the relevant provisions as requiring the company, if it was to be treated as agent under the statutory scheme, to be within the terms of the section dealing with receipt of income on behalf of the non-resident persons. On the facts, the company was not held to have received the income within that meaning, and the statutory conditions for treating it as agent were not satisfied.
Conclusion: The issue was answered in the negative. The company was not treated as the agent of the non-resident shareholders for assessment purposes.
Issue (ii): Whether, if so, the company had rightly been assessed to super-tax on their account.
Analysis: Once the answer to agency was in the negative, the basis for assessment on the company in respect of the shareholders' super-tax did not survive for decision.
Conclusion: The issue did not arise for determination.
Final Conclusion: The reference was answered in favour of the assessee on the principal question of agency, with the ancillary assessment question left unanswered as a consequence.
Ratio Decidendi: Under the statutory scheme applied by the majority, a company could not be treated as the agent of non-resident shareholders for assessment unless the statutory conditions governing receipt of income on their behalf were satisfied.
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