- (1.) The assessment year involved in this appeal against the judgment and order of a Division Bench of the High Court at Patna is 1960-61. The question which the High Court answered in the affirmative and against the revenue reads thus: "Whether on the facts and in the circumstances of the case, the tribunal was right in holding that there was no income to the nonresident which could fall within the categories enumerated in Section 9 (1) (i) of the Act and as such the question of bringing any such income to tax in the hands of the agent would not arise -
(2.) Briefly stated, the facts are these. The assessee is an English company. It entered into an agreement with an Indian company, Indian Copper corporation Limited. Thereunder the assessee was appointed Technical advisor to the Indian company in regard to its exploration, mining and mineral-dressing operations. It was required to undertake through its staff the duties normally undertaken by Technical Advisors to a mining operation with regard to technical advice and to provide once in every year a member of its staff to visit the property of the Indian company. The assessee was also required to send out to the Indian company's property, at its request, a member of its technical staff for a visit additional to the requisite annual visit. The assessee was entitled to recover therefore, the retaining fee of 7000 per annum, the same being payable in sterling in London.
(3.) For Assessment Year 1960-61 the Income Tax Officer held that the indian company was an agent of the assessee within the meaning of Section 163 of the Income Tax Act and that the annual remuneration of 7000 was income accruing to the assessee which was taxable in the hands of the Indian company. The Appellate Assistant Commissioner concluded that even if the indian company was held to be an agent within the meaning of Section 163, no business connection within the meaning of Section 9 (1) had been established with the Indian company so as to make income accruing to the non-resident assessee liable to tax through its agent. This finding was approved by the Tribunal. The High Court, on reference, held that the assessee received in London 7000 for technical advice given to the Indian company from London. The income of such a non-resident assessee, in the facts and circumstances of the present case, could not be correlated with activity within the territory of India so as to make it income under Section 9 (1) of the Act.;