Case: The Premier Automobiles Ltd Vs. S.N. Shrivastava &amp; Anr

that the previous year should have come to an end before liability can arise. The previous year of an assessee may in some cases end after the commencement but before the end of a financial year in which advance-tax is payable:"it may in other cases commence and end with the financial year. But the liability to pay advance-tax is not in any manner affected because the previous year ends before or with the financial year.Where an assessees previous year is the financial year, his total income may not be determined for the previous year before the commencement of the financial year, but on that account no exemption from payment of advance-tax is granted by the Act. On the commencement of a financial year, a person who is previously assessed to tax is liable to pay advance-tax on demand by the Income-tax Officer under Section 210. The quantum of tax will be determined by Section 209 and will be adjusted in the manner provided by Section 210 (3). That applies to every assessee whether the tax is liable to be paid by him on his own total income, or on the income assessed in his hands as a representative assessee. If he has not been previously assessed in the character in which he is liable to pay tax, an obligation is imposed by Section 212 (3) upon him to make an estimate of his income and to pay advance-tax.That provision applies to his own income and also to the income in respect of which he is a representative assessee. There is nothing in the Act under which the liability to pay advance-tax of a representative assessee depends upon determination of the total income for the previous year."5. An argument of hardship was also raised. It was said that an agent of a non-resident may not normally have in his possession any materials on which he may estimate the income in respect of which he may be chargeable to advance-tax, if he had not been previously assessed to tax as an agent of a non-resident.That again, in our judgment, is not a ground which exempts an agent from liability to pay advance-tax on behalf of his principal. Liability to submit an estimate necessarily implies the duty to secure the requisite information from the non-resident for submitting the estimate. The tax, it must be remembered, is assessed on the agent for and on behalf of the principal, and the Act as made an express provision enabling the agent to recover from the principal the tax so paid by him. Once the Income-tax Officer treats a person as an agent of non-resident, liability to pay tax on regular assessment arises; and his liability as a representative assessee to pay advance-tax is not excluded by any provision of the Act.6. In our judgment, Sections 207 and 208 which impose liability to pay advance-tax in a financial year, Section 210 which authorises the Income-tax Officer to make a demand for payment of advance-tax from a person who is previously assessed, and Section 212 (3) which imposes the duty to make an estimate of the total income likely to be received or to accrue or arise and to pay advance-tax if the total estimated income exceeds the maximum amount not chargeable to tax in his case by Rs. 2,500, apply to every person whether he is assessed in respect of his own income or as a representative assessee, and we are unable to imply an unexpressed limitation on the express words of the statute in favour of an agent of a non-resident principal.7. In the present case by order dated February 25, 1965, for the assessment year 1964-65 the Company was treated as an agent of the non-resident principal. Since the Company was treated as an agent of the non-resident it became liable to pay advance-tax in the financial year 1964-65. By virtue of Section 207 read with Section 208 the declaration that the Company was an agent involved liability to pay advance-tax as well as tax assessed on regular assessment. We are unable to hold that the liability to pay advance-tax did not arise against the Company.8.The plea that the provisions imposing liability to pay advance-tax upon an agent of a non-resident infringe the equality clause of the Constitution has no substance.As already observed, the liability to pay advance-tax arises under Sections 207 and 208 and its quantum is determined by Ss. 209, 210 and 212 (3) and it is not predicated of the accrual of liability that the total income of the previous year should be ascertained or precisely ascertainable when demand is made by the Income-tax Officer under Section 210, or when the assessee is required to make an estimate.The assumption that an assessee whose year of account coincides with the financial year is not in respect of that year liable to pay advance-tax is not warranted. The computation of advance-tax is not dependent upon the completion of the previous year: it depends upon the rules prescribed by Section 209, 210 and 212. Every person who has been previously assessed to tax is liable when ordered by the Income-tax Officer to pay advance-tax, subject to the right to make an estimate under Section 212 (1). A person who has not been previously assessed but whose income is likely to exceed the specified amount is also liable to pay advance-tax. The act does not accord discriminatory treatment between different assesses. Payment of advance-tax is on account and is always liable to be adjusted against the tax assessed on regular assessment.That again applies to all assesses. It is then difficult to appreciate the grounds on which the plea of denial of equal protection may be sustained. The only ground urged, that an assessee may escape liability to pay advance-tax where his previous year coincides with the financial year, is without substance, and no other ground is set up in support of the plea of violation of the guarantee of equality under Article 14 of the Constitution.

Decision (1 = appeal accepted, 0 = rejected): 0

Explanation:
0[ds]The tax, it must be remembered, is assessed on the agent for and on behalf of the principal, and the Act as made an express provision enabling the agent to recover from the principal the tax so paid by him. Once the Income-tax Officer treats a person as an agent of non-resident, liability to pay tax on regular assessment arises; and his liability as a representative assessee to pay advance-tax is not excluded by any provision of the Act.In our judgment, Sections 207 and 208 which impose liability to pay advance-tax in a financial year, Section 210 which authorises the Income-tax Officer to make a demand for payment of advance-tax from a person who is previously assessed, and Section 212 (3) which imposes the duty to make an estimate of the total income likely to be received or to accrue or arise and to pay advance-tax if the total estimated income exceeds the maximum amount not chargeable to tax in his case by Rs. 2,500, apply to every person whether he is assessed in respect of his own income or as a representative assessee, and we are unable to imply an unexpressed limitation on the express words of the statute in favour of an agent of a non-resident principal.In the present case by order dated February 25, 1965, for the assessment year 1964-65 the Company was treated as an agent of the non-resident principal. Since the Company was treated as an agent of the non-resident it became liable to pay advance-tax in the financial year 1964-65. By virtue of Section 207 read with Section 208 the declaration that the Company was an agent involved liability to pay advance-tax as well as tax assessed on regular assessment. We are unable to hold that the liability to pay advance-tax did not arise against the Company.8.The plea that the provisions imposing liability to pay advance-tax upon an agent of a non-resident infringe the equality clause of the Constitution has no substance.As already observed, the liability to pay advance-tax arises under Sections 207 and 208 and its quantum is determined by Ss. 209, 210 and 212 (3) and it is not predicated of the accrual of liability that the total income of the previous year should be ascertained or precisely ascertainable when demand is made by the Income-tax Officer under Section 210, or when the assessee is required to make an estimate.The assumption that an assessee whose year of account coincides with the financial year is not in respect of that year liable to pay advance-tax is not warranted. The computation of advance-tax is not dependent upon the completion of the previous year: it depends upon the rules prescribed by Section 209, 210 and 212. Every person who has been previously assessed to tax is liable when ordered by the Income-tax Officer to pay advance-tax, subject to the right to make an estimate under Section 212 (1). A person who has not been previously assessed but whose income is likely to exceed the specified amount is also liable to pay advance-tax. The act does not accord discriminatory treatment between different assesses. Payment of advance-tax is on account and is always liable to be adjusted against the tax assessed on regular assessment.That again applies to all assesses. It is then difficult to appreciate the grounds on which the plea of denial of equal protection may be sustained. The only ground urged, that an assessee may escape liability to pay advance-tax where his previous year coincides with the financial year, is without substance, and no other ground is set up in support of the plea of violation of the guarantee of equality under Article 14 of the Constitution.