Ranganath Misra, J. - (1.) These are appeals by the Revenue by special leave and are directed against the decision of the Calcutta High Court dated 15-9-1972 rendered upon references made under S. 256(l) of the Income-tax Act of 1961. The Tribunal referred the following six questions for opinion of the Court:-(1) Whether on the facts and in the circumstances of the case and on a proper construction of the agreement between the Indian Company and the Export Company, the Tribunal was right in holding that the six non-resident companies in Group A had a business connection with the Indian Company and therefore that the Indian Company was correctly treated as an agent of the said non-resident companies under S. 163 of the Income-tax Act, 1961 (2) If the answer to question No. 1 is in the affirmative, then, whether on the facts and in the circumstances of the case, the Tribunal was justified in holding that any profit could be deemed to accrue or arise in India to the six non-residents in the United Kingdom in respect of the goods sold by them to customers in India (3) Whether, on the facts and in the circumstances of the case and on a proper construction of the agreement dated 22-3-1955 between the Indian Company and Crane Packing Ltd. (company in Group B), the Tribunal was right in holding that the non-resident company had business connection with the Indian Company and, therefore, the Indian Company was correctly treated as an agent of the said non-resident company under S. 163 of the Income-tax Act, 1961 (4) If the answer to question No. 3 is in the affirmative, then, whether on the facts and in the circumstances of the case, the Tribunal was justified in holding that any profit could be deemed to accrue or arise in India to the aforesaid non-resident company in respect of the goods sold by it to customers in India (5) Whether, on the facts and in the circumstances of the case and on proper construction of the agreement dated 1-6-1954 between the Indian Company and Bundy Tubing Co. (Australia) Pvt. Ltd. (non-resident company in Group B), the Tribunal was right in holding that the non-resident company had business connection with the Indian Company and, therefore, the Indian Company was correctly treated as an agent of the said non-resident company under S. 163 of the Income-tax Act, 1961 (6) If the answer to question No. 5 is in the affirmative, then, whether on the facts and in the circumstances of the case, the Tribunal was justified in holding that any profits could be deemed to accrue or arise in India to the aforesaid non-resident company in respect of the goods sold to the customers in India
(2.) The short facts relevant for appreciating the background in which these questions arose are these - T. I. and M. Sales Ltd., assessee-respondent, was assessed to income-tax as a representative assessee of ten non-resident companies. The Tribunal grouped the ten non-resident companies under three heads - six in Group A, three in Group B and one in Group C. In regard to the companies under Group A, the assessee had no direct agreement but had dealings by virtue of its agreement with the exporting company. So far as the three companies under Group B are concerned, the assessee had no business connection with them and so far as the only company under Group C is concerned, the assessee's stand was that it had an agreement dated 16-12-1948 with the export company, but no liability accrued under the law in respect of the transactions. The Income-tax Officer referred specifically to the agreement of 1948 and refuted the stand of the assessee by saying:- "The agreement of 6-12-1948 referred to above which continued during the relevant years is clear authority that the non-resident had employed the Indian Company for selling its goods in India on commission. The agreement certainly brings into existence a business connection between the two. The Indian Company is in receipt of commission calculated with reference to the aforesaid values of goods sent not only by the non-residents, but also by some manufacturers of the T.I. Group in the United Kingdom with which the Indian Company had no direct contract, but which supply goods to India as per orders placed by the Indian Company through the non-residents .........................." The Income-tax Officer also found that the Group A companies belonging to the T.I. Group were connected with the Indian Company through the export company.
(3.) Appeals challenging the assessments were taken to the Appellate Assistant Commissioner. Before him, the assessee tried to establish the actual course of dealing between the Indian Company and the ten non-residents and contended that no liability under the Act accrued. The Appellate Authority dismissed the contentions of the assessee by holding that "the assessee has produced no proof of its assertions and, on the contrary, has blocked the enquiry by me thereon". Along with the grounds of the appeal filed before the Tribunal, an affidavit dated 27-12-1965 of Carol Stuart Cameron was filed. Cameron stated in that affidavit that he was the Secretary of the assessee and was in superintendence of the proceedings relating to the assessments of the assessee as representative-assessee of the ten non- residents. In that affidavit, he denied the fact that before the Appellate Assistant Commissioner any obstruction was offered to an attempted probe by the said Appellate Authority. On the other hand, the affidavit stated that several documents were made available before the Appellate Authority and were available and actually placed before him and in case the Appellate Authority wanted any information or further documents to be produced, Cameron was prepared to do so. We shall again refer to the affidavit in its appropriate place later. Before the Tribunal, some argument was raised with reference to the affidavit but ultimately the Tribunal upheld the assessments but referred the questions indicated above for the opinion of the High Court. The High Court by the impugned judgment reported in (1985) 151 ITR 286 referred to the provisions of Ss. 4, 42 and 43 of the Income-tax Act of 1922 corresponding to Ss. 5, 9 and 163 respectively of the Income-tax Act of 1961. In the light of the affidavit of Cameron, it took note of the fact that no attempt had been made by the Revenue to traverse the facts stated therein, referred to and relied upon the decision of this Court in the case of Commr. of Income-D .A tax, Punjab v. Aggarwal and Co., 56 ITR 20 and came to hold that there was no element of business connection and, therefore, the assessee was not liable. Questions 1, 3 and 5 were thus answered in the negative and against the Revenue and, therefore, Questions 2, 4 and 6 which were required to be answered only if the answer to the other three questions was in the affirmative did not arise.;