JUDGMENT

B. P. JEEVAN REDDY, J.:—Assessee is the appellant. He is aggrieved by the decision of the Bombay High Court in Income Tax Reference No. 458 of 1976 answering the following question, which was referred to it at his instance, against him: "whether on the facts and in the circumstances of the case the amount of tax paid by Ballarpur on behalf of the assessee in assessment years 1974-75 and 1975-76 is income taxable under the heading other sources".

2. The Ballarpur Paper and Straw Board Mills Limited (Ballarpur) is a public limited company engaged in the manufacture of paper and straw board. It undertook to set up a caustic soda/ chlorine manufacturing plant at Ballarpur. For this purpose, it entered into an agreement with Krebs, a French concern, for purchase of certain machinery and equipment. There was a second agreement between Ballarpur and Krebs whereunder Krebs undertook to provide services of certain personnel including engineers for setting up the plant at Ballarpur. Krebs, in turn, entered into an arrangement with a Swiss concern, Escher Wyas Eurich, for supply of certain machinery and also to make available services of certain personnel. The assessee, Emil Webber, was one such person provided by the Swiss concern. The assessee came to India and worked here in connection with the setting up of the plant.

3. According to the agreement between Ballarpur and Krebs the former undertook to pay salaries and other emoluments to personnel provided by Krebs in accordance with the formula contained in the agreement. Inter alia, it was provided that "salaries are understood free of any Indian tax or duty" For the assessment year 1974-75, the assessee appellant was paid a sum of Rs. 3,82,481/- and for the assessment year 1975-76, a sum of Rs. 67,200/-, in addition to daily allowances and other facilities.

4. The assessee contended before the Income Tax Oficer that he was not liable to pay tax. He also filed returns affirming the said stand. The stand taken by him was negatived, whereupon Ballarpur paid the tax of Rs. 3,23,400/- and Rs. 35,546/- for the said two assessment years respectively. In his assessment orders, the I.T.O. treated the said tax amount as a perquisite and added the same to the salary amount received by the assessee. The said addition was questioned by the assessee in appeal before the A.A.C. but without success. The matter was then carried to the Tribunal. The Tribunal too did not agree with the assessees contention and dismissed his appeal whereupon he obtained the aforesaid reference which, as stated above, has been answered against him by the Bombay High Court.

5. For a proper appreciation of the question arising herein, it is necessary to notice certain factual statements contained in the Statement of the Case. It is stated therein: "according to this agreement, Ballarpur were under an obligation to pay by the device of delegation invoices opened with a bank in France certain amount of salaries at agreed rates to Krebs and C is. Paris for setting up the plant at the town of Ballarpur The Tribunal clarified that there was no dispute between the parties that the amounts of Rs.3,82,481/- and Rs.67,200/- paid by Ballarpur through Krebs to the assessee for services rendered by it in the two respective years were taxable under the ticking Salary. It further clarified that there was no dispute between the parties, that the relationship of .the employer and employee did not exist between Ballarpur and. the assessee The Tribunal held as below:- (i) Ballarpur was under a legal obligation to pay the tax, if any, levied on the assessee; (2) Ballarpur paid tax by virtue of such a legal obligation .........."

6. The facts found by the Tribunal thus show that the assessee-appellant was paid certain salary free of tax but that the tax payable in that behalf was to be and was in fact paid by Ballarpur. The assessment was made upon the assessee directly. The question is whether the said tax component paid by Ballarpur can