Chakravartti, C.J. - (1.) The principal point involved in this appeal has been called by the learned trial Judge a point of first impression. It is undoubtedly a point which has never arisen before and that was perhaps because no one ever thought of raising a point of this character.
(2.) The facts are as follows. The respondent, Anglo-India Jute Mills Co., Limited, is a company incorporated under the Indian Companies Act and carries on business in India. In 1947, the company purchased the entire share capital in Landale & Clarice Limited and the second largest lot was purchased from Clive Investment Trust Co., Ltd., a Sterling Company registered in the United Kingdom, The transaction concerned 1,900 Preference Shares, purchased at the rate of Rs. 135 per share and 2,450 Ordinary Shares, purchased at the rate of Rs. 332-8-0 per share. The total price paid by the respondent company to its vendors for that lot of shares was Rs. 10,71,125. Out of that sum, the respondent company retained in its hands an amount of Rs. 1,48,812-8-0. It is said that parties to the transaction thought that the profit made by the vendovs out of this deal might attract the Capital Gains Tax and since it was not unlikely that the respondent company would be treated as an agent of the vendors, it was considered expedient to retain an amount which would be sufficient to cover the tax liability. Apparently, till 1954, the amount continued to lie in the hands of the respondent company, no one making any demand for its payment or any payment out of it.
(3.) In the meantime, on 9-3-1953, the Income-tax Officer, Companies District II, Calcutta, had completed the assessment of the Clive Investment Trust Company Limited for the assessment year 1948-49. That assessment had been made on the basis that the Clive Investment Trust Company Limited was resident and ordinarily resident in India and the total amount of tax payable under it had been determined at Rs. 3,72,372. As the asiessee company had gone into liquidation and apparently had 110 assets in India directly held by it, the Department was thrown on indirect modes of recovery. It must have known that the respondent company had had dealings with the Clive Investment Trust Company Limited and obviously thought that there might be some money owing from the respondent company to the Clive Investment Trust Company Limited. Accordingly, on 10-3-1954, the Income-tax Officer, Companies District II, Calcutta, issued a notice to the respondent company under Section 46 (5-A), Income-tax Act, and by that notice required the respondent company to pay him forthwith any amount due from it or held by it for or on account of the Clive Investment Trust Company Limited.;