Sankar Prasad Mitra, C.J. - (1.) This reference under Section 256(1) of the I.T. Act, 1961, arises out of 56 applications regarding assessments of T.I. & M. Sales Ltd., hereinafter called the "Indian company", treating it as an agent of a number of non-resident companies. Here we are concerned with eight companies, six of them have been described as "Group A" companies, and two as "Group B" companies. The Indian company had no direct agreement with the Group "A" companies but had dealings with them by virtue of an agreement with T.I. Export Ltd., hereinafter referred to as the "Export Company".
(2.) The Group "B" companies are those with whom the Indian company had direct agreements. When the Tribunal heard the appeal, there were three Group B companies. We now have before us only two of them. The third company, viz., M/s. Geo Tucker Eyelet Co. Ltd., has been found by the Tribunal to be non-taxable in India and the Tribunal's decision is accepted by the Department. The Tribunal has also dealt with the consequences of the agreement with the Export company as well. But that does not form the subject-matter of the present reference.
(3.) Let us at the outset set out the relevant provisions of the statute. Section 3 of the Indian I.T. Act, 1922, is the charging section. Under Section 4, incomes which are received or which accrue or arise or are deemed to be received, to accrue or to arise in taxable territories during a year are taxable. In the instant case, it is common ground that, so far as the assessee is concerned, no income was received nor did any income accrue in India. The question is whether any income should be deemed to have been received or deemed to accrue. Section 4(1)(c) also provides that if the person to be assessed is a non-resident in the taxable territories during the assessment year in question, the income which arises or accrues or is deemed to accrue or arise to him in the taxable territories would also be taxed here.;