M/s. HINDALCO INDUSTRIES LTD., MUMBAI V. DDIT (I.T)1(1), MUMBAI

ITA 3667/MUM/2005

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 2116 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 11 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-05-2010
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: L
• Next Hearing Date: 23-10-2009
• Assessment Year: 2001-2002
• Appeal Filed On: 16-05-2005
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: NARENDER SINGH
• Assessee Lawyers: S M BANDI; S E DASTUR PANKAJ TOPRANI
• Keywords: Capital asset; Recovery proceedings
• Section: 143(3); 142(1); 5(2); 234B; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH L BEFORE SHRI N.V. VASUDEVAN (JM) & B. RAMAKOTAIAH (A M) I.T.A.NO. 3667/MUM/2005 (ASSESSMENT YEAR : 2001-0 2) I.T.A.NO. 6923/MUM/2006 (ASSESSMENT YEAR : 2001-0 2) I.T.A.NO. 4685/MUM/2005 (ASSESSMENT YEAR : 2001-0 2) HINDALCO INDUSTRIES LIMITED CENTURY BHAWAN DR. ANNIE BESANT ROAD WORLI, MUMBAI-400 025. PAN : AAACH1201R VS. DCIT (IT) 1(1) SCINDIA HOUSE 1 ST FLOOR, ROOM NO. 117 N.M. ROAD BALLARD PIER MUMBAI-400 038. APPELLANT RESPONDENT I.T.A.NO. 4968/MUM/2005 (ASSESSMENT YEAR : 2001-0 2) DCIT (IT) 1(1) SCINDIA HOUSE 1 ST FLOOR, ROOM NO. 117 N.M. ROAD BALLARD PIER MUMBAI-400 038. VS. HINDALCO INDUSTRIES LIMITED AS AGENT OF M/S. ALCAN INC., CENTURY BHAWAN 3 RD FLOOR DR. ANNIE BESANT ROAD WORLI, MUMBAI-400 025. PAN : AAACH1201R APPELLANT RESPONDENT ASSESSEE BY : S/SHRI S.E. DASTUR, PANKAJ TOPRANI & S.M. BANDI DEPARTMENT BY : SHRI NARENDER SINGH ORDER PER N.V. VASUDEVAN, JM :- ITA NO. 4685/MUM/2005 AND ITA NO. 4968/MUM/2005 : ITA NO. 4685/MUM/2005 IS AN APPEAL BY THE HINDALCO INDUSTRIES LIMITED, AS AGENT AND REPRESENTATIVE ASSESSEE OF M/ S. ALCAN INC.(CANADA) {HEREIN AFTER REFERRED TO AS HINDALCO}; WHILE ITA N O. 4968/MUM/2005 IS AN APPEAL BY THE REVENUE. BOTH THESE APPEALS ARE D IRECTED AGAINST THE HINDALCO INDUSTRIES LIMITED 2 ORDER DATED 31.3.2005 OF LEARNED CIT(A)-XXXI, MUMBA I RELATING TO A.Y. 2001-02 ARISING OUT OF PROCEEDINGS U/S. 147 OF THE ACT READ WITH SECTION 163 OF THE ACT. 2. ITA NO. 3667/MUM/2005 IS AN APPEAL BY HINDALCO A GAINST THE ORDER DATED 21.2.2005 OF LEARNED CIT(A)-XXXIII, MUM BAI RELATING TO A.Y. 2001-02; WHEREBY LEARNED CIT(A) CONFIRMED THE ORDER OF THE ASSESSING OFFICER PASSED U/S. 163 OF THE ACT, TREATING HINDAL CO AS REPRESENTATIVE ASSESSEE OF M/S. ALCAN INC (CANADA). 3. FACTS AND CIRCUMSTANCES UNDER WHICH, THESE APPEA LS ARISE FOR CONSIDERATION ARE AS FOLLOWS :- ALCAM ALUMINIUM LIMITED (ALCAN) IS A COMPANY INCORP ORATED UNDER THE LAWS OF CANADA. AFTER TAKING NECESSARY AP PROVAL FROM THE RESERVE BANK OF INDIA (RBI) FROM TIME TO TIME, ALCA N HAD ACQUIRED 3,88,44,324 SHARES IN INDIAN ALUMINIUM COMPANY LIMI TED (INDAL) OVER A PERIOD OF TIME. ALCAN HAS AGREED TO SELL ITS ENTIRE HOLDINGS IN INDAL AT AN AGREED PRICE OF RS. 190/- PER SHARE TO HINDALCO. AL CAN BEING A NON- RESIDENT COMPANY AND HOLDING SHARES IN A COMPANY IN CORPORATED IN INDIA IS GOVERNED BY THE PROVISIONS OF SECTION 45 READ WI TH SECTION 48 OF THE INCOME TAX ACT, 1961 (ITA). THEREFORE IT IS LIABLE TO PAY TAX IN RESPECT OF GAINS MADE FROM SALE OF SHARES IN INDAL. UNDER THE PROVISIONS OF SECTION 195 OF THE ACT, ANY PERSON RESPONSIBLE FOR PAYING T O A NON-RESIDENT ANY SUM CHARGEABLE TO TAX UNDER THE ACT HAS AN OBLIGATI ON TO DEDUCT INCOME TAX AT THE TIME OF MAKING PAYMENT AT THE RATES IN F ORCE. UNDER SECTION 197(1) OF THE ACT THE RECIPIENT OF THE PAYMENT CAN MAKE AN APPLICATION TO THE ASSESSING OFFICER FOR ISSUE OF A CERTIFICATE RE GARDING NO DEDUCTION OF TAX OR DEDUCTION OF TAX AT A LOWER RATE BY THE PERS ON MAKING PAYMENT. IF THE ASSESSING OFFICER IS SATISFIED WITH SUCH CLAIM BY THE RECIPIENT OF THE PAYMENT, HE SHALL ISSUE A CERTIFICATE AS MAY BE APP ROPRIATE. ON THE BASIS OF SUCH CERTIFICATE THE PERSON MAKING PAYMENT SHALL DEDUCT TAX AT RATES SPECIFIED IN SUCH CERTIFICATE. HINDALCO INDUSTRIES LIMITED 3 4. ALCAN FILED AN APPLICATION DATED 26.4.200 U/S. 197(1) OF THE ACT BEFORE THE ASSESSING OFFICER PRAYING THAT THE ASSESSING OF FICER ISSUE A REQUISITE CERTIFICATE U/S. 197(1) OF THE ACT. ALCAN COMPUTED ITS TAX LIABILITY ON SALE OF SHARES TO HINDALCO AS FOLLOWS :- COMPUTATION OF TOTAL GAINS INR CAPITAL GAINS/(LOSS) IN RESPECT OF SHARES ACQUIRED BY UTILIZING CANADIAN $ 323,366,347 CAPITAL GAINS/(LOSS) IN RESPECT OF SHARES ACQUIRED BY UTILIZING US$ (270,148,177) CAPITAL GAINS/(LOSS) IN RESPECT OF BONUS SHARES 3,123,912,736 TOTAL CAPITAL GAINS 3,177,130,906 TOTAL CAPITAL GAINS : (ROUNDED OFF TO) 3,177,130, 910 STATEMENT OF TAXES PAYABLE : TOTAL CAPITAL GAINS 3,177,130,910 TAXES PAYABLE @10% ON LONG TERM CAPITAL GAINS 317,713,091 LESS : TAXES DEDUCTED AT SOURCE 400,000,000 BALANCE AMOUNT REFUNDABLE 82,286,909 THE ASSESSING OFFICER BY HIS LETTER DATED 30.5.2000 DIRECTED HINDALCO TO DEDUCT A SUM OF RS. 40 CRORES AS TAX FROM AND OUT O F AMOUNTS PAYABLE TO ALCAN. THE CERTIFICATES SPECIFICALLY REFER TO THE F ACT THAT THE CALCULATION AS GIVEN BY THE ASSESSEE WAS PROVISIONAL AND SUBJECT T O CHANGE AT THE TIME OF REGULAR ASSESSMENT AS PER THE PROVISIONS OF INCO ME TAX ACT. HINDALCO MADE PAYMENT OF RS. 40 CRORES TO THE CENTRAL GOVERN MENT ACCOUNT BEING TAX DEDUCTED AT SOURCES IN TWO INSTALLMENTS OF RS. 38,72,41,882/- ON 30.5.2000 AND RS. 1,127,58,118/- ON 31.5.2000. THE ASSESSING OFFICER ISSUED A CERTIFICATE DATED 23.6.2000 U/S. 197(1) OF THE ACT CERTIFYING RECEIPT OF THE AFORESAID PAYMENT. THE TRANSACTION OF SALE OF SHARES BY ALCAN TO HINDALCO WAS COMPLETED ON 31.5.2000. THERE FORE THE TRANSFER BY SALE OF THE SHARES TOOK PLACE DURING THE PREVIOUS Y EAR RELEVANT TO A.Y. 2001-02 ATTRACTING CHARGE TO CAPITAL GAIN TAX IN A. Y. 2001-02. 5. ALCAN FILED RETURN OF INCOME FOR A.Y. 2001-02 O N 31.10.2001 DECLARING TOTAL INCOME OF RS. 317,71,30,910/-. THE ASSESSING OFFICER ISSUED NOTICE U/S. 143(2) OF THE ACT DATED 22.10.2002 AND NOTICES U/S. 142(1) DATED 22.10.2002, 14.11.2003 AND 4.2.2004. HINDALCO INDUSTRIES LIMITED 4 6. WHEN THE ASSESSMENT PROCEEDINGS AGAINST ALCAN WE RE IN PROGRESS AS ABOVE, THE ASSESSING OFFICER ISSUED A NOTICE U/S .163 DATED 4.2.2004 TO HINDALCO PROPOSING TO TREAT HINDALCO AS AGENT OF AL CAN IN RESPECT OF INCOME WHICH ALCAN RECEIVED ON SALE OF SHARES TO HI NDALCO. THE ASSESSING OFFICER PROPOSED TO TREAT HINDALCO AS AGE NT AND REPRESENTATIVE ASSESSEE OF ALCAN U/S. 163(1) OF THE ACT. IN REPLY, HINDALCO SUBMITTED THAT THE PROPOSED ACTION U/S. 163(1) OF THE ACT IS WITHOUT JURISDICTION AND UNSUSTAINABLE IN LAW. IT WAS SUBMITTED BY HIND ALCO THAT THE PROPOSED ACTION OF TREATING IT AS A REPRESENTATIVE ASSESSEE OF ALCAN WAS FOR A.Y. 2001-02. IT WAS CONTENDED BY HINDALCO THAT HAVING REGARD TO THE SCHEME AND INTENT OF THE ACT AND MORE PARTICULARLY OF THE PROVISIONS OF SECTION 160(1)(I) READ WITH SECTION 161(1), 162 AND 163, NO PERSON COULD BE TREATED AS A AGENT IN RELATION TO A NON-RESIDE NT AFTER THE EXPIRY OF THE PREVIOUS YEAR CORRESPONDING TO THE ASSESSMENT YEAR IN QUESTION TO FASTEN WITH A VICARIOUS LIABILITY OF THE NON-RESIDENT COMP ANY AFTER THE EXPIRY OF TWO YEARS AND 10 MONTHS FROM THE END OF PREVIOUS YE AR ENDED 31.3.2001 CORRESPONDING TO A.Y. 2001-02, WAS IMPROPER. THE TR ANSACTIONS OF SALE AND PURCHASE OF SHARES IN QUESTION WERE MADE AND CO MPLETED IN THE FINANCIAL YEAR 2000-01 (A.Y. 2001-02) AND THE PAYME NT TO THE NON- RESIDENT COMPANY WAS MADE DURING THE SAID FINANCIAL YEAR. THUS, THE CONCERNED NON-RESIDENT COMPANY WAS IN RECEIPT OF IN COME DURING THAT YEAR AND ALCAN IS NOT ENTITLED TO RECEIVE FROM HIND ALCO ANY INCOME FOR THE CONCERNED TRANSACTION DURING THE CURRENT YEAR. THE REMITTANCE OF THE NET AMOUNT WAS MADE AFTER DURING THE TAX OF RS. 40,00,0 0,000/- IN THE FINANCIAL YEAR 2000-01 AS PER THE CERTIFICATE U/S. 197(1) DATED 30 TH MAY 2000, ISSUED BY JCIT, SPL.RG-36, MUMBAI. IN THE CIR CUMSTANCES AFORESAID, THERE IS NO FACTUAL OR LEGAL BASIS FOR T REATING HINDALCO AS AN AGENT OF THE NON-RESIDENT COMPANY M/S. ALCAN INC. THE ASSESSING OFFICER HOWEVER BY ORDER DATED 20.2.2004 TREATED HI NDALCO AS AGENT OF ALCAN FOR THE REASONS :- THE ARGUMENT PUT FORWARD BY HIL ARE NOT ACCEPTABLE FOR THE FOLLOWING REASONS :- HINDALCO INDUSTRIES LIMITED 5 (A) HIL FULFILLS THE CONDITIONS AS APPLICABLE TO IT IS EVIDENT ENOUGH FROM A PLAIN READING OF SECTION 163(1) AND T HE FACTS OF THE CASE AS NARRATE ABOVE. (B) SECTION 163(1) IS CONTAINED IN CHAPTER XV(C) OF THE I.T. ACT, 1961 WHICH DEALS WITH REPRESENTATIVE ASSESSEE-SPEC IAL CASES AND BEGINS WITH THE HEADNOTE WHO MAY BE REG ARDED AS AN AGENT. THE RELEVANT PROVISIONS OF SECTION 16 3(1) ARE GIVEN AS UNDER :- FOR THE PURPOSES OF THIS ACT, AGENT IN RELATION TO A NON- RESIDENT INCLUDES ANY PERSON IN INDIA- WHO IS EMPLOYED BY OR ON BEHALF OF THE NON-RESIDENT ; OR WHO HAS ANY BUSINESS CONNECTION WITH THE NON- RESIDENT; OR FROM OR THROUGH WHOM THE NON-RESIDENT IS IN RECEIPT OF ANY INCOME, WHETHER DIRECTLY OR INDIRECTLY; OR WHO IS THE TRUSTEE OF THE NON-RESIDENT; AND INCLUDE S ALSO ANY OTHER PERSON WHO, WHETHER A RESIDENT OR NO N- RESIDENT, HAS ACQUIRED BY MEANS OF A TRANSFER, A CA PITAL ASSET IN INDIA C) FOR THE RELEVANT A.YS. I.E. 2001-02, THE FOLLOWI NG FACTS ARE WELL ESTABLISHED; I) HIL HAD BUSINESS CONNECTION WITH THE NON-RESIDEN T I.E. ALCAN II) THE NON-RESIDENT (HERE ALCAN), IS IN RECEIPT OF INCOME DIRECTLY FROM HIL, AND III) HIL HAS ACQUIRED A CAPITAL ASSET IN INDIA, BY MEANS OF TRANSFER FROM ALCAN. D) SECTION 160(1)(I) CLEARLY STATES THAT FOR THE PURP OSE OF THIS ACT, REPRESENTATIVE ASSESSEE MEANS :- (I) IN RESPECT OF THE INCOME OF A NON-RESIDENT SPECIFIE D IN SUB-SECTION(1) OF SECTION 9, THE AGENT OF THE NO N- RESIDENT, INCLUDING A PERSON WHO IS TREATED AS AN AGENT UNDER SECTION 163. E) FURTHER, SECTION 149(3), WHICH PRESCRIBES THE TIME LIMIT FOR NOTICE TO BE ISSUED U/S. 148 FOR REOPENING AN ASSE SSMENT, STIPULATES THE FOLLOWING :- IF THE PERSON ON WHOM A NOTICE UNDER SECTION 148 I S TO BE SERVED IS A PERSON TREATED AS THE AGENT OF A NON-RESIDENT UNDER SECTION 163 AND THE ASSESSMENT, REASSESSMENT OR RE-COMPUTATION TO BE MADE IN PURSUANCE OF THE NOTICE IS TO BE MADE ON HIM AS THE AGENT OF SUCH NON-RESIDENT, THE NOTICE SHALL NOT BE HINDALCO INDUSTRIES LIMITED 6 ISSUED AFTER THE EXPIRY OF A PERIOD OF TWO YEARS FR OM THE END OF THE RELEVANT ASSESSMENT YEAR. IN THE PRESENT CASE, THE RELEVANT A.YS. 2001-02, AND THUS NOTICE U/S. 148 COULD BE ISSUED IN THE CASE OF HIL FOR A.Y.2001-02 TILL 31.3.2004. THIS TIME LIMIT HAS NOT YET EXPIRED. ON THE BASIS OF THE ABOVE, THE ARGUMENTS PUT FORWARD BY HIL, ARE RENDERED OTIOSE. M/S. HINDALCO INDUSTRIES LTD., IS HELD TO BE A REPRESENTATIVE ASS ESSEE IN RELATION TO M/S. ALCAN INC., A NON-RESIDENT COMPAN Y FOR A.Y. 2001-02, AS IT FULFILS THE CONDITIONS LAID DOW N IN SECTION 163(1)(B) AND 163(1)(C) AND FURTHER IT HAS ACQUIRED FROM ALCAN A NON-RESIDENT CAPITAL ASSET IN INDIA BY ..OF A TRANSFER DURING A.Y. 2001-02. 7. ON 16.3.2004 THE ASSESSING OFFICER PASSED AN ORD ER U/S. 143(3) OF THE ACT ON ALCAN DETERMINING THE CAPITAL GAIN AS FO LLOWS :- A) LONG TERM CAPITAL GAINS ON SHARES ACQUIRED IN CAD (AS PER PARA 6.11) RS. 84,93,97,375/- B) LONG TERM CAPITAL GAINS(LOSS) ON SHARE S ACQUIRED IN USD (AS PER COMPUTATION FILED ALONGWITH RETURN) (-)RS. 27,01,48,177/- C) LONG TERM CAPITAL GAINS ON BONUS SHARES (AS PER PARA 8.4) RS. 333,74,29,856/- TOTAL LONG-TERM CAPITAL GAINS RS. 391,66,79 ,054/- TAX ON THE ABOVE BY APPLYING THE RATE OF 20% WAS CO MPUTED AT RS. 78,33,35,581/-. 8. PRIOR TO THE PASSING OF THE ABOVE ASSESSMENT ORD ER IN THE CASE OF ALCAN ON 23.2.2004, THE ASSESSING OFFICER ISSUED NO TICE U/S. 147 TO HINDALCO AS AGENT OF ALCAN PROPOSING TO ASSESS THE VERY SAME CAPITAL GAIN IN THE HANDS OF HINDALCO AS AGENT OF ALCAN. ON 15.3.2004 A DAY PRIOR TO PASSING OF THE ORDER OF ASSESSMENT IN THE CASE OF ALCAN, THE ASSESSING OFFICER PASSED AN ORDER OF ASSESSMENT IN THE CASE OF HINDALCO ASSESSING THE VERY SAME CAPITAL GAIN IN THE HANDS O F HINDALCO AS AGENT OF ALCAN. HINDALCO INDUSTRIES LIMITED 7 9. AGAINST THE ORDER DATED 20.2.2004, TREATING HIND ALCO AS AGENT OF ALCAN U/S. 163(1) OF THE ACT, HINDALCO FILED APPEAL BEFORE LEARNED CIT(A), WHO BY ORDER DATED 21.2.2005 DISMISSED THE SAID APP EAL. AGAINST THIS ORDER, HINDALCO HAS FILED APPEAL BEFORE THE TRIBUNA L WHICH IS ITA NO. 3669/MUM/2005. AGAINST THE ORDER OF THE ASSESSING OFFICER ASSESSING CAPITAL GAIN IN THE HANDS OF THE HINDALCO AS AGENT OF ALCAN, HINDALCO FILED APPEAL BEFORE LEARNED CIT(A) WHO BY ORDER DAT ED 31.3.2005 CONFIRMED THE ASSESSMENT BUT DELETED THE LEVY OF IN TEREST U/S. 234B OF THE ACT. AGAINST THE SAID ORDER OF LEARNED CIT(A), HINDALCO HAS FILED APPEAL BEFORE THE TRIBUNAL WHICH IS ITA NO. 4685/MU M/2005 AND THE REVENUE HAS FILED APPEAL WHICH IS ITA NO. 4968/MUM/ 2005. 10. WE HAVE ALREADY REFERRED TO THE FACT THAT ON 16 .3.2004, THE ASSESSING OFFICER ASSESSED CAPITAL GAIN IN THE HAND S OF ALCAN ON THE SAME BASIS AND FIGURES AS WAS MADE IN THE ASSESSMEN T IN THE CASE OF HINDALCO AS AGENT OF ALCAN U/S. 147 READ WITH SECTI ON 163 OF THE ACT. AGAINST THIS ORDER OF THE ASSESSING OFFICER, ALCAN FILED AN APPEAL BEFORE THE LEARNED CIT(A). LEARNED CIT(A) BY HIS ORDER DAT ED 16.4.2004 DISMISSED THE APPEAL FILED BY ALCAN. ALCAN FILED AP PEAL AGAINST THE ORDER OF LEARNED CIT(A) BEFORE THE ITAT. THE ITAT BY ITS ORDER DATED 30.4.2007 SINCE REPORTED AS ALCAN INC. VS. DDIT, 100 ITD 15 ( MUM) UPHELD THE MANNER OF COMPUTATION AS DONE BY THE ASSESSEE AND A LSO HELD THAT THE RATE OF TAX ON CAPITAL GAIN WOULD ONLY BE 10% AND N OT 20% AS CLAIMED BY THE REEVNUE. THUS, THE TAX DEDUCTED AT SOURCE BY HI NDALCO WAS MORE THAN SUFFICIENT TO DISCHARGE THE TAX LIABILITY OF A LCAN ON SALE OF SHARES BY IT TO HINDALCO. IT WAS STATED BEFORE US THAT THE RE VENUE IS IN APPEAL BEFORE THE HON'BLE HIGH COURT AGAINST THE ORDER OF THE TRI BUNAL IN THE CASE OF ALCAN. 11. THE ORDER OF LEARNED CIT(A) IN THE APPEAL BY HI NDALCO AGAINST THE ORDER OF ASSESSMENT U/S. 163 READ WITH SECTION 147 WAS DECIDED ON 31.3.2005 MUCH LATER IN POINT OF TIME TO HIS ORDER CONFIRMING ORDER OF THE ASSESSING OFFICER DATED 16.3.2004 MAKING ASSESSMENT OF CAPITAL GAIN IN HINDALCO INDUSTRIES LIMITED 8 THE HANDS OF THE ALCAN, WHICH WAS DATED 16.4.2004. IT IS IN THE ABOVE BACKGROUND OF FACTS THAT THOSE APPEALS HAVE TO BE D ECIDED. 12. FIRST, WE SHALL TAKE UP FOR CONSIDERATION ITA N O. 3665/MUM/2005 APPEAL BY HINDALCO CHALLENGING THE ORDER U/S. 163 O F THE ACT TREATING IT AS AGENT AND REPRESENTATIVE ASSESSEE OF ALCAN. IN T HIS APPEAL THE CONTENTION OF THE LEARNED COUNSEL FOR THE HINDALCO WAS :- A) HINDALCO COULD NOT BE TREATED AS AGENT AND REPRE SENTATIVE ASSESSEE OF ALCAN U/S. 163 OF THE ACT AS THE CONDIT IONS CONTEMPLATED U/S. 163 ARE NOT SATISFIED. B) HINDALCO HAS DULY DEDUCTED TAX AT SOURCE AS CONT EMPLATED U/S. 195 OF THE ACT AND IN SUCH CASES, HINDALCO COU LD NOT BE AGAIN TREATED AS AGENT AND REPRESENTATIVE ASSESS EE OF ALCAN. C) THE ORDER TREATING HINDALCO AS AGENT OF ALCAN HA D BEEN PASSED ON 20.2.2004 I.E. AFTER A PERIOD OF TWO YEAR S AND TEN MONTHS FROM THE END OF THE PREVIOUS YEAR IN WHICH H INDALCO MADE PAYMENT TO ALCAN. ACCORDING TO HIM LIABILITY O F HINDALCO IN RESPECT OF TAX DUES OF ALCAN IS A VICAR IOUS LIABILITY. SECTION 162(1) GIVES THE REPRESENTATIVE ASSESSEE A RIGHT TO RETAIN ANY SUMS OF THE PRINCIPAL IN HIS PO SSESSION TO THE EXTENT TO WHICH HE PAYS AS TAX LIABILITY OF THE PRINCIPAL UNDER THE ACT. SINCE THE ASSESSEE PAID TH E CONSIDERATION AFTER DEDUCTING TAX AT SOURCE TO THE PRINCIPAL ON 31.5.2000, THE DELAY ON THE PART OF THE REVENUE IN INITIATING PROCEEDINGS U/S. 163 WILL CAUSE PREJUDIC E TO THE AGENT IN AS MUCH AS HE WILL NOT BE IN A POSITION TO EXERCISE HIS RIGHTS U/S 162(1). WE MAY CLARIFY THAT THE LEAR NED COUNSEL FOR THE ASSESSEE HINDALCO MADE A REFERENCE TO THE PROVISIONS OF SECTION 162(2) AND SUBMITTED THAT SIN CE HINDALCO REMITTED ALL PAYMENTS TO ALCAN THERE WAS N O ASSET OF ALCAN WITH HINDALCO AND THEREFORE THE PROCEEDING S U/S. 163 WERE NOT LEGAL. THIS ARGUMENT IS NOT ACCEPTABLE BECAUSE PROVISION OF SECTION 163(3) OF THE ACT WILL BE ATTRACTED ONLY WHEN THE AGENT HAS OBTAINED A CERTIF ICATE FROM THE ASSESSING OFFICER OR THE PRINCIPAL U/S. 19 5(2) OF THE ACT. ADMITTEDLY THERE WAS NO SUCH CERTIFICATE O BTAINED BY THE AGENT U/S. 195(2) OF THE ACT. 13. WE ARE OF THE VIEW THAT THE OBJECTIONS RAISED B Y THE HINDALCO TO THE ORDER U/S. 163 CANNOT BE SUSTAINED. IT IS NOT I N DISPUTE THAT CAPITAL GAIN WHICH ALCAN DERIVED ON SALE OF SHARES OF AN IN DIAN COMPANY IS HINDALCO INDUSTRIES LIMITED 9 INCOME CHARGEABLE TO TAX IN THE HANDS OF THE ALCAN. THE INCOME SO CHARGEABLE TO TAX WAS RECEIVED BY ALCAN FROM HINDAL CO AND THEREFORE SECTION 163(1)(C) WERE CLEARLY ATTRACTED. WITH REGA RD TO THE CONTENTION THAT HINDALCO HAVING DULY DEDUCTED TAX AT SOURCE U/ S. 195 AND THEREFORE CANNOT BE TREATED AS AGENT OF ALCAN, WE ARE OF THE VIEW THAT PROCEEDINGS U/S. 163 ARE ONLY INTENDED TO ENSURE THAT A PERSON CAN BE REGARDED AS A REPRESENTATIVE ASSESSEE ONLY AN EXISTENCE OF CERTAI N CONDITIONS. LIABILITY ON THE REPRESENTATIVE ASSESSEE DOES NOT FASTEN ON A N ORDER U/S. 163 BEING PASSED. THEREFORE THE FACT THAT THE AGENT HAD DEDUCTED TAX U/S. 195 OF THE ACT WILL NOT BE A BAR TO PROCEED AND PAS S AN ORDER U/S. 163 OF THE ACT. 14. THE NEXT OBJECTION OF HINDALCO THAT THERE HAS B EEN A DELAY IN INITIATING PROCEEDINGS U/S. 163 OF THE ACT WHICH HA S RESULTED IN PREJUDICE TO THE AGENT, WE DO NOT THINK THAT THE LAW CONTEMPL ATES ANY TIME LIMIT FOR INITIATING PROCEEDINGS U/S. 163 OF THE ACT. IT IS A LSO NOT THE CASE OF AGENT THAT PROCEEDINGS FOR ASSESSING INCOME OF THE PRINCI PAL, IS BARRED BY TIME. WE THEREFORE REJECT THIS ARGUMENT ALSO. THE PURPOSE OF SECTION 163 IS TO SECURE PAYMENT OF TAXES BY THE NON-RESIDENT. WE THE REFORE UPHOLD THE ORDER U/S. 163 OF THE ACT. ITA NO. 3667/MUM/05 IS T HEREFORE DISMISSED. 15. AS FAR AS THE APPEALS BY THE ASSESSEE AND REVEN UE ARISING OUT OF THE ORDER OF ASSESSMENT U/S.147 R.W.S.163 OF THE AC T I.E. ITA 4685/MUM/05 (BY ASSESSEE) AND ITA NO.4968/MUM/05 (B Y REVENUE) ARE CONCERNED, THE SUBMISSION OF THE LEARNED COUNSE L FOR THE ASSESSEE ON THE ISSUE RAISED IN THE ASSESSEES APPEAL WAS THAT HAVING COMMENCED AND CONCLUDED THE ASSESSMENT IN THE CASE OF THE PRI NCIPAL THE VERY SAME INCOME CANNOT BE ASSESSED IN THE HANDS OF THE AGENT . IN THIS REGARD IT WAS POINTED OUT THAT IN THE APPEAL AGAINST THE ORDE R OF ASSESSMENT OF ALCAN, THE CIT(A) CONFIRMED THE ORDER OF THE AO AND SUCH ORDER WAS PASSED EVEN PRIOR TO THE ORDER OF CIT(A) IN THE CAS E OF HINDALCO. ACCORDING TO HIM THE PROVISIONS OF SEC.161 WAS ENAC TED TO ENSURE ASSESSMENT AND RECOVERY OF TAX ON INCOME THAT ACCRU ES AND ARISES IN HINDALCO INDUSTRIES LIMITED 10 INDIA AND WHICH IS CHARGEABLE TO TAX IN INDIA THROU GH THE MEDIUM OF AN AGENT WITHIN INDIA. ACCORDING TO HIM IN A CASE WHE RE THE NON RESIDENT SUBJECTS HIMSELF TO PROCEEDINGS BEFORE THE AO AND E XPRESSES HIS WILLINGNESS TO DISCHARGE TAX LIABILITIES AND IF THE SAME IS ACCEPTED AND ASSESSMENT MADE ON THE NON RESIDENT, THERE WAS NO N ECESSITY TO MAKE AN ASSESSMENT ON THE AGENT IN INDIA. IN THIS REGARD OUR ATTENTION WAS DRAWN TO THE DECISION OF THE HONBLE BOMBAY HIGH CO URT IN THE CASE OF MAHARAJA OF PATIALA VS. CIT 11 ITR 202 (BOM), CHAT URBHUJ RAGHVJI TRUST (TRUSTEES OF) V. CIT [1963] 50 ITR 693 (BOM), SAIPE M UK LTD. VS. DDIT 298 ITR (AT) 113 (MUM). THE LEARNED D.R. RELIED ON THE ORDER OF THE CIT(A) AND SUBMITTED THAT IT WAS THE CHOICE OF THE AO AND THAT HE CAN PROCEED AGAINST EITHER THE PRINCIPAL OR THE AGENT O R BOTH. ACCORDING TO HIM, THE ASSESSMENT IN THE HANDS OF THE PRINCIPAL ( ALCAN) IS RELEVANT ONLY TO THE EXTENT OF TAX LIABILITY OR COMPUTATION OF CA PITAL GAIN. THEREFORE THE FACT THAT ASSESSMENT WAS MADE ON THE PRINCIPAL WILL NOT RENDER THE PROCEEDINGS AGAINST THE AGENT IMPROPER OR INVALID. 16. ON THE ABOVE ISSUE, THE FINDINGS OF THE CIT(A) IS AS FOLLOWS: I HAVE CAREFULLY CONSIDERED THE VARIOUS SUBMISSION S OF THE APPELLANT, BUT NOT IN AGREEMENT WITH THE SAME, FOR THE REASONS DISCUSSED HEREUNDER :- THE MAIN CONTENTION OF THE APPELLANT IS THAT ONCE A LCAN HAS FILED ITS RETURN OF INCOME AND THE DEPARTMENT HAS P ROCEEDED AGAINST ALCAN FOR MAKING ASSESSMENT, SIMULTANEOUS A CTION CANNOT BE TAKEN AGAINST THE APPELLANT AS AN AGENT. IN THIS REGARD FIRSTLY IT WILL NOT BE OUT OF PLACE TO MENTI ON HERE THAT THE APPELLANT SEPARATELY FILED AN APPEAL AGAINST THE OR DER UNDER SECTION 163 PASSED BY THE ASSESSING OFFICER TREATIN G THE APPELLANT AS AN AGENT OF ALCAN. THE APPEAL HAS BEEN DECIDED BY THE LEARNED CIT(A)-XXXIII, MUMBAI VIDE HER ORDER NO . CIT(A)XXXIII/DDIT(IT)1(1)/IT/9-H/03-04 DATED 21.2.2 005 AND THE SAME HAS BEEN DISMISSED. THIS MEANS THAT AT LEA ST AT THE FIRST APPELLATE STAGE IT HAS BEEN FOUND THAT THE AP PELLANT HAS RIGHTLY BEEN TREATED AS AGENT OF ALCAN. NOW COMING TO THE MAIN ARGUMENT OF THE APPELLANT RE GARDING SIMULTANEOUS ASSESSMENT PROCEEDINGS AGAINST ALCAN A ND THE APPELLANT I DO NOT SUBSCRIBE TO THE CONTENTION OF T HE APPELLANT THAT SINCE THE NON-RESIDENT HAS INDEPENDENTLY FILED THE RETURN HINDALCO INDUSTRIES LIMITED 11 OF INCOME, THEREFORE THE APPELLANT CANNOT BE TREATE D AS REPRESENTATIVE ASSESSEE. IN FACT, THE SCHEME OF THE ACT PROVIDES FOR TAKING ACTION AGAINST THE NON-RESIDENT AS WELL AS ITS AGENT AS REPRESENTATIVE ASSESSEE. SECTION 163 NO WHERE PR OVIDES FOR A BAR ON TAKING ACTION AGAINST A PERSON WHERE THE CON DITIONS PRESCRIBED IN THE SECTION ARE SATISFIED, MERELY FOR THE REASON THAT THE NON-RESIDENT HAS FILED THE RETURN OF INCOM E INDEPENDENTLY. IN FACT, THE COURTS HAVE HELD THAT THERE IS NO BAR ON THE SIMULTANEOUS ASSESSMENT OF THE PRINCIPAL AND AGENT. IN THE CASE OF BARIUM CHEMICALS LTD. VS. ITO , 100 ITR 637 (A), THE ASSESSEE ENTERED INTO AN AGREEMENT WIT H A NON- RESIDENT FROM THE RECTIFY CERTAIN DEFECTS IN THE PL ANT AND MACHINERY SUPPLIED TO IT AND ALSO TO SUPPLY DESIGNS , DRAWINGS AND OTHER TECHNICAL KNOW-HOW. PURSUANT TO THE ABOVE SAID AGREEMENT, THE NON-RESIDENT FIRM SUPPLIED NECESSARY DESIGNS AND DRAWINGS, ETC, AND ALSO SENT ONE OF ITS PARTNER S, MR. DAVIS FOR SUPERVISING THE ERECTION OF THE PLANT. THE ITO PASSED AN ORDER TREATING THE ASSESSEE AS AN AGENT OF THE NON- RESIDENT FIRM AND DIRECTED BOTH THE ASSESSEE AND THE FIRM TO FILE RETURNS. THE ANDHRA PRADESH HIGH COURT HELD THAT THERE IS NO QUE STION OF EXERCISING OF OPTION BY THE ITO TO ASSESS AND RECOV ER TAX EITHER FROM THE NON-RESIDENT OR THE AGENT. THE INITIATION OF ASSESSMENT PROCEEDINGS AGAINST THE NON-RESIDENT PRI NCIPAL CANNOT BE A BAR FOR EITHER CONTINUING THOSE PROCEED INGS OR INITIATING FRESH PROCEEDINGS AGAINST THE RESIDENT A GENT OF THE NON-RESIDENT. SIMILARLY, THE HON'BLE KERALA HIGH CO URT IN THE CASE OF CIT VS. FERTILIZERS & CHEMICALS (TRAVANCORE ) LTD., 166 ITR 823 HAS HELD THAT THE DIRECT ASSESSMENT ON THE NON- RESIDENT WOULD NOT AFFECT THE JURISDICTION OF THE I TO TO ASSESS THE AGENT OF THE NON-RESIDENT UNDER SECTION 163. THE RELIANCE PLACED BY THE APPELLANT ON CERTAIN COU RT CASES AND BOARD CIRCULAR TO CONTEND THAT THE DEPARTMENT HAS T O CHOOSE ONE PERSON AND THEN AFTER HAVING MADE THE CHOICE, N O ACTION CAN BE TAKEN AGAINST THE OTHER PERSON, IS MISPLACED . IN THIS REGARD, IT MAY BE STATED THAT THESE DECISIONS ETC. HAVE BEEN RENDERED ONLY IN THE CONTEXT OF ASSESSMENT OF TRUST EE OR THE BENEFICIARY AND NOT IN THE CONTEXT OF ASSESSMENT OF NON- RESIDENT ASSESSEE AND ITS AGENT. NEEDLESS TO SAY TH AT THE CIRCUMSTANCES AND NEED LEADING TO SIMULTANEOUS ASSE SSMENT IN THE HANDS OF A NON-RESIDENT AND ITS INDIAN AGENT ARE DIFFERENT. IT IS TRUE THAT THE APPELLANT HAD OBTAINED A CERTIF ICATE FOR DEDUCTION OF TAX AT SOURCE UNDER SECTION 197, BUT H IS DOES NOT MAKE THE TAKING OF ACTION UNDER SECTION 163 AS BAD IN LAW. IN FACT, PROCEEDINGS UNDER SECTION 195/197 FOR DEDUCTI ON OF TAX AT SOURCE AND PROCEEDINGS UNDER SECTION 163 ARE TWO SE PARATE PROCEEDINGS. IT WILL NOT BE OUT OF PLACE TO MENTION HERE THAT A HINDALCO INDUSTRIES LIMITED 12 PROCEEDINGS MAY BE TAKEN AGAINST THE AGENT AS REPRE SENTATIVE ASSESSEE BOTH FOR ASSESSMENT AS WELL AS RECOVERY. E VEN OTHERWISE AS HON'BLE SUPREME COURT IN THE CASE OF TRANSMISSION CORPORATION OF A.P. AND OTHERS VS. CIT , 239 ITR 587 HAS HELD THAT THE PURPOSE OF SUB-SECTION (1) OF SECTION 195 IS TO SEE THAT ON THE SUM WHICH IS CHARGEABLE UNDER SECTION 4 OF THE ACT, FOR LEVY AND COLLECTION OF INCOME TAX T HE PAYER SHOULD DEDUCT INCOME TAX THEREON AT THE RATES IN FO RCE, IF THE AMOUNT IS TO BE PAID TO A NON-RESIDENT. THE SAID PR OVISION IS FOR TENTATIVE DEDUCTION OF INCOME TAX THEREON SUBJE CT TO REGULAR ASSESSMENT AND BY DEDUCTION OF INCOME TAX THE RIGHT S OF THE PARTIES ARE NOT IN NAY MANNER ADVERSELY AFFECTED. 17. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS BEFORE US. IN THE CASE OF SAIPEM UK LTD. (SUPRA) IDENTICAL ISSUE AROSE FOR CONSIDERATION BEFORE THE TRIBUNAL. THE FACTS WERE AS FOLLOWS. THE ASSES SEE COMPANY WAS INCORPORATED UNDER THE LAWS OF UNITED KINGDOM. ITS OPERATIONS IN INDIA PERTAINED TO EXECUTION OF CERTAIN CONTRACT WORKS AW ARDED BY CERTAIN INDIAN COMPANIES. IN ORDER TO EXECUTE THESE CONTRAC TS, THE ASSESSEE- COMPANY ENTERED INTO VARIOUS SUB-CONTRACTS, WHICH I NCLUDE THE SUB- CONTRACTS WITH M/S. VALENTINE MARITIME (GULF) LLC, UAE (FOR SHORT VALENTINE). IT APPEARS THAT THE ASSESSEE-COMPANY AS WELL AS THE AFORESAID VALENTINE WAS BEING SEPARATELY ASSESSED T O INCOME-TAX REGULARLY. THE ASSESSING OFFICER PASSED AN ORDER UN DER SECTION 163 OF THE INCOME-TAX ACT ON 5.3.2002 TREATING THE ASSESSEE-CO MPANY AS REPRESENTATIVE ASSESSEE OF VALENTINE. SIMULTANEOUSL Y ON 5-3-2002 ITSELF THE ASSESSING OFFICER ISSUED A NOTICE UNDER SECTION 148 IN THE NAME OF THE ASSESSEE-COMPANY AND ON 28-3-2002, THE ASSESSIN G OFFICER PASSED ASSESSING INCOME OF THE PRINCIPAL IN THE HANDS OF T HE AGENT UNDER SECTION 144 READ WITH SECTIONS 147 AND 163. THE RELEVANT INCOME OF THE PRINCIPAL WAS INDEPENDENTLY BROUGHT TO A CHARGE OF TAX IN THE CASE OF PRINCIPAL BY AN ORDER DATED 28-3-2002 PASSED UNDER SECTION 143(3) OF THE INCOME-TAX ACT BY THE SAME ASSESSING OFFICER. THE PRINCIPALS APPEAL AGAINST THIS ORDER WAS ALSO DISMISSED BY THE LEARNE D CIT(A). IT WAS THE CONTENTION OF THE ASSESSEE THAT SINCE THE SUBSTANTI VE ASSESSMENT MADE BY THE ASSESSING OFFICER IN THE HANDS OF THE PRINCI PAL HAS BEEN UPHELD BY THE LEARNED CIT(A), HE WAS WHOLLY UNJUSTIFIED IN CO NFIRMING THE PROTECTIVE HINDALCO INDUSTRIES LIMITED 13 ASSESSMENT IN THE CASE OF THE AGENT ALSO. IT WAS TH E CLAIM OF THE AGENT THAT DOING SO WOULD AMOUNT TO DOUBLE TAXATION OF TH E SAME INCOME, WHICH IS NOT PERMISSIBLE UNDER LAW. THE TRIBUNAL DI STINGUISHED THE CASE OF BARIUM CHEMICALS LTD.(SUPRA) AS FOLLOWS: ANOTHER IMPORTANT ISSUE IS AS TO WHETHER THE ASSES SING OFFICER HAVING ALREADY ASSESSED THE INCOME IN THE HANDS OF THE REAL ASSESSEE, CAN MAKE A PROTECTIVE ASSESSMENT IN THE C ASE OF THE ASSESSEE HOLDING IT TO BE AGENT OF VALENTINE. IT WO ULD BE APPROPRIATE TO DEAL WITH THE CASES REFERRED TO BY T HE LEARNED CIT(A) AND ALSO RELIED UPON BY THE LEARNED DEPARTMENTAL RE PRESENTATIVE. IN THE CASE OF BARIUM CHEMICALS LTD. (SUPRA), WHILE DISPOSING THE WRIT PETITIONS FILED BY THE ASSESSEE, THE ANDHRA PR ADESH HIGH COURT HELD THAT MERELY BECAUSE THE AGENT OF THE NON -RESIDENT CAN BE ASSESSED UNDER SECTIONS 160 AND 163 OF THE INCOM E-TAX ACT, ASSESSMENT AND RECOVERY OF TAX IN THE HANDS OF THE NON-RESIDENT PRINCIPAL IS NOT BARRED. IN THAT CASE, THE ASSESSME NTS WERE STILL PENDING AND ONLY NOTICES WERE ISSUED. WE FIND THAT AT PAGES 641 AND 642 OF THE REPORT, THE ANDHRA PRADESH HIGH COUR T HAS CONSIDERED AND DISTINGUISHED THE BOMBAY HIGH COURT JUDGMENT IN THE CASE OF TRUSTEES OF CHATURBHUJ RAGHAVJI TRUST V . CIT [1963] 50 ITR 693 ON SIMILAR ISSUE. IT WOULD BE APPROPRIATE T O REPRODUCE BELOW THE RELEVANT PART OF THE ANDHRA PRADESH HIGH COURT DECISION FROM PAGES 641 AND 642 OF THE REPORT: RELIANCE, HOWEVER, WAS PLACED UPON A DECISION OF T HE BOMBAY HIGH COURT IN CHATURBHUJ RAGHAVJI TRUST V. C IT. THAT CASE CAN BE DISTINGUISHED EASILY ON THE FACTS. IN THAT CASE, AN AMOUNT OF RS. 25,000 WAS PAID BY THE TRUST EES TO BAI CHAMPAVAHOO. THE AMOUNT WAS TREATED AS AN INCOM E AND WAS BROUGHT TO TAX FROM THE HANDS OF BAI CHAMPAVAHOO DIRECTLY. THE ARGUMENT WAS THAT THE SAM E AMOUNT COULD NOT BE BROUGHT AGAIN TO TAX IN THE HAN DS OF THE TRUSTEES. THE ABOVE CASE COULD HAVE BEEN DISPOSED OF ON ONE S HORT GROUND THAT THE BENEFICIARY HAVING ALREADY BEEN ASS ESSED AND TAX RECOVERED FROM THE BENEFICIARY, A FRESH ASS ESSMENT AND RECOVERY OF TAX ON THE SAME TRANSACTION WAS NEI THER POSSIBLE NOR PERMISSIBLE. THE LEARNED JUDGES OF THE BOMBAY HIGH COURT, HOWEVER, CONSIDERED THE ARGUMENT THAT, SINCE THE SAID INCOME HAD ALREADY BEEN BROUGHT TO TAX IN THE HANDS OF CHAMPAVAHOO, IT COULD NOT BE BROUGHT TO TA X AGAIN IN THE HANDS OF THE TRUSTEES. WHILE CONSIDERI NG THIS ARGUMENT, THEIR LORDSHIPS OF THE BOMBAY HIGH COURT CONSIDERED SECTION 41(2) OF THE INDIAN INCOME-TAX A CT, HINDALCO INDUSTRIES LIMITED 14 1922, WHICH IS IN PARI MATERIA WITH SECTION 166 OF THE INCOME-TAX ACT, 1961. THEIR LORDSHIPS OBSERVED THAT : SECTION 41 HAVING PROVIDED FOR TWO ALTERNATIVE METHODS, NAMELY, EITHER TO TAX THE INCOME IN THE HANDS OF THE TRUSTEES OR DIRECTLY IN THE HANDS OF T HE PERSON ON WHOSE BEHALF THE INCOME WAS RECEIVABLE UNDER THE TRUST, AND ONE OF THEM HAVING BEEN AVAILE D OF BY THE INCOME-TAX DEPARTMENT IN DIRECTLY ASSESSI NG CHAMPAVAHOO IN RESPECT OF THE INCOME, THE OTHER WAS NO LONGER AVAILABLE TO THE DEPARTMENT. THEIR LORDSHIPS FURTHER OBSERVED: SECTION 41 WAS A SPECIAL ENABLING PROVISION WHICH PERMITTED THE ASSESSMENT IN THE HANDS OF THE TRUSTEES BUT DID NOT PRECLUDE THE DIRECT ASSESSMENT IN THE HANDS OF THE BENEFICIARIES. THEIR LORDSHIPS CONCLUDED: THERE IS NOTHING IN SECTION 41 WHICH WOULD INDICATE THAT THE CHOICE BETWEEN THE ALTERNATIVE METHODS PROVIDED THEREIN HAS TO BE MADE ONLY AT THE TIME OF THE ASSESSMENT OF THE TRUSTEES OR THAT THE CHOICE ONLY BELONGS TO THE INCOME-TAX OFFICER WHO I S ASSESSING THE TRUST. IF THESE OBSERVATIONS ARE READ IN THE CONTEXT IN WH ICH THEY ARE MADE, IT WOULD NOT BE DIFFICULT TO UNDERSTAND T HAT WHAT ALL THEIR LORDSHIPS SAID WAS THAT CHAMPAVAHOO HAVIN G ALREADY BEEN ASSESSED AND TAX RECOVERED FROM HER, T HE INCOME-TAX OFFICER COULD NOT HAVE PROCEEDED AGAINST THE TRUSTEES FOR RECOVERY OF TAX ON THE SAME TRANSACTIO N. IT IS TRUE THAT THEIR LORDSHIPS HAVE READ SECTION 41(2) T O SUGGEST THAT THERE ARE TWO ALTERNATIVE METHODS, NAMELY, EIT HER TO TAX THE INCOME IN THE HANDS OF THE TRUSTEES, OR DIR ECTLY IN THE HANDS OF THE PERSON ON WHOSE BEHALF THE INCOME WAS RECEIVABLE. BUT THEIR LORDSHIPS IMMEDIATELY SAID TH AT THE INCOME-TAX DEPARTMENT HAVING AVAILED OF ONE OF THE METHODS, VIZ., HAVING PROCEEDED AGAINST CHAMPAVAHOO AND RECOVERED THE TAX FROM HER, THE TRUSTEES COULD NOT HAVE BEEN PROCEEDED AGAINST. FROM THE ABOVE DISCUSSION, IT MAY BE SEEN THAT IN T HE CASE OF TRUSTEES OF CHATURBHUJ RAGHAVJI TRUST (SUPRA), T HE RELEVANT AMOUNT WAS ASSESSED IN THE HANDS OF BAI CHAMPAVAHOO DIRECTLY AND THE BOMBAY HIGH COURT HELD THAT SUCH INCOME COULD NOT BE BROUGHT TO THE CHARGE OF TAX HINDALCO INDUSTRIES LIMITED 15 AGAIN IN THE HANDS OF THE TRUSTEES UNDER SECTION 41 (2) OF THE INDIAN INCOME-TAX ACT, 1922 WHICH IS IN PARI MATERI A WITH SECTION 166 OF THE INCOME-TAX ACT, 1961. IN OUR VIE W, THE JUDGMENT IN THE CASE OF BARIUM CHEMICALS LTD. (SUPR A) WILL NOT BE APPLICABLE TO THE FACTS OF THE ASSESSEES CA SE AND ON THE OTHER HAND, THE BOMBAY HIGH COURT DECISION IN T HE CASE OF TRUSTEES OF CHATURBHUJ RAGHAVJI TRUST (SUPR A) SUPPORTS THE VIEW THAT THE INCOME HAVING BEEN BROUG HT TO A CHARGE OF TAX IN THE HANDS OF THE REAL PERSON, THE SAME INCOME CANNOT BE ONCE AGAIN ASSESSED IN THE CASE OF A REPRESENTATIVE ASSESSEE. 18. THE TRIBUNAL DEALT WITH THE DECISION OF THE KER ALA HIGH COURT DECISION IN THE CASE OF FERTILIZERS & CHEMICALS (TR AVANCORE) LTD. (SUPRA) AS A CASE WHERE THE NON-RESIDENT WAS HAVING SEVERAL REPRESENTATIVE ASSESSEES IN RESPECT OF SEVERAL HEADS OF INCOME AND IN THIS CONTEXT, THE HIGH COURT OBSERVED THAT THERE CAN BE MORE THAN ONE ASSESSMENT IN RESPECT OF THE INCOME ACCRUED OR ARISEN TO A NON-RE SIDENT PROVIDED THERE ARE MORE THAN ONE REPRESENTATIVE ASSESSEE. THE HIGH COURT HELD THAT DIRECT ASSESSMENT ON THE NON-RESIDENT IN RESPECT OF OTHER INCOME WOULD NOT AFFECT THE JURISDICTION OF THE ITO TO ASSESS TH E AGENT OF THE NON- RESIDENT ON INCOME ARISEN TO THE NON-RESIDENT THROU GH HIM (EMPHASIS SUPPLIED). WHAT THE HIGH COURT MEANT WAS IF SOME OT HER INCOME HAS BEEN ASSESSED IN THE CASE OF THE NON-RESIDENT, THE ASSESSING OFFICER HAS JURISDICTION TO FRAME ASSESSMENT ON THE AGENT OF TH E NON-RESIDENT IN RESPECT OF SOME INCOME FLOWING TO THE NON-RESIDENT THROUGH THE AGENT. THIS DECISION OF THE KERALA HIGH COURT, WAS HELD NO T TO BE INTERPRETED TO MEAN THAT THE SAME INCOME CAN BE ASSESSED SIMULTANE OUSLY IN THE HANDS OF THE NON-RESIDENT AND IN THE HANDS OF THE A GENT. THE TRIBUNAL HELD THAT SUCH DOUBLE TAXATION MILITATES AGAINST TH E CARDINAL PRINCIPLES FOR LEVYING TAX ON INCOME. THE TRIBUNAL FURTHER H ELD THAT WHEN ONCE ASSESSMENT IN THE CASE OF PRINCIPAL BECOMES FINAL T HE ASSESSMENT OF THE SAME INCOME IN THE HANDS CANNOT BE MADE. THE ABOVE DECISION OF THE TRIBUNAL IN OUR VIEW IS SQUARELY APPLICABLE TO THE FACTS OF THE PRESENT CASE. HINDALCO INDUSTRIES LIMITED 16 19. RESPECTFULLY FOLLOWING THE SAME, WE HOLD THAT I NCOME HAVING BEEN BROUGHT TO A CHARGE OF TAX IN THE HANDS OF THE PRIN CIPAL, THE SAME INCOME CANNOT BE ONCE AGAIN ASSESSED IN THE CASE OF A REPR ESENTATIVE ASSESSEE. WE THEREFORE HOLD THE ASSESSMENT OF THE CAPITAL GAI N OF ALCAN IN THE HANDS OF THE HINDALCO AS AGENT OF ALCAN CANNOT BE S USTAINED. THE ASSESSMENT ORDER IS THEREFORE ANNULLED. IN VIEW OF OUR ABOVE CONCLUSION, WE DEEM IT UNNECESSARY TO DEAL WITH THE OTHER ISSUE S RAISED BY THE ASSESSEE IN ITS APPEAL. 20. THE ONLY ISSUE RAISED IN THIS DEPARTMENTAL APPE AL PERTAINS TO DELETION BY THE LEARNED CIT(A) THE INTEREST CHARGED UNDER SECTION 234B. SINCE THE RELEVANT ORDERS HAVE ALREADY BEEN QUASHED BY US WHILE DECIDING THE ASSESSEES APPEAL, THE DEPARTMENTAL AP PEAL IS RENDERED INFRUCTUOUS AND IS LIABLE TO BE DISMISSED ON THAT G ROUND. 21. ITA NO. 6923/MUM/06: THIS IS AN APPEAL BY HIND ALCO ARISING OUT OF PROCEEDINGS BY THE AO U/S.250 OF THE ACT, PURSUA NT TO THE ORDER OF THE CIT(A) DISMISSING APPEAL AGAINST ORDER PASSED U/S.1 47 READ WITH SEC.163 OF THE ACT AND WHILE DOING SO GIVING CERTAIN DIRECT IONS TO THE AO IN THE MATTER OF COMPUTATION OF CAPITAL GAIN. SINCE THE A SSESSMENT ON HINDALCO AS AGENT OF ALCAN IS HELD TO BE NOT VALID, THIS APP EAL ALSO BECOMES INFRUCTUOUS AND IS THEREFORE DISMISSED. 22. IN THE RESULT, ITA NO. 3667/MUM/05 IS DISMISSED . ITA NO.4685/MUM/05 IS ALLOWED. ITA NO.4968/MUM/05 IS DI SMISSED. ITA NO.6923/MUM/06 IS DISMISSED. ORDER HAS BEEN PRONOUNCED ON 14 TH DAY OF MAY, 2010. SD/- (B. RAMAKOTAIAH) ACCOUNTANT MEMBER SD/- (N.V. VASUDEVAN) JUDICIAL MEMBER DATED : 14 TH MAY, 2010 COPY TO : 1. THE ASSESSEE HINDALCO INDUSTRIES LIMITED 17 2. THE RESPONDENT 3. THE CIT(A)-CONCERNED. 4. THE CIT, CONCERNED. 5. THE DR CONCERNED, MUMBAI 6. GUARD FILE BY ORDER TRUE COPY ASSTT. REGISTRAR, ITAT, MUMBAI PS