INCOME TAX OFFICER Vs. RAZA TEXTILES LIMITED

JUDGEMENT

(1.) THE respondent, M/s. Raza Textiles Ltd., Jwalanagar, Rampur, was directed by the Income -tax Officer, Rampur, under Section 18(3B) road with Section 18(7) of the Indian Income -tax Act, 1922 (hereinafter referred to as 'the Act'), to pay Rs. 1,39,739 -5 -0 as tax on a sum of Rs. 2,00,000 which was remitted by the respondents as commission to M/s. Nathir Mal and Sons, Djakarta, Indonesia, during the assessment year 1952 -53. An appeal was filed by the respondent against the said order, but was dismissed by the Appellate Assistant Commissioner on the ground that it was not maintainable. This order was upheld by the Income -tax Appellate Tribunal. The respondent, thereafter, instituted a writ petition in this court, inter alia, on the ground that M/s. Nathir Mal and Sons was not a non -resident firm and, as such, the provisions of Section 18(3B) read with Section 18(7) were not applicable. This ground found favour with the learned single judge who decided the writ petition and without going into the merits of the other grounds raised in the writ petition, the order of the Income -tax Officer was quashed. On appeal, the judgment of the learned single judge was reversed by a Bench of this court on the ground that the finding recorded by the Income -tax Officer as to whether M/s. Nathir Mal and Sons was a non -resident firm or not, was a finding on a question of fact, of which the Income -tax Officer was the sole judge. The judgment of the Bench was, however, set aside by the Supreme Court (See : [1973]87ITR539(SC) ) on the ground that the question as to whether the said firm was a resident or a non -resident firm, even though a question of fact, was one concerning the jurisdiction of the Income -tax Officer and the High Court was entitled to give its own finding, the same being a jurisdictional fact. The special appeal was sent back to this court to be decided afresh.

(2.) LEARNED counsel for the appellant urged that on the material placed before the Income -tax Officer and before this court it is clear that the decision given by the Income -tax Officer was correct. In order to determine as to whether M/s. Nathir Mal and Sons was resident or non -resident, it would be necessary to consider the provisions of Section 4A(b) of the Act. It reads:

(3.) LEARNED counsel for the appellant placed reliance on certain decisions interpreting Section 4A(b) aforesaid. They are : Bhimji R, Naik v. Commissioner of Income -tax : [1946]14ITR334(Bom) , Subbayya Chettiar v. Commissioner of Income -tax : [1951]19ITR168(SC) and Commissioner of Income -tax v. Erin Estate : [1951]20ITR412(Mad) . In the first case referred to above it was held that the control and management mentioned in Section 4A(b) of the Act must be de facto control and management and not de jure control and management, and further that in the case of a firm the problem ought to be approached from the same angle as in the case of a company.