Judgement

RANGANATH MISRA, J.:- These are appeals by the Revenue by special leave and are directed against the decision of the Calcutta High Court dated 15-9-1972 rendered upon references made under S. 256(l) of the Income-tax Act of 1961. The Tribunal referred the following six questions for opinion of the Court : -

(1) Whether on the facts and in the circumstances of the case and on a proper construction of the agreement between the Indian Company and the Export Company, the Tribunal was right in holding that the six non-resident companies in Group A had a business connection with the Indian Company and therefore that the Indian Company was correctly treated as an agent of the said non-resident companies under S. 163 of the Income-tax Act, 1961 ?

(2) If the answer to question No. 1 is in the affirmative, then, whether on the facts and in the circumstances of the case, the Tribunal was justified in holding that any profit could be deemed to accrue or arise in India to the six non-residents in the United Kingdom in respect of the goods sold by them to customers in India ?

(3) Whether, on the facts and in the circumstances of the case and on a proper construction of the agreement dated 22-3-1955 between the Indian Company and Crane Packing Ltd. (company in Group B), the Tribunal was right in holding that the non-resident company had business connection with the Indian Company and, therefore, the Indian Company was correctly treated as an agent of the said non-resident company under S. 163 of the Income-tax Act, 1961 ?

(4) If the answer to question No. 3 is in the affirmative, then, whether on the facts and in the circumstances of the case, the Tribunal was justified in holding that any profit could be deemed to accrue or arise in India to the aforesaid non-resident company in respect of the goods sold by it to customers in India ?

(5) Whether, on the facts and in the circumstances of the case and on proper construction of the agreement dated 1-6-1954 between the Indian Company and Bundy Tubing Co. (Australia) Pvt. Ltd. (non-resident company in Group B), the Tribunal was right in holding that the non-resident company had business connection with the Indian Company and, therefore, the Indian Company was correctly treated as an agent of the said non-resident company under S. 163 of the Income-tax Act, 1961?

(6) If the answer to question No. 5 is in the affirmative, then, whether on the facts and in the circumstances of the case, the Tribunal was justified in holding that any profits could be deemed to accrue or arise in India to the aforesaid non-resident company in respect of the goods sold to the customers in India ?

2. The short facts relevant for appreciating the background in which these questions arose are these - T. I. & M. Sales Ltd., assessee-respondent, was assessed to income-tax as a representative assessee of ten non-resident companies. The Tribunal grouped the ten non-resident companies under three heads - six in Group A, three in Group B and one in Group C. In regard to the companies under Group A, the assessee had no direct agreement but had dealings by virtue of its agreement with the exporting company. So far as the three companies under Group B are concerned, the assessee had no business connection with them and so far as the only company under Group C is concerned, the assessees stand was that it had an agreement dated 16-12-1948 with the export company, but no liability accrued under the law in respect of the transactions. The Income-tax Officer referred specifically to the agreement of 1948 and refuted the stand of the assessee by saying : -

"The agreement of 6-12-1948 referred to above which continued during the relevant years is clear authority that the non-resident had employed the Indian Company for selling its goods in India on commission. The agreement certainly brings into existence a business connection between the two. The Indian Company is in receipt of commission calculated with reference to the aforesaid v