DDIT (I.T.) - 1(1), MUMBAI V. M/s. AIR INDIA LTD., MUMBAI

ITA 6630/MUM/2006

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 4281 (ITAT-MUMBAI)
• Duration Of Justice: 9 year(s) 3 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-04-2016
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: L
• Next Hearing Date: 14-08-2017
• Assessment Year: 2000-2001
• Appeal Filed On: 07-12-2006
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: JASBIR CHA UHAN
• Keywords: Recovery proceedings; Reassessment proceedings
• Section: 148; 144

Judgement Text

ITA NO.6630/MUM/06 ASSESSMENT YEAR: 2000 - 01 PAGE 1 OF 10 IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI L BENCH, MUMBAI [CORAM : PRAMOD KUMAR AM AND PAWAN SINGH JM] ITA NO. 6630 /MUM/0 6 AS SESSMENT Y EAR : 20 00 - 01 DEPUTY DIRECTOR OF INCOME TAX ( INTERNATIONAL TAXATION) 1 (1) , MUMBAI .. ....... .APPELLANT VS. AIR INDIA LIMITED - AS AN AGENT OF CARBIJET INC ... RESPONDENT AIR INDIA BUILDING, NARIMAN POINT MUMBAI 400 021 [PAN: AAACA9213E] APPEARANCES BY: JASBIR CHAUHAN , FOR THE A PPELLANT JITENDRA SANGHVI , F OR THE RE SPONDENT DATE OF CONCLUDING THE HEARING : JANUARY 06 , 201 6 DATE OF PRONOUNCING THE ORDER : APRIL 5 TH , 201 6 O R D E R PER PRAMOD KUMAR , AM : 1. BY WAY OF THIS APPEAL, THE ASSESSING OFFICER HAS CHALLENGED CORRECTNESS OF THE ORDER DATED 17 TH AUGUST 2006 PASSED BY THE LEARN ED CIT(A) IN THE MATTER OF ASSESSMENT UNDER SECTION 144 R.W.S. 147 AND 163 OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT ) FOR THE ASSESSMENT YEAR 2000 - 01. 2. GRIEVANCES RAISED BY THE APPELLANT ARE AS FOLLOWS: 1. ON THE FACTS AND IN T HE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) ERRED IN HOLDING THAT THE SAME INCOME ITA NO.6630/MUM/06 ASSESSMENT YEAR: 2000 - 01 PAGE 2 OF 10 CANNOT BE ASSESSED FIRST IN THE HANDS OF THE NON RESIDENT AND SIMULTANEOUSLY THROUGH ITS AGENT, REPRESENTATIVE OF THE ASSESSEE. 2. ON THE FACTS AND IN THE CI RCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) ERRED IN HOLDING THAT INCOME OF RS 97,35,04,000 IS NOT REQUIRED TO BE ASSESSED, AND, THEREFORE, DELETED. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) ERRED IN DE LETING THE ADDITION MADE OF RS 97,35,04,000 3. WHEN THIS APPEAL WAS CALLED OUT FOR HEARING, LEARNED COUNSEL FOR THE ASSESSEE FAIRLY ACCEPTED THAT SO FAR AS THE CORE ISSUE, ON MERITS, IS COVERED, AGAINST THE ASSESSEE, BY DECISION OF A COORDINATE BENCH OF THIS TRIBUNAL, IN THE CASE OF CARBIJET INC VS DCIT [(2005) 4 SOT 18 (MUM)] . THE SHORT ISSUE THAT WE HAVE TO, THEREFORE, DECIDE IS WHETHER OR NOT THE LEARNED CIT(A) WAS JUSTIFIED IN HOLDING THAT THE ASSESSMENT COULD NOT BE FRAMED ON THE ASSE SSEE, AS AN AGEN T, WHEN THE NON - RESIDENT IS ALSO ASSESSED TO TAX IN RESPECT OF THE SAME. 4. SO FAR AS THIS ISSUE IS CONCERNED, THE RELEVANT MATERIAL FACTS ARE LIKE THIS. THE ASSESSEE BEFORE US IS A PUBLIC SECTOR UNDERTAKING ENGAGED IN THE BUSINESS OF CIVIL AVIATION. IT HAD ENTERED INTO A WET LEASE AGREEMENT, WITH AN COMPANY BY THE NAME OF CARBIJET INC. BASED IN ANTIGUA AND BARBUDA - A TWIN ISLAND COUNTRY IN WEST INDIES , ON 16 TH NOVEMBER, 1994. THIS AGREEMENT WAS INITIALLY VALID UPTO 30 TH JUNE 1995, BUT IT WAS LATER EXTEND ED UPTO 31 ST DECEMBER 1995. IN THE MEANTIME, ON 22 ND OCTOBER 1995, THE ASSESSEE ENTERED INTO A FRESH AGREEMENT ,FOR WET LEASE OF 3 AIRCRAFTS, WITH THE SAME COMPANY, AND THIS AGREEMENT WAS TO REMAIN IN FORCE UPTO 31 ST DECEMBER, 1997. HOWEVER, ON 4 TH SEPTEMB ER 1996, THIS AGREEMENT WAS TERMINATED BY THE ASSESSEE, AND THIS TERMINATION OF LEASE WAS SUBJECTED TO LITIGATION, SEEKING COMPENSATION FOR CARBIJET INC, BEFORE THE INTERNATIONAL ARBITRAL TRIBUNAL LONDON, ITA NO.6630/MUM/06 ASSESSMENT YEAR: 2000 - 01 PAGE 3 OF 10 (IATL,IN SHORT). IN COMPLIANCE WITH THE DIRECTIONS OF THE IATL, WHICH DECIDED THE MATTER IN FAVOUR OF CARBIJET INC. THE ASSESSEE MADE A PAYMENT OF US $ 21.6 MILLION ON 14.2.2000. THIS AMOUNT WAS DEPOSITED IN AN ESCROW ACCOUNT IN THE NAME OF SOLICITORS FOR BOTH THE PARTIES, BUT FINALLY, ON 22 ND MAY 2000, TH E AMOUNT WAS TRANSFERRED TO THE ACCOUNT OF CARBIJET INC. FINALLY, ON 31 ST MARCH 2002, THE IATL HAS ALSO AWARDED LEGAL COSTS AGAINST THE ASSESSEE. THE ASSE SSEE BEFORE US, VIDE ORDER DATED 6 TH MARCH 2003, WAS TREATED AS A REPRESENTATIVE ASSESSEE, AND ITS IN THIS CAPACITY THAT THE PRESENT ASSESSMENT WAS FRAMED ON 27 TH MARCH 2003.IN THE COURSE OF THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER CAME TO THE CONCLUSION THAT THE SUM OF US $ 22.4 MI LLION AWARDED TO CARBIJET, UNDER THE QUANTUM AWARD DATED 15 TH NOVE MBER 1999, ON ACCOUNT OF COMPENSATION FOR LOSS OF INCOME AS LEASE RENTAL, WAS INCOME OF THE CARBIJET INC. IT WAS NOTED THAT THE ASSESSING OFFICER HELD THAT ANY RECEIPT ARISING FROM THE TERMINATION OF WET LEASE CONTRACT WITH AIR INDIA, AFTER THE EXPIRY OF T HE FIRST WET LEASE AGREEMENT, WAS REVENUE RECEIPT IN NATURE , AND THAT IT WAS TAXABLE IN THE HANDS OF THE ASSESSEE IN THE YEAR IN WHICH THE RIGHT TO RECEIVE THE SAID INCOME CRYTSTALLIZED. THE ASSESSING OFFICER ALSO NOTED THAT THE APPEAL AGAINST THE ARBITRAL AWARD WAS REJECTED BY THE COURT OF APPEAL . IT WAS NOTED THE BUSINESS OF CARBIJET INC WAS TO PROVIDE AIRCRAFT ON LEASE, AND, THEREFORE, RECEIPT IN QUESTION WAS A RECEIPT IN THE COURSE OF ITS NORMAL BUSINESS. CONVERTED INTO INRS, UNDER RULE 115A, THE AMOUN T WAS QUANTIFIED AT RS 97,35,04,000 . THIS AMOUNT WAS BROUGHT TO TAX IN THE HANDS OF THE ASSESSEE, AS A REPRESENTATIVE ASSESSEE OF CARBIJET INC, AGGRIEVED BY WHICH ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CIT(A). 5 . LEARNED CIT(A) UPHELD THE TAXA BILITY OF THE ARBITRAL AWARD, IN THE HANDS OF THE CARBIJET INC, IN PRINCIPLE. HE ALSO HELD THAT THIS AMOUNT IS TAXABLE IN THIS ASSESSMENT YEAR . WHAT IS, PARTICULARLY IN THE CONTEXT OF ISSUES REQUIRING OUR ADJUDICATION, MOST SIGNIFICANT IS THAT HE ADMITTED CERTAIN ADDITIONAL GROUNDS OF APPEAL IN RESPECT OF THE ISSUE AS TO WHETHER THE ASSESSING OFFICER IS JUSTIFIED IN MAKING ASSESSMENT OF THE SAME INCOME OF RS 97,35,04,000 SIMULTANEOUSLY IN THE HANDS OF THE CARBIJET INC AS ALSO AIR INDIA AS REPRESENTATIVE ASS ESSEE OF CARBIJET INC. LEARNED CIT(A) ALSO CALLED FOR, VIDE LETTER 12 TH JULY 2006, REPORT OF THE ASSESSING OFFICER ON COMMENTS AND JUSTIFICATION FOR MAKING ASSESSMENT OF THE SAME INCOME TWICE - FIRST IN THE ITA NO.6630/MUM/06 ASSESSMENT YEAR: 2000 - 01 PAGE 4 OF 10 HANDS OF THE CARBIJET INC AND THEN IN THE HANDS O F THE AIR INDIA AS A REPRESENTATIVE ASSESSEE OF THE CARBIJET INC . IN RESPONSE, VIDE DETAILED REPORT DATED 19 TH JULY 2006, THE ASSESSING OFFICER NARRATED THE SEQUENCE OF EVENTS AND THE RELATED FACTS, AND SUBMITTED, INTER ALIA, THAT THE SAME INCOME HAS BEE N TAXED SIMULTANEOUSLY IN THE HANDS OF THE PRINCIPAL AS WELL AS ITS REPRESENTATIVE ASSESSEE MAINLY TO SAFEGUARD THE INTERESTS OF THE REVENUE. AIR INDIA WOULD STAND ABSOLVED OF ITS LIABILITY TO PAY THE DEMAND FOR AY 2000 - 01 WHEN CARBIJET INC PAYS THE CORRES PONDING DEMAND IN ITS OWN CASE . LEARNED CIT(A) THEN TOOK NOTE OF THE DETAILED ARGUMENTS OF THE ASSESSEE THAT THE DECISIONS OF HON BLE KERALA HIGH COURT IN THE CASE OF CIT VS FERTILIZERS & CHEMICALS (TRAVANCORE) LTD [ ( 1987 ) 166 ITR 823 (KER)] AND BARIUM CH EMICALS LTD VS ITO [(1975) 100 ITR 637 (AP)] SUPPORTS THE CASE OF THE ASSESSE INASMUCH AS ONCE INCOME HAS BEEN ASSESSED IN THE HANDS OF THE NON RESIDENT, SAME CANNOT THEREAFTER BE ASSESSED IN THE HANDS OF HIS REPRESENTATIVE . IT WAS ALSO NOTED THAT IN T HE LIGHT OF HON BLE CALCUTTA HIGH COURT S DECISION IN THE CASE OF CIT VS ALFRED HUBERT (INDIA) PVT LTD [( 1986 ) 159 ITR 583 (CAL)] DOUBLE ASSESSMENT OF INCOME IN THE HANDS OF THE ASSESSEE AND HIS AGENT WAS NOT POSSIBLE. A NOTE WAS TAKEN OF THE ASSESSEE S R ELIANCE ON HON BLE SUPREME COURT S JUDGMENT IN THE CASE OF CLAGGETT BRACH I & CO LTD [( 1989 ) 177 ITR 409 (SC)] WHEREIN IT WAS HELD THAT : IT CANNOT BE DISPUTED ALSO THAT IF AN ASSESSMENT IS MADE ON ONE (I.E. THE ASSESSEE OR HIS AGENT), THERE CAN BE NO ASSE SSMENT ON THE OTHER . LEARNED CIT(A) THEREAFTER EMBARKED UPON A ANALYSIS OF THE JUDICIAL PRECEDENTS IN THE CASES OF CIT VS KAMALINI KHATAU [(1999) 209 ITR 101 (SC)] , CIT VS FERTILIZERS & CHEMICALS (TRAVANCORE) LTD (SUPRA), BARIUM CHEMICALS LTD (SUPRA), ALFRED HUBERT (INDIA) PVT LTD (SUPRA), AND CLAGGET T BRACHI & CO LTD (SUPRA), JYOTI PRASAD AGARWAL & ORS VS ITO [ ( 1959 ) 37 ITR 107 (ALL)] AND ITO VS BACHU LAL KAPUR [( 1966 ) 60 ITR 74 (SC )] AND FINALLY CONCLUDED AS FOLLOWS: 2.20 AFTER CONSIDERING THE VAR IOUS PROVISIONS OF THE ACT AND THE DECISIONS OF HON BLE SUPREME COURT AND OTHER HIGH COURT AS DISCUSSED ABOVE, IT IS HELD THAT THE SAME INCOME CANNOT BE ASSESSED FIRST IN THE ITA NO.6630/MUM/06 ASSESSMENT YEAR: 2000 - 01 PAGE 5 OF 10 HANDS OF NON - RESIDENT AND SIMULTANEOUSLY THROUGH ITS AGENT, REPRESENTATIVE OF ASS ESSEE. 2.21 IT IS SEEN THAT THE ASSESSMENT PROCEEDINGS IN THE CASE OF CI WERE INITIATED BY FILING OF RETURN BY CI ON 28.11.2000 BEFORE THE DCIT CIR. 2(1). RETURN WAS FILED ON NIL INCOME AND A NOTE WAS GIVEN IN THE RETURN MENTIONING THAT THE INTERNATI ONAL ARBITRATION TRIBUNAL ISSUED A QUANTUM AWARD ON 15.11.1999. IT WAS CLAIMED THAT THE ARBITRATION PROCEEDINGS GAVE RAISED TO COMPENSATION. SINCE THE ARBITRATION PROCEEDINGS WERE CONDUCTED OUTSIDE AND THE QUANTUM AWARD WAS ISSUED OUTSIDE INDIA, AMOUNT PAY ABLE BY AI TO CI DID NOT ACCRUE TO CI IN INDIA. THE CI ACCORDINGLY CLAIMED THAT THE QUANTUM AWARD AS PER ORDER OF IAT DATED 15.11.99 DID NOT ACCRUE OR ARISE IN INDIA. CASE WAS SELECTED FOR SCRUTINY AND THE NOTICE U/S.143(2) WAS ISSUED ON 28.11.2001 AND THE PROCEEDINGS WERE CARRIED ON BY ISSUE OF NOTICES SUBSEQUENTLY LEADING TO COMPLETION OF ASSESSMENT ON 28.03.2003 U/S.143(3). SIMULTANEOUSLY NOTICE WAS ISSUED TO AI ON 15.03.2001 CALLING UPON AI TO SHOW - CAUSE WHY NOT IT SHOULD BE TREATED AS AGENT OF CI U/S.1 63. ORDER U/S.163 HOLDING AI AS AGENT OF CI WAS PASSED ONLY ON 06.03.2003. . NOTICE U/S.148 WAS ISSUED ON 07.03.2003. NOTICE U/S.142(1) WAS ALSO ISSUED ON 07.03.2003 CALLING AI TO FILE CERTAIN DETAILS. SECOND NOTICE WAS ISSUED ON 19.03.2003 CALLING UPON AI TO FILE DETAILS. ASSESSMENT HAS BEEN COMPLETED ON 27.03.2003 U/S. 144 R.W.S. 147 & 163. PERUSAL OF THE ASSESSMENT ORDER OF CI AND THAT OF AI PASSED ON 28.03.2003 AND 27.03.2003 RESPECTIVELY FOR A.Y.2000 - 01 REVEALS THAT BOTH THE ORDERS ARE SAME. THESE HAVE BEEN PASSED SIMULTANEOUSLY. INCOME ASSESSED BY BOTH ORDERS IS SAME I.E. RS.97,35,04,000/ - . REASONS GIVEN FOR THE ASSESSMENT OF THIS INCOME ARE ALSO SAME. IT IS THEREFORE A CLEAR CASE OF DOUBLE ASSESSMENT OF SAME INCOME FIRST IN THE HANDS OF NON - RESIDENT A ND SECONDLY IN THE HANDS OF AGENT. APPEAL AGAINST THE ASSESSMENT IN THE CASE OF CI HAS BEEN DECIDED BY MY PREDECESSOR VIDE HIS ORDER DATED 30.03.2004 IN APPEAL NO. CIT(A)XXXI/JT.DIT(IT) - 3/IT - 88/03 - 04 IN WHICH THE ASSESSMENT OF INCOME AT RS.97,35,04,000/ - HAS BEEN UPHELD. ASSESSMENT OF SAME ITA NO.6630/MUM/06 ASSESSMENT YEAR: 2000 - 01 PAGE 6 OF 10 INCOME IN THE HANDS OF AI AS AGENT OF CI CANNOT THEREFORE BE UPHELD AS THERE CAN BE NO DOUBLE ASSESSMENT OF SAME INCOME, EVEN THOUGH THERE CAN BE SEVERAL ASSESSMENT OF NON - RESIDENT REGARDING DIFFERENT INCOME. 2.22 T HE PERUSAL OF THE ASSESSMENT ORDER PASSED DIRECTLY IN THE CASE OF CI AND IN THE HANDS OF AI AS AGENT OF CI REVEALS THAT BOTH ORDERS HAS BEEN PASSED CREATING SUBSTANTIVE DEMAND AND THE ASSESSMENT IN THE HANDS OF AGENT IS NOT PROTECTIVE. REGARDING JUSTIFICAT ION FOR COMPLETING THE ASSESSMENT IN THE HANDS OF AI, THE AO HAS MENTIONED IN HIS REPORT DATED 19.07.2006 (QUOTED ABOVE) THAT THE SIMULTANEOUS ASSESSMENT HAS BEEN MADE MAINLY TO SAFEGUARD THE INTEREST OF REVENUE. THE AO HAS FURTHER MENTIONED THAT HOLDING T HE AI AS AGENT U/S. 163 IS NEEDED FOR OTHER PURPOSES (OTHER THAN ASSESSMENT) INCLUDING FOR THE PURPOSES OF RECOVERY OF TAX. AS DISCUSSED ABOVE, HON'BLE SUPREME COURT AND DECISIONS OF VARIOUS OTHER HIGH COURTS HAVE HELD THAT THESE CANNOT BE SIMULTANEOUS ASS ESSMENT IN THE HANDS OF NON - RESIDENT AND HIS AGENT ASSESSING THE SAME INCOME TWICE. AI IS ALREADY LIABLE TO TAX U/S. 195. ITS LIABILITY U/S. 195 IS NOT IN ANYWAY AFFECTED BY THE ASSESSMENT OF INCOME OF CI WHETHER IN THE HANDS OF CI OR IN THE HANDS OF AI AS AGENT OF CI. THE POWER OF AO TO RECOVER THE TAX RELATING TO INCOME OF CI, U/S.226(3), IF AI IS FOUND TO HOLD ANY MONEY PAYABLE TO CI EITHER IN PRESENT OR ANYTIME FUTURE IS NOT AFFECTED BY ASSESSMENT IN THE HANDS OF AGENT. IT IS THEREFORE CLEAR THAT THE IN TEREST OF REVENUE IS NOT JEOPARDISED IN ANYWAY IN RESPECT OF RECOVERY OF TAX. 2.23 IN VIEW OF THIS IT IS HELD THAT INCOME OF RS.97,35,04,000/ - IS NOT REQUIRED TO BE ASSESSED AND THE SAME IS THEREFORE DELETED 6 . THE ASSESSING OFFICER IS AGGRIEVED AND IS IN APPEAL BEFORE US. 7 . WE HAVE HEARD THE RIVAL CONTENTIONS, PERUSED THE MATERIAL ON RECORD AND DULY CONSIDERED THE FACTS OF THE CASE IN THE LIGHT OF THE APPLICABLE LEGAL POSITION. ITA NO.6630/MUM/06 ASSESSMENT YEAR: 2000 - 01 PAGE 7 OF 10 8 . THE QUESTION WHETHER THE SAME INCOME CAN BE TAXED IN THE HANDS OF THE ASSESSEE, IN HIS OWN NAME, AS ALSO IN THE HANDS OF HIS AGENT UNDER SECTION 163 IN THE REPRESENTATIVE CAPACITY, CAME UP FOR ADJUDICATION BEFORE HON BLE SUPREME COURT IN THE CASE OF CLAGGETT BRACHI (SUPRA). WHILE DEALING WITH THIS SITUATION, THEIR LORDSHIP S HAVE, INTER ALIA, OBSERVED AS FOLLOWS: 6. THE SECOND POINT URGED BEFORE US IS THAT WHEN THE ITO HAD TAKEN THE ASSESSMENT PROCEEDINGS AGAINST THE INDIAN AGENT OF THE ASSESSEE, IT WAS NOT OPEN TO HIM TO TAKE ASSESSMENT PROCEEDING AGAINST THE ASSESSEE. IT IS OPEN TO AN ITO TO ASSESS EITHER A NON - RESIDENT ASSESSEE OR TO ASSESS THE AGENT OF SUCH NON - RESIDENT ASSESSEE. IT CANNOT BE DISPUTED ALSO THAT IF AN ASSESSMENT IS MADE ON ONE, THERE CAN BE NO ASSESSMENT ON THE OTHER, AND THEREFORE, IN THIS CASE IF THE A SSESSMENT HAD BEEN MADE ON THE INDIAN AGENT, THE ASSESSMENT COULD NOT HAVE BEEN MADE ON THE ASSESSEE . HOWEVER, FACTS SHOW THAT THE REASSESSMENT PROCEEDINGS COMMENCED AGAINST THE AGENT WERE FOUND TO BE BARRED BY TIME BY REASON OF S. 149(3) OF THE ACT. THE I SSUE OF NOTICE UNDER S. 148 OF THE ACT TO THE AGENT AFTER THE EXPIRY OF TWO YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR IS PROHIBITED BY THE STATUTE. THE ITO DROPPED THE PROCEEDINGS WHEN HE WAS MADE AWARE OF THAT PROHIBITION. THE ASSESSMENT PROCEEDI NGS TAKEN BY HIM AGAINST THE AGENT HAVE TO BE IGNORED AND CANNOT OPERATE AS A BAR TO ASSESSMENT PROCEEDINGS DIRECTLY AGAINST THE ASSESSEE. ON THIS POINT ALSO, THE HIGH COURT HAS TAKEN THE CORRECT VIEW WHEN IT ANSWERED THE QUESTION IN FAVOUR OF THE REVENUE. [EMPHASIS, BY UNDERLINING, SUPPLIED BY US] 9 . THE LEGAL POSITION, AS IN OUR HUMBLE UNDERSTANDING AND AS A RESULT OF THE LAW SO LAID DOWN BY THEIR LORDSHIPS, IS THAT THE ASSESSING OFFICER CAN ONLY ASSESSEE ONE OF THE PERSONS, EITHER THE PRINCIPAL OR THE A GENT, AND ONCE HE DOES SO, HE IS FUNCTUS OFFICIO SO FAR AS ASSESSMENT OF THAT INCOME IS CONCERNED. WHEN HE TAXES THE INCOME ITA NO.6630/MUM/06 ASSESSMENT YEAR: 2000 - 01 PAGE 8 OF 10 IN THE HANDS OF THE ASSESSEE DIRECTLY, HE LOSES HIS RIGHT TO TAX THE SAME INCOME IN THE HANDS OF THE AGENT, AND VICE VERSA . NO INHE RENT PREFERENCE CAN BE SAID TO BE IN EXISTENCE OF EITHER OF THEM, I.E. AGENT AND THE PRINCIPAL, AND WHEN HE TAXES THE SAME INCOME IN THE HANDS OF BOTH OF THEM, THE ASSESSMENT WHICH IS DONE AT A LATER POINT OF TIME CEASES TO BE VALID IN THE EYES OF LAW. THE WORDS OF HON BLE SUPREME COURT ARE UNAMBIGUOUS AND, IN OUR CONSIDERED VIEW, DO NOT LEAD TO ANY OTHER CONCLUSION. IN THE PRESENT CASE, THE ASSESSMENT HAS BEEN FRAMED ON THE REPRESENTATIVE ASSESSEE, I.E. AIR INDIA, ON 27 TH MARCH 2003, WHEREAS THE ASSESSMENT IS DONE DIRECTLY ON THE PRINCIPAL, I.E CARBIJET INC, ON 28 TH MARCH 2003. ON THESE FACTS, THEREFORE, WHEN THE ASSESSING OFFICER EXERCISED HIS OPTION TO BRING THE INCOME TO TAX IN THE HANDS OF AIR INDIA, AS A REPRESENTATIVE ASSESSEE, HE WAS PERHAPS LEGALLY FUNCTUS OFFICIO SO FAR AS ASSESSMENT OF THE SAME INCOME IN THE HANDS OF CARBIJET INC DIRECTLY WAS CONCERNED. HOWEVER, MERELY BECAUSE A DAY LATER, THE ASSESSING OFFICER ALSO TAXED THE SAME INCOME IN THE HANDS OF CARBIJET INC AS WELL, THE ASSESSMENT OF THAT INCOME IN THE HANDS OF THE REPRESENTATIVE ASSESSEE - I.E. AIR INDIA, CANNOT BE FAULTED WITH. WE ARE, THEREFORE, UNABLE TO HOLD, AS HAS BEEN HELD BY THE CIT(A), THAT THE ASSESSMENT IN THE HANDS OF THIS INCOME IN THE HANDS OF AIR INDIA, IN REPRESENTATIVE CA PACITY, CEASES TO HOLD GOOD IN LAW BECAUSE HE HAS ALSO TAXED, THOUGH SUBSEQUENTLY, THE SAME INCOME IN THE HANDS OF THE ASSESSEE DIRECTLY. AS A MATTER OF FACT, LEARNED CIT(A) HAS FREQUENTLY USED THE EXPRESSION SIMULTANEOUS TO DESCRIBE THIS DUAL ASSESSMENT , AND IT IS THERE THAT HE APPARENTLY FELL IN ERROR. WHILE THE PROCESS OF ASSESSMENT MAY BE SIMULTANEOUS AND SOMEWHAT PARALLEL IN APPROACH, THE ASSESSMENT IS NOT SIMULTANEOUS. AS WE HAVE NOTED ABOVE, THERE IS NO INHERENT PREFERENCE FOR ASSESSMENT DIRECTLY O N THE PRINCIPAL, AND THE ONL Y LIMITATION ON THE ASSESSMENT VIS - - VIS THESE TWO PARTIES, I.E. AGENT AND THE PRINCIPAL, ARE CONCERNED, THAT ONCE AN ASSESSMENT IS MADE ON ONE OF THEM, THE ASSESSMENT FOR THE SAME INCOME THER E AFTER CANNOT BE MADE ON THE OTHER. IN THE PRESENT CASE, T HE ASSESSMENT IS ON TWO DIFFERENT DATES, AND THE DATE OF ASSESSMENT ON THE AIR INDIA IN A REPRESENTATIVE CAPACITY IS A DAY EARLIER THAN THE ASSESSMENT ON THE CARBIJET INC DIRECTLY. THEREFORE, THE ASSESSMENT IN THE HANDS OF AIR INDIA, IN THE REPRESENTATIVE CAPACITY, CANNOT BE SAID TO BE LEGALLY UNSUSTAINABLE. IT IS ONLY THE ASSESSMENT IN THE HANDS OF CARBIJET INC WHICH MAY NOT BE SUSTAINABLE IN LAW BUT THAT ASPECT OF THE MATTER IS WHOLLY ACADEMIC SINCE, IN VIEW OF THE PROVISIONS OF SEC TION 165 OF THE ACT, EVEN THOUGH THE ITA NO.6630/MUM/06 ASSESSMENT YEAR: 2000 - 01 PAGE 9 OF 10 ASSESSMENT MAY BE IN THE HANDS OF A REPRESENTATIVE ASSESSEE UNDER SECTION 163(3), THERE IS NO BAR ON DIRECT RECOVERY, OF TAXES SO HELD TO BE LEVIABLE, FROM CARBIJET INC . IT IS IMPORTANT TO BEAR IN MIND THE FACT THAT, AS SECTION 165 CATEGORICALLY PROVIDES, NOTHING, INTER ALIA, IN SECTION 163, SHALL PREVENT EITHER THE DIRECT ASSESSMENT OF THE PERSON ON WHOSE BEHALF, OR FOR WHOSE BENEFIT, INCOME THEREIN REFERRED TO IS RECEIVABLE, OR THE RECOVERY FROM SUCH PERSON THE TAX PA YABLE IN RESPECT OF SUCH INCOME . IN EFFECT THUS, IT IS NOT ONLY DIRECT ASSESSMENT ON THE PRINCIPAL, BUT ALSO DIRECT RECOVERY FROM THE PRINCIPAL EVEN THOUGH THE ASSESSMENT MAY BE IN THE NAME OF THE AGENT UNDER SECTION 163 , THAT IS PERMISSIBLE NOTWITHSTAN DING THE PROVISIONS OF SECTION 163. THE DECISION OF HON BLE CALCUTTA HIGH COURT, IN THE CASE OF GANESH CHANDRA DHAR VS CIT [(1959) 35 ITR 84 (CAL )], MAY BE REFERRED TO IN THIS REGARD. IN EFFECT THUS, WHETHER THE ASSESSMENT IS MADE ON THE AGENT UNDER SECTIO N 163 OR ON THE PRINCIPAL HIMSELF, THE RIGHTS OF RECOVERY FROM THE PRINCIPAL REMAIN INTACT ANYWAY. WHETHER THE ASSESSMENT IS ON CARBIJET INC, IN ITS OWN NAME, OR IN THE HANDS OF AIR INDIA, AS AN AGENT OF CARBIJET INC, THE DEMANDS IN RESPECT OF THE TAXES S O LEVIED CAN ALWAYS BE ENFORCED AGAINST CARBIJET INC, AND, TO THAT EXTENT, AIR INDIA LIMITED WILL STAND EXONERATED OF ITS TAX LIABILITY IN THIS REGARD. AS REGARDS CONFIRMATION OF DEMANDS RAISED ON THE CARBIJET INC, AS WE HAVE NOTED, THESE DEMANDS ARE WHOLL Y ACADEMIC IN EFFECT. THAT HAS NO BEARING ON THE QUESTION, GIVEN THE FACTS OF THIS CASE, AS TO WHETHER OR NOT THE DEMANDS RAISED ON THE ASSESSEE BEFORE US, IN REPRESENTATIVE CAPACITY, CAN BE LEGALLY SUSTAINABLE OR NOT. 10. FOR THE REASONS SET OUT ABOVE, WE UPHOLD THE GRIEVANCE OF THE ASSESSING OFFICER, REVERSE THE CONCLUSIONS ARRIVED AT BY THE CIT(A) AND CONCLUDE THAT THE IMPUGNED INCOME OF RS 97,35,04,000 HAS BEEN RIGHTLY ASSESSED TO TAX IN THE HANDS OF AIR INDIA LIMITED, AS AN AGENT UNDER SECTION 163 OF THE ACT. IT IS, HOWEVER, MADE CLEAR THAT NOTHING STATED HEREINABOVE, FOR THE DETAILED REASONS SET OUT ABOVE, SHALL EITHER BE CONSTRUED AS COMING IN THE WAY OF DIRECT RECOVERY OF DUE TAXES FROM CARBIJET INC , AND THAT, TO THE EXTENT THE INCOME TAX AUTHORIT IES CAN RECOVER THE TAXES, THE LIABILITY OF AIR INDIA SHALL CORRESPONDINGLY STAND EXONERATED. ITA NO.6630/MUM/06 ASSESSMENT YEAR: 2000 - 01 PAGE 10 OF 10 11. IN THE RESULT, THE APPEAL IS ALLOWED. PRONOUNCED IN THE OPEN COURT TODAY ON THE 5 TH DAY OF APRIL, 2016 SD/ - SD/ - PAWAN SINGH PRAMOD KUMAR (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) DATED: THE 5 TH DAY OF APRIL , 2016 . PBN/* COPIES TO : (1) THE APPELLANT (2) THE RESPONDENT (3) CIT (4) CIT(A) (5) DR (6) GUARD FIL E BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL MUMBAI B ENCHES, MUMBAI