C.K.Banerji, J. - (1.) These references relate to the assessment of Dunlop Rubber Co. (India) Ltd., Calcutta, for the assessment years 1958-59 to 1964-65, and have been initiated under Section 256(2) of the I.T. Act, 1961. The relevant accounting years are the calendar years 1957 to 1963, respectively.
(2.) The facts found and/or admitted are shortly as under : The assessee had made certain remittances to its parent company, viz., Dunlop Rubber Co. Ltd., U.K., a non-resident company. The ITO was of the view that the said remittances were income chargeable to tax. As the assessee had not deducted tax from the amounts remitted as required under Section 18(3B) of the Indian I.T. Act, 1922, which corresponds to Section 195(1) of the I.T. Act, 1961, the ITO by a letter dated 1st March, 1965, called upon the assessee under Section 201(1) of the I.T. 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 ITO before the AAC of Income-tax, and contended that the assessee had no obligation to deduct taxes from the remittances which, though having an element of income or profit, did not constitute chargeable income and that the assessee, being an agent within the meaning of Section 163(1) of the Act, was not liable to deduct such tax or to pay the same. The AAC, on a 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.;