Judgement

RAMASWAMI, J.: The respondent is a limited company incorporate under the Indian Companies Act, 1913 and carries on business of manufacturing and selling diesel trucks and bus chassis, locomotives and other heavy engineering products. The respondent manufactures diesel trucks and bus chassis in collaboration with the German firm "Daimler Bens A. G." The business of manufacturing locomotives is carried on by the respondent in collaboration with the German firm "Kruss Maffei A. G." For each of the assessment years from 1955-56 to 1961-62, the Income-tax Officer issued a notice to the respondent under S. 43 of the Indian Income-tax Act, 1922 (hereinafter called the Act ) intimating that he intended treating the respondent as the Agents of the two German firms. In pursuance of the notices the Income-tax Officer actually passed orders under S. 43 of the Act treating the respondent as agent of the said two German firms. For the assessment year 1962-63 no notice under S. 43 of the Act had been issued observed upon the respondent by the Income-tax Officer and no order under that section had been passed treating the respondent as the agent of the two German firms. On September 8, 1961, the respondent received from the Income-tax Officer notices of demand under S. 29 of the Act together with an order under S. 18-A (i) calling upon the respondent to make advance payment of the tax for the assessment year 1962-63 as agent of the said two German firms. The tax demanded was Rs. 90,833.29 in the case of Krauss A. G. and Rs. 6,32,629.62 in the case of Daimler A. G. By its reply dated September 22, 1961, the respondent denied its liability to make advance payment of tax. The respondent also made a representation to the Commissioner of Income-tax but on April 16, 1962, the respondent received a communication from the Commissioner rejecting its representation. The respondent thereupon filed two petitions in the Bombay High Court challenging the action of the Income-tax Officer demanding advance tax and asking for the grant of a writ in the nature of certiorari to quash the notices of demand under S. 29 of the Act. By its judgment dated April 17/18, 1963, the High Court allowed the petitions and granted a writ quashing the notices of demand issued to the respondent and restraining the Income-tax Officer from taking any further steps or proceedings in the enforcement of the said notices. These appeals are brought by special leave to this Court on behalf of the Income-tax Officer, Companies Circle, Bombay, hereinafter called the appellant.

2. Sections 18-A, 42 and 43 of the Act, as they stood at the material time, are to the following effect:

"18-A, (1) (a) In the case of income in respect of which provision is not made under section 18 for deduction of income ax at the time of payment, the Incometax officer may, on or after the 1st day of April in any financial year, by order in writing, require an assessee to pay quarterly to the credit of the Central Government on the 15th day of June, 15th day of September, 15th day of December and 15th day of March in that year, respectively, an amount equal to one-quarter of the income-tax and super-tax payable on so much of such income as is included in his total income of the latest previous year in respect of which he has been assessed, if that total income exceeded the maximum amount not chargeable to tax in his case by two thousand five hundred rupees. Such income-tax and super-tax shall be calculated at the rates in force for the financial year in which he is required to pay the tax, and shall bear to the total amount of income-tax and super-tax so calculated on the said total income the same proportion as the amount of such inclusions bears to his total income or in cases where under the provisions of sub-section (1) of Section 17 both income-tax and super-tax or super-tax are chargeable with reference to the total world income, shall bear to the total amount of income-tax and super-tax which