- (1.) This appeal arises out of six references made by the Calcutta Bench of the Income-tax Appellate Tribunal under Sec. 66(1) Income-tax Act, two of them relating to the Income tax assessment years 1943-44 and 1943-45 and the remaining four relating to Excess Profits Tax for the chargeable accounting periods on 31st December of each of the years 1940, 1941, 1942 and 1943 respectively.
(2.) The relevant facts appearing in the statements of the case are as follows: Messrs. Port Said Salt Association Ltd., (hereinafter referred to as "the Association") is a company incorporated in the United Kingdom and has its registered office there. The Association, however, carries on business in Egypt and its head office is situate in Alexandria where the annual general meetings of its share-holders are held. Not being resident in the United Kingdom the Association pays no British Income-tax, an its profits. For the purposes of assessment under the Indian Income-tax Act, the Association has been considered to be a non-resident. The Association manufactures salt in Egypt where it has certain concessions and the salt as manufactured is sent for sale in any country where there is a suitable market. Part of the salt so manufactured by the Association is consigned to Messrs. Turner Morrison and Co. Ltd., for sale in India. All shipping operations, i.e. chartering of steamer, loading, insurance etc. are effected in Egypt by the Association who sends the documents to Messrs. Turner Morrison and Co., Ltd. Messrs. Turner Morrison and Company Ltd. effect sales in India through brokers at the best price obtainable at or above the prices approved by the Association. Turner Morrison and Co. Ltd. are paid commission at the rate of 2-1/2 per cent generally on all the sales except in some cases where 1-1/4 per cent, is paid. All handing of the cargoes when they arrive at Calcutta and the necessary disbursements in connection therewith are carried out and made by Turner Morrison and Co. Ltd. The sale proceeds are collected by Turner Morrison and Co. Ltd., and credited to the account kept in their own name with the Hongkong and Shanghai Banking Corporation. After deducting the expenses including their commission, the balance is remitted by Turner Morrison and Co., Ltd. to the Association in Egypt. On these facts the Income-tax Officer treated Turner Morrison and Co. Ltd., as the agents of the Association under S. 43, Income-tax Act, and assessed them to income-tax for the two assessment years mentioned above under S. 4(1) (a) or, alternatively, under the first part of S. 4(1) (c). They were also assessed to Excess Profits Tax for the four chargeable accounting periods hereinbefore mentioned.
(3.) Turner Morrison and Co. Ltd. (hereinafter referred to as the Agents) preferred appeals against the aforesaid assessment orders to the Appellate Assistant commissioner who, however, dismissed the appeals. The Agents took a further appeal to the Income-tax Appellate Tribunal. The submission of the Agents before the Tribunal was that the assessment under S. 4(1) (a) was bad and that the assessment should have been made under S. 42 of the Act. The Tribunal, on a consideration of the facts, came to the conclusion that the assessment was properly made under S. 4(1) (a) and incidentally the Tribunal also came to the conclusion that the alternative contention of the Income-tax authorities that then assessment should be made under the first part of S. 4(1) (c) was also well-founded and that S. 42 had no application to the case. The result was that the Tribunal confirmed the findings of the Income-tax Officer and the Appellate Assistant Commissioner and dismissed the appeals.;