Sabyasachi Mukharji, J. - (1.) The assessee is a resident-company and the present reference arises out of the assessment in respect of the assessment year 1957-58, the relevant previous year being the period from 1st November, 1955, to 31st October, 1956. In 1955, the Indian Industries Fair was held in New Delhi, wherein M/s. Auger & Turner Group Ltd., a non-resident U.K. company, was allotted a space in the fair ground. 5,000 sq. ft. of the space allotted to the U.K. company was let out by them to the assessee-company, for a consideration of Rs. 50,000. This amount was paid by the assessee-company to the UK. company in instalments, Rs. 23,310 being the payment during the relevant previous year for the assessment year 1957-58. The Income-tax Officer treated the assessee-company as the agent in India of the aforesaid U.K. company under Section 43 of the Indian Income-tax Act, 1922, and assessed a net income of Rs. 18,648 in its hands as the income of the non-resident, after deducting an estimated expense of Rs. 4,662.
(2.) The Appellate Assistant Commissioner, on appeal, set aside the order of the Income-tax Officer. He held that the assessee was not an agent of the non-resident company because the rent which the assessee paid to the nonresident was not received by the latter "through" the assessee and there was no business connection between the assessee and the non-resident.
(3.) The revenue preferred an appeal before the Income-tax Appellate Tribunal. It was urged before the Tribunal that the word "through" used in Section 43, in the facts and circumstances of this case, also meant "from". The Tribunal was unable to accept this contention. It was further argued on behalf of the revenue that the assessee had business connection with the non-resident. It was urged that an agreement between the resident company and the non-resident was an agreement between the two traders in their trading capacities and, as such, the amount of rent was paid in 7 instalments covering a period of 15 months. The Tribunal was of the opinion that a casual business cannot be held to establish business connection in terms of the section. Letting out of a property, according to the Tribunal, cannot, in the facts and circumstances of the case, be construed as a business connection between the lessor and the lessee. In these circumstances, the Tribunal was of the opinion that the assessee was not liable to be assessed under the provisions of Section 43 of the Indian Income-tax Act, 1922.;