J. M. Baxi & Co., as agents of Chartering
Singapore Pte Ltd. v. DDIT
ITA No. 2965/M/2006 to ITA No. 2968/M/2006
A.Ys. : 1998-99 to 2002-2003. Dated : 5-3-2009
S. 149(3) of the Income-tax Act, 1961 —
Whether the time limit provided u/s.149(3) applies to the asses-see who has
voluntarily filed the return of his principal non-resident, and in whose case
no order u/s.163 has been passed treating him as the agent of the non-resident
— Held, No.
Facts :
M/s. J. M. Baxi & Co. (‘the assessee’) filed
returns for A.Ys. 1998-99 to 2002-03 as agent of non-resident Singapore
company, M/s. Thaoresen Chartering Singapore Pte Ltd. (TCSPL). In the returns
filed the assessee and its principal claimed that under Article 8 of Double
Tax Avoidance Treaty, the freight collected in India on account of various
vessels owned/ chartered by TCSPL was taxable at a lower rate. The returns
filed were accepted u/s.143(1) of the Act. Subsequently, the AO issued notices
u/s.148 dated 6-1-2005 to the assessee as agent of non-resident.
Since the notices issued u/s.148 in the first
three assessment years i.e., 1998-99, 1999-2000 and 20002001 were
issued after the expiry of period of two years from the end of the relevant
assessment year the same were claimed to be out of time u/s.149(3) on the
ground that the assessee was an agent of a non-resident. On the other hand,
the Revenue contended that the provisions of S. 149(3) do not apply to a
person who is ‘agent’ under general law and that since the assessee has never
been ‘treated as an agent’ u/s.163, the notices issued are not barred by the
limitation prescribed u/s.149(3).
Since the Regular Bench found conflict of
decisions between various authorities, the matter was referred to the Special
Bench.
Held :
S. 160 to S. 166 are machinery and enabling
provisions and give the Department the option to either assess the
non-resident or his agent. A non-resident or his agent cannot claim that he be
assessed under a particular clause of S. 163 and not u/s.160(1)(i) read with
S. 161.
Under provisions of S. 160 to S. 166, there are
agents of two types : (1) agents who admit their liability as agents of
non-resident. Such liability may be expressly admitted or it may be implied
from their act and conduct. Having accepted themselves to be ‘agent’ of the
non-resident, the question of giving opportunity of being heard to such agents
or passing order, treating them as agent of non-resident, would not arise. (2)
There can be agents u/s.160(1)(i) or u/s.163(1), who deny their liability to
be agents of the non-resident assessee. Because of their stand, it becomes
necessary for the AO to allow them an opportunity of being heard and then
adjudicate the matter relating to their liability to be agent in terms of S.
163(2). When an order u/s.163(2) is passed holding such persons to be agent of
the non-resident, such person falls in the category of persons who are treated
as agents u/s.163. Whether a particular person would fall under first category
or second category, would depend upon facts and circumstances of the case.
S. 149(3) applies only in a case where a person
is ‘treated as an agent’ of a non-resident u/s.163 i.e., persons
disputing their liability as agent. It does not apply to persons who have
voluntarily treated themselves as agent of the non-resident.
The SB upon going through the various clauses of
the agreement entered into by the assessee with its principal and upon
consideration of other facts viz. that the assessee had not disputed
its liability to be assessed as an agent of the non-resident; it had signed
income-tax returns and had filed them as agent for and on behalf of the
non-resident, several documents were furnished with the income-tax authorities
including an undertaking that taxes due from the non-resident would be paid by
the asses-see, came to a conclusion that the assessee had treated himself as
the ‘agent’ and that it was not necessary for the authorities in this case to
provide any opportunity of being heard to the assessee as regards its
liability to be treated as an agent under the Act, nor was there any necessity
to pass any order in terms of S. 163(2). The time limit prescribed in S.
149(3) was held to be not applicable. The question referred to the SB was
answered in favour of the Revenue and against the assessee.
