Judgement

KAPUR, J. - This is an appeal under certificate of the Pepsu High Court and the question for decision relates to the applicability of the Indian Income Tax Act, 1922 to the erstwhile Pepsu area in the years of assessment 1948-49 and 1949-50.

2. The assessee company (the respondent before us), was incorporated in the Patiala State and had its registered office at Surajpur in Pepsu. For the year of assessment 1948-49 the company failed to deduct from out of the remuneration paid to its Managing Agents, who were non residents, the income-tax and the super tax which, it, under the law, was required to do. It also paid to its auditors auditing fees and from out of this sum also it did not deduct the income-tax and super-tax under the provisions of the Patiala Income Tax Act. The two sums in dispute were Rs. 59,787-1-0 and Rs. 581-4-0 respectively.

For the assessment year 1949-50 also the assessee company failed to make the deduction from the remuneration paid to its Managing Agents and the income-tax deductable was Rs. 52,484-14-0 and super tax Rs. 21,611-6-0. The Income Tax Officer took action against the assessee company under Ss. 18 (3a) and 18(7) of the Patiala Income Tax Act