Agent of non-resident: Section 163: A. Y. 2003- 04: Where a person in respect of whom agent is sought to be made a representative assessee, does not attain status of non-resident during relevant accounting period, provisions of section 163 cannot be invoked in such a case:

One F was an employee with the petitioner. In respect of the A. Y. 2003-04, which is relevant in this case, the said F had filed the return of income and was assessed in the status of “Resident & Ordinarily Resident”. On 16/03/2010, the ACIT issued a notice u/s. 163(1)(c) of the Income-tax Act, 1961 proposing to treat the petitioner as the representative agent of F for the A. Y. 2003-04. In reply, the petitioner stated that F was not a non-resident in the A. Y. 2003-04 and accordingly that the petitioner could not be treated as a representative agent of F u/s. 163(1)(c) of the Act and, therefore, the petitioner requested the ACIT to drop the proceedings. The ACIT did not agree with the submissions of the petitioner and passed an order dated 31.01.2011 treating the petitioner as the agent of F u/s. 163 of the Act for the A. Y. 2003-04. The Commissioner rejected the revision application made by the petitioner u/s. 264 of the Act.

The Delhi High Court allowed the writ petition filed by the petitioner and held as under:

“i) S ection 160(1)(i) of the said Act makes it clear that the expression “representative assessee” has to seen “in respect of the income of a non-resident”. It is obvious that when we construe the expression “income of a non-resident” it has reference to income in a particular previous year/accounting year. The income of that year must be of a non-resident. If that be so, the agent of the non-resident or the deemed agent u/s. 163 of the said Act would be the representative assessee. The petitioner is not an agent of F.

ii) S ection 163(1)(c) talks about the person from or through whom the non-resident “is in receipt of any income, whether directly or indirectly”. The income bears reference to the accounting year for which the statutory agent is to be appointed. In the present case, the year in question is the year ended on 31-03-2003. During that year F was not a nonresident. Therefore, the petitioner cannot even be regarded as a deemed agent u/s. 163(1)(c) of the Act. Consequently, the petitioner cannot be considered to be the representative assessee of F in respect of the A. Y. 2003-04.

iii) T he writ petition is allowed and the impugned order is set aside.”