TaxTMI 
TaxTMI 
1988 (2) TMI 87
X X X X Extracts X X X X
X X X X Extracts X X X X
....gaged in the business of manufacturing fertilizers and other similar activities. It appears that in the year 1981 the Indian Company thought of starting its Nylon-6 Project. For the start up service and for technical supervision and consultation for the said project the Indian Company stood in need of the services of certain foreign technicians. The Indian Company, therefore, entered into an agreement with a Swiss Company known as 'Inventa' (henceforth referred to as the " Foreign Company ") which agreed to lend the services of five of its technical employees to the Indian Company. The terms and conditions as agreed to between the Indian Company and the Foreign Company are not placed before us but from the service contract entered into by the Foreign Company with its employees, whose services were to be deputed to the Indian Company, stated that the deputation shall be in force for a maximum period of six months and that during the period of the stay in India of the employees of the Foreign Company the retention remuneration would be payable to them outside India by the Foreign Company. For their stay in India with the Indian Company, the deputationists were told that they would re....
X X X X Extracts X X X X
X X X X Extracts X X X X
....y and allowances' but in the note given below the said statement they again reiterated that the living allowance was not taxable in view of the said decision of the Gujarat High Court. In another statement accompanying the income-tax returns, they further reiterated the said position and in note No. 3, given in the said statement, it was mentioned that the foreign technicians were entitled for exemption u/s 10(6)(vii)(a) of the Act for which necessary application had already been made by the Indian Company to the Government of India vide Letter No. F & A/PM/LS/NYC/904/81 dated June 6, 1981. 6. It appears that the ITO had taken up the assessment of the foreign technicians in January or February 1985. Such proceedings further appear to have been attended to by the Indian Company as is evident from its letters dated 19th March, 1985 and 25th March, 1985. Now what happened was like this that taking clue from the mention of the fact in the statements attached to the returns that the Indian Company had applied for exemption u/s 10(6)(vii)(a) of the Act in respect of the assessees, the ITO issued a notice u/s 163(2) of the Act to the Indian Company intimating that he proposed to treat ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....r been agitated on behalf of the Indian Company that in case there was any tax liability against the nonresident foreign assessees, the same was to be reimbursed by the assessee-company and, therefore, the Department was not to remain at a loss. It was on the above three grounds that the proposed action of the ITO u/s 163 of the Act was opposed by the Indian Company. The ITO, however, did not feel satisfied with the main contention of the Indian Company that there was no necessity of appointing it as agent of the five foreign technicians who had rendered service for it and had earned income from the Indian Company. He accordingly passed his order u/s 163(3) of the Act on 16th March, 1985. 7. In appeal to the CIT (A), Baroda, the Indian Company again appears to have reiterated the same points as had been agitated by it in its written reply to the notice issued u/s 163(2) of the Act. The learned CIT (A), however, did not agree with its submission that the Indian Company was not required to be appointed as statutory agent of the foreign technicians. He, therefore, dismissed the appeals giving rise to the present appeals before us. 8. Before us, Mr. B. C. Shah, Chartered Accounta....
X X X X Extracts X X X X
X X X X Extracts X X X X
....served by the learned CIT (A) it was purely a clerical mistake And do not affect the merit of the order itself. 12. Mr. Shah further urged that the ITO had erred in passing a common order in respect of all the foreign technicians and that he should have passed separate orders in respect of each of the foreign technicians for each assessment year. In this behalf Mr. Shah relied upon the decision of the Supreme Court in the case of H. L. Sud, ITO v. Tata Engg. & Locomotive Co. Ltd. [1969] 71 ITR 457. 13. We find no force in this argument also. The requirement of section 163(2) is that no order appointing any Indian person as an agent for a non-resident assessee should be passed without giving him an opportunity of being heard. This requirement was satisfied as soon as the ITO had issued notice u/s 163(2) of the Act to the appellant. Now, since the facts relating to the case of the foreign technicians were quite similar and such foreign technicians had, admittedly, rendered services to the appellant, the learned ITO could have disposed of the matter of appointment of the appellant as agent for all those foreign technicians for the assessment year 1982-83 by a common order. The r....
X X X X Extracts X X X X
X X X X Extracts X X X X
....and was, therefore, taxable under the provisions of the Act. Mr. P.D. Khandelwal, the learned D.R., further submitted that living allowance very well fell within the purview of the definition of 'salary' for the purposes of section 10(14) as it stood amended on the relevant date and for that the foreign technicians could be assessed through their agents, i.e., the appellant. He further submitted that the ITO had invoked his jurisdiction u/s 163 and for the purpose of disposal of the present appeals it is in fact the scope of section 163(1)(c) which is required to be taken into consideration. He summed up that the decision of the Supreme Court in the case of Raghava Reddi has rightly been relied upon by the ITO and that the Calcutta decision as cited by the learned representative for the appellant was not at all applicable to the facts and circumstances of the cases under consideration. 16. In the present cases, we are required to consider the scope of section 163. It needs no stress that a person may be appointed the agent of non-resident u/s 163 either before the commencement of the relevant assessment year or during the course of such proceedings against the assessee. The nece....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ns, and (2) the value of any perquisite or profit in lieu of salary taxable under clauses (2) and (3) of sec. 17 of the Act. Then, the term "total income" has been defined in section 2(45) as meaning the total amount of income referred to in section 5 and computed in the manner laid down in the Act. Sec. 5 deals with the scope of 'total income' and, inter alia, says that subject to the provisions of the Act the total income of any previous year of a person, who is a resident, includes all income from whatever source derived which (a) is received or is deemed to be received in India in such year by or on behalf of such person ; or (b) accrues or arises or is deemed to accrue or arise to him in India during such year ; or (c) accrues or arises to him outside India during such year. This necessarily takes us to section 9(1), which is relevant for our purpose. 18. Section 9(1)(ii), with its Explanation reads as under :-- " 9. (1) The following incomes shall be deemed to accrue or arise in India--- (i) (ii) income which falls under the head " Salaries " if it is earned in India : (Explanation : For the removal of doubts, it is hereby declared that income of the nature ref....