- (1.) This reference relates to the assessment of Dunlop Rubber Co. (India) Ltd., Calcutta, for the Assessment Years 1958-59 to 1964-65 and has been initiated u/s 256(2) of the Income Tax Act 1961. The relevant accounting years are the calendar years 1957 to 1963 respectively.
(2.) The assessee had made certain remittances to its parent Company, viz. Dunlop Rubber Co. Ltd., U.K., a non-resident Company. The Income Tax Officer was of the view that the said remittances were incomes chargeable to tax. As the assessee had not deducted tax from the amounts remitted as required u/s 18(3B) of the Indian Income Tax Act, 1922 which corresponds to s. 155(1) of the Income Tax Act 1961, the Income Tax Officer by a letter dt. 5th March 1965 called upon the assessee u/s 201(1) of the Income Tax Act, 1961, to pay within a week from the receipt of the said letter a sum of Rs. 87,59,815/- being the amount of tax which should have been deducted and paid by the assessee.
(3.) The assessee appealed against the said order of the Income Tax Officer before the Appellate Assistant Commissioner of Income Tax and contended that the assessee had no oligation to deduct taxes from the remittances which though having an element of income or profits did not constitute chargeable income and that the assessee being an agent within the meaning of s. 163(1) of the Act was not liable to deduct such tax or to pay the same. The Appellate Assistant Commissioner on consideration of the agreement between the assessee and the parent Company came to the conclusion that the payments were in the nature of royalty and rejected the contentions of the assessee.;