TaxTMI 
TaxTMI 
1981 (8) TMI 58
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.... rubber products. Whilst it was in the process of formation but not actually incorporated, the promoter of the assessee-company, namely, Indo Orient Agency Ltd., entered into an agreement dated 9th October, 1959, called " Initial Service Agreement " as agents for and on behalf of the assessee-company yet to be formed with Messrs. Dayton Rubber Company, Dayton, Ohio, U.S.A., hereinafter, for the sake of brevity, referred to as 'Dayton'. The purpose of the agreement was to obtain technical service and assistance of Dayton to enable the assessee-company to erect plant structure, acquire suitable equipment and machinery, install and erect such equipment and machinery, train its key personnel, procure required materials and supplies and initiate....
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.... as an agent of Dayton for the assessment year 1962-63. In the other years no similar orders were passed, although the AAC in his order mentions that the ITO had passed orders for declaring the assessee-company as agents of Dayton. On 30th March, 1965, the ITO issued notice to the assessee-company inviting its attention to the fact that it had remitted an aggregate amount of Rs. 71,28,618 to Dayton, a non-resident, without deducting the necessary amount of tax therefrom, and called upon it to show cause why necessary order under s. 201 of the I.T. Act, 1961, should not be passed against it. Certain contentions were raised by the assessee-company. They were considered and rejected by the ITO, who held that it was the primary liability of ....
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.... with the statutory duty to deduct income-tax under s. 195 before making the payment to the non-resident. The order passed by the ITO under s. 163 treating the assessee as an agent of Dayton was referred to and it was submitted that the same had become final or in the alternative that the appeal filed by the assessee-company had been dismissed as time-barred. It was thus urged that the assessee company was the agent of Dayton throughout the period 1st April, 1959, to 31st March, 1963. Accordingly, the assessee-company was liable to pay income-tax on the amounts paid to Dayton throughout this period. If that be so, it was submitted by counsel, then the assessee was freed from the obligation under s. 195(1) of the I.T. Act, 1961, to deduct th....
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....ar 1962-63 also prevailed in the remaining years. In this background, the Tribunal opined that since the assessee-company was liable to pay tax as agent of Dayton, it could not be saddled with the liability to deduct the amount of tax out of the payments made to Dayton under s. 195(1) of the I.T. Act, 1961, or under s. 18(2B) of the Indian I.T. Act, 1922. It is this view of the Tribunal which has been assailed by Mr. Joshi. Certain other questions were sought to be referred by the revenue to the High Court, but these were disallowed by the Tribunal. The reasons for referring only one question and disallowing questions Nos. 1 and 2 originally sought by the Commissioner have been indicated in para. 11 of the statement of the case. We....