JUDGMENT Tambe, J.
1. On a direction given by this court, the Income-tax Appellate Tribunal has drawn up a statement of the case and referred to this court the following question of law :
"Whether the order purporting to have been made under section 44B of the Indian Income-tax Act by the Income-tax Officers at Bombay and Calcutta were in law orders validly made under that section ?"
We are here concerned with the assessment year 1948-49, the relevant accounting year being that ended on 31st March, 1948. The facts giving rise to this reference in brief are :
2. The East and West Steamship Company is a firm carrying on business in Pakistan. In the course of its business several of its ships touched Indian ports such as Bombay, Calcutta and Cochin. We are not here concerned with the business done by the ships touching the Port at Cochin, but are concerned only with the tax levied in respect of the business done by the company in the ports of Calcutta and Bombay. In the relevant assessment year the company had no office in the then British India and the territories of the Indian Dominion. It is common ground that the company was not a resident within the meaning of that expression as used in the Indian Income-tax Act. The company, however, had its agents in different places in India who collected the freight on behalf of the company. In the relevant assessment year whenever a ship owned or chartered by the said company touched the ports of Calcutta or Bombay, a statement of freight earned by the company was furnished by the respective agents of the company at those places to the respective Income-tax Officers of those places. On receipt of such statements, the Income-tax Officers at the said places made assessment orders on the basis of the statements of freight submitted to them by the respective agents. The tax due from the company on the basis of those statements of freight received by the company was neither assessed nor recovered before the ships left the ports, but the tax assessed was later on paid by the agents at the respective places. From the six sample orders which are placed on the record, it appears that except in one case the assessment orders had been made during the currency of the accounting period. In other words, all the assessment orders except one have been made before 31st March, 1948. All these assessment orders purport to have been made under sub-section (2) of section 44B. In no case the ships were either detained for the purpose of passing the assessment orders or recovery of tax. After the expiry of the accounting period, i.e., after 31st March, 1948, regular assessment in respect of company's income was done by the income-tax authorities in Karachi, and the income-tax authorities found that the business of the firm during that accounting period had resulted in a loss. The income-tax authorities also apportioned the loss attributable to the business done by the company in Indian Ports at Rs. 9,60,258. On 5th January, 1953, a claim for refund was made under section 48 of the Income-tax Act by one M. N. Sidhwa, who had been specially empowered by the company to make such a claim for and on behalf of the non-resident company. The Income-tax Officer allowed the claim for refund by his order dated 23rd February, 1953. This order of the Income-tax Officer allowing refund came to be noticed by the Commissioner of Income-tax, and he took the view that the Income-tax Officer was in error in allowing refund, and set aside that order. The reason given by the Commissioner for setting aside the order of the Income-tax Officer was that the assessment orders having been made under section 44B(2), an application for refund should have been made within a period of one year under section 44C of the Act, and such an application not having been made, the one made on 5th January, 1953, after the expiry of the period of one year ought not to have been allowed. Against this order of the Commissioner, the assessee took an appeal to the Tribunal, and the principal contention raised on behalf of the assessee before the Tribunal, was that the provisions of section 44C had no application to the facts of the present case. The original assessment orders which were made were not orders made under the provision of Chapter V-A of the Act. In other words, the assessment orders were not made under section 44B of the Act. It was conceded on behalf of the assessee that if it is held that the assessment order were made under section 44B of the Act, then the provision of 44C would come into play, and the assessee's application for refund was liable to be rejected on the ground of limitation. In substance, the contention was that the assessment orders which were made were not made against the company but were made against the agent of the company under the latter part of section 44A of the Act and, therefore, fell out of the provision of the Act. The Tribunal did not accept this contention of the assessee. It held that the agents at the ports, in India, of the company, who collected the freight on behalf of the company were not agents within the meaning of section 44A of the Act. In the opinion of the Tribunal, the agent referred to in section 44A does not mean a statutory agent within the meaning of section 43, but a contractual or factual one, and there was no proof that the said agents who collected freight were contractual or factual agents of the company. The Tribunal further held that the assessments made under section 44B of the Act, and, therefore, the application for refund made by the assessee was barred by time. As regards the returns filed by the said agents, i.e., the agents who collected the freight on behalf of the company, and the tax paid by them, the Tribunal observed :
"With a view to avoiding inconvenience to the ships concerned in the matter of getting port clearance, a sort of understanding is reached between the department, port authorities and freight agents according to which the freight agents hold themselves responsible to pay tax that may be due from the masters before the respective ships are allowed to leave a port. That is why we find that though on several occasions ships were loaded and actually left ports in the account year 1947-48, tax has been actually paid by these freight agents in the account year 1948-49."
3. In this view of the matter, the Tribunal dismissed the appeal filed by the assessee. The application made by the assessee under sub-section (1) of section 66 was rejected by the Tribunal. But, as already stated, on a direction made by this court, the aforesaid question has been referred to us by the Tribunal.
4. To appreciate the contentions raised by counsel, it will be convenient at this stage to refer to the provisions of Chapter V-A of the Act and which consist of three sections 44A, 44B, and 44C. The provisions relate to liability to pay tax of occasional shipping. They are :
"44A. The provisions of this Chapter shall, notwithstanding anything contained in the other provisions of this Act, apply for the purpose of the levy and recovery of tax in the case of any person who resides out of the taxable territories and carries on business in the taxable territories in any year as the owner or character of a ship (such person hereinafter in this Chapter being referred to as the principal), unless the Income-tax Officer is satisfied that there is an agent of such principal from whom the tax will be recoverable in the following year under the other provisions of this Act.
44B. (1) Before the departure from any port in the taxable territories of any ship in respect of which the provisions of this Chapter apply, the master of the ship shall prepare and furnish to the Income-tax Officer a return of the full amount paid or payable to the principal, or to any person on his behalf, on account of the carriage of all passengers, livestock or goods shipped at that port since the last arrival of the ship thereat.
(2) On receipt of the return, the Income-tax Officer shall assess the amount referred to in sub-section (1), and for this purpose may call for such accounts or documents as he may require, and one-sixth (then one-fifth) of the amount so assessed shall be deemed to be the amount of the profits and gains accruing to the principal on account of the carriage of the passengers, livestock and goods shipped at the port.
(3) When the profits and gains have been assessed as aforesaid, the Income-tax Officer shall determine the sum payable as tax thereon at the rate for the time being applicable to the total income of a company, and such sum shall be payable by the master of the ship, and a port-clearance shall not be granted to the ship until the Customs-collector, or other officer duly authorised to grant the same, is satisfied that the tax has been duly paid.
44C. Nothing in this Chapter shall be deemed to prevent a principal from claiming, in the year following that in which any payment has been made on his behalf under this Chapter, that an assessment be made of his total income in the previous year, and that the tax payable on the basis thereof be determined in accordance with the other provisions of this Act, and, if he so claims, any such payment as aforesaid shall be treated as a payment in advance of the tax and the difference between the sum so paid, and the amount of tax found payable by him shall be paid by him or refunded to him, as the case may be."
5. Mr. Kolah, appearing for the assessee, contends that the assessment orders made were not made under the provisions of Chapter V-A, but on the other hand they were orders made against the agent, the Income-tax Officer acting under the provisions of the latter part of the section 44A of the Act. The mere fact that the section under which the order is said to have been made is section 44B in the assessment orders, it would not debar this court from ascertaining the correct provisions of law under which these orders have been made, and when the court so scrutinises, it will be apparent that the orders are made under the provisions of the Act other than the provisions of Chapter V-A. The observations at page 261 in Navinchandra Mafatlal v. Commissioner of Income-tax [ 27 I.T.R. 245.] are relied upon. It is next contended that the agent mentioned in section 44A includes both a statutory agent within the meaning of section 43 of the Act and a contractual agent. The freight agents of the company were the statutory agents within the meaning of section 43, and it was, therefore, obligatory on the Income-tax Officer to assess the agents under the latter part of section 44A. It is then contended that even on a perusal of the assessment orders, it i s apparent that they are not made under the provision of section of 44B, but are made under general provisions of the Act. According to Mr. Kolah, the assessee in a case of assessment under section 44B is a shipping master. It is the shipping master, who has to file a return, and it is also the shipping master who is liable to pay tax. The assessment order are neither made on the shipping master nor has the shipping master filed a return, nor has he paid the tax. These being the facts of the case, the Tribunal was in error in holding that the assessment orders were made under section 44B of the Act. In order to sustain an order under section 44B of the Act, the department must bring the case strictly within the four corners of section 44B. This not having been done, the department cannot claim that the orders are made under section 44B. Reliance is placed on the observations at page 195 in Commissioner of Income-tax v. Provident Investment Co. Ltd. .
6. Mr. Joshi, on the other hand, contends that the assessment orders in question are not assessment orders made on the agents under the general provisions of the Act. The orders contemplated to be made under the latter part of section 44A are to be made after the expiry of one year in respect of the entire income of the previous year. The orders in the present case are not made after the expiry of the accounting year, but during the course of the accounting year. Separate orders have been made in respect of each shipping. These orders could only be made under section 44B of the Act, and under no other provisions of the Act. According to Mr. Joshi, is true that the returns have not been filed by the master, nor has the tax been paid by the master of the ship. But this is only a concession granted as a result of an arrangement, as found by the Tribunal, and that concession would not vitiate the orders or take them out of section 44B of the Act.
7. The crux of the question which falls for consideration is whether the application for refund made by the company on or about 5th January, 1953, through its authorised agent, Mr. M. N. Sidhwa, under section 48 of the Act, is barred by time by reason of the provisions of section 44C of the Act. Now, section 44C, which we have already reproduced above, would have application when a non-resident assessee claims an adjustment in respect of payment of tax made by him under Chapter V-A. The adjustment which the principal can claim is that an assessment be made of his total income in the previous year, that the tax payable on the basis thereof be determined in accordance with the provisions of the Act other than Chapter V-A, and the amount payable by him by way of difference should be recovered from him, or if any amount is found refundable, it should be refunded to him. It has therefore to be seen whether the payments of which refund is claimed by the company are payments made by the company under the provisions of Chapter V-A of the Act, and this in turn brings us to the question whether the assessment orders are under section 44B of the Act. No doubt, the sample orders which have been included in the statement of the case are purported to have been made under sub-section (2) of section 44B of the Act. But, as pointed out by this court, that by itself is not conclusive to hold that the orders are under section 44B(2). It is open to this court, having regard to the facts of the case, to ascertain for itself th section under which the orders in question fall. At page 261 in Navinchandra Mafatlal v. Commissioner of Income-tax [ 27 I.T.R. 245.], the learned chief Justice observed :
"Therefore, broadly, the position on the reference is this. An order was made by the Income-tax Officer on 23rd January, 1950. If that order was a valid or proper order, it was made within the period of limitation. But this order, as already pointed out, was not made under section 34. Now, if an order is made by an Income-tax Officer and even though he may state that he has not made it under any particular section of the Income-tax Act, or even if he may state that he made it under a particular section, it is for us to decide which is the proper provision of the law under which such an order should have been made."
8. It is, therefore, to be seen whether the assessment order which are purported to have been made under section 44B(2) fall under these provisions or they are orders falling under the provisions of the Act other than those of Chapter V-A. Now, the orders of the assessment which are made under the general provisions of the Act, i.e., the provisions of the Act other than the provisions of Chapter V-A, are made after the expiry of the account year in respect of the total income of the previous year. The rates at which the tax is levied on the computed income are the rates that are announced in the Finance Act which come into operation after the expiry of the accounting period. To this, there is no doubt - apart from the provisions of Chapter V-A - one exception. Those provisions are contained in section 24A of the Act. When it appears to the Income-tax Officer that any person may leave the taxable territories during the current financial year, or shortly after its expiry, and that he has no present intention of returning, section 24A empowers the Income-tax Officer to proceed to assess him on his total income of the period from the expiry of the last previous year of which his income has been assessed in his hands to the probable date of his departure, and the rate at which the tax is levied are the rates announced by the Finance Act then in force. Now, looking to the six relevant assessment orders which have been included in the statement of the case, they clearly show that none of them is made in respect of the total income of the company earned by it or accrued to it in India during the previous year. But, on the other hand, each assessment year relates to income earned on each separate occasion of the company's ship halted in Indian ports and loaded cargo at Indian ports. Five out of the six orders have been made before the expiry of the accounting year. In other words, five out of the six orders have been made before 31st March, 1948. One order, however, relates to the freight realised by the company by reason of loading of goods in its ship at the Indian port on March 1, 1948. It is not in dispute that the rate at which tax has been levied in all these six assessment orders were the rates announced by the Finance Act which came into force on 1st April, 1947. The name of the assessee as mentioned in two of these six orders is East & West Steamship Company, while in the other four orders, the name of the assessee is mentioned as the respective ship. The address of the assessee is given as c/o. the freight agents. The status of the assessee is shown as a company (Tramp Steamer), and the orders show that the income of the assessee has been computed at 5% of the freight earned in the shipment of Indian cargo. We may here reproduce one of the assessment orders made, where one of the ships is shown as as an assessee, dated 26th January, 1948, in respect of the freight earned in the shipment of Indian goods on 11th November, 1947, in the company's ship, S. S. Strymon :
"The vessel made voyage carrying coal under the principalship of Messrs. East & West Steamship Co. Ltd., Karachi, the port of shipment being Calcutta. Total freight earned per statement of freight earnings date 2nd January, 1948, filed by Messrs. Lionel Edwards Ltd., Dr. Clive Buildings, Calcutta, is Rs. 2,15,740. One twentieth of this comes to Rs. 10,787 which is treated as profit on the freight earnings.
Rs. A. P.
Assessed under section 44B(2) on Rs. 10,787 Income-tax payable @ 60 pies per rupee 3,370 15 0 Corporation tax payable @ 24 pies per rupee 1,348 6 0 ----------------- Tax payable 4,719 5 0" -----------------
9. As already stated, the statement of freight earnings has not been filed by the respective matters of the ships, but by the freight agents, and the tax has also been paid not by the master before the ships left Indian shores, but by the freight agents. It is clear that these assessment orders cannot be said to have been made under the general provisions of the Act, i.e., under the provisions of section 23 of the Act, which are normally made after the expiry of the accounting year. Mr. Kolah, however, contends that these orders can be treated as under section 24A. We find it difficult to accept this contention of Mr. Kolah, because the condition precedent that gives an Income-tax Officer jurisdiction to make an order under section 24A is that it must appear to the Income-tax Officer that any person may leave the taxable territories during the currency of the financial year or shortly afterwards. In none of the orders, the Income-tax Officer has stated that he was making an assessment order because it appeared to him that the assessee was likely to leave the taxable territories during the currency of the financial year, and, therefore, he was making these assessment orders. On the contrary, the assessment orders specifically say that the orders are made under section 44B(2) of the Act. In our opinion, it is not possible to accept the contention that we should hold that these are the orders made against the freight agents under section 24A of the Act. However, our conclusion that the assessment orders are not under section 24A of the Act is not be itself sufficient to hold that the assessment orders are under Chapter V-A. It has, therefore, to be seen whether the orders can be said to have been made under Chapter V-A of the Act. Now, Chapter V-A contains special provisions relating to a particular class of shipping, and it provides for the levy of tax on the income earned by a non-resident, charging freight for loading goods at Indian ports in his or its ships, and the scheme of Chapter V-A is that a separate assessment is made in respect of each shipment of goods, carriage of passengers, etc., in the ship of such a non-resident. The procedure is a summary procedure. After the ship berths at Indian ports, the master of the ship is required to prepare and furnish a return to the Income-tax Officer of the full amount paid or payable to his principal on account of carriage of passengers, livestock or goods shipped at that port since the last travel of the ship at the port. The return furnished by the master of the ship then is scrutinised by the Income-tax Officer, and he is empowered to determined the figure of the freight earned. By a rough and ready method the profits are determined at a certain percentage of the freight earnings. At the material time, the said percentage was 5%. On the amount of profit so determined, the tax levied was according to the rates prescribed by the Finance Act which had come into force on the 1st of April of that year. A duty is enjoined on the master to pay tax and if the amount is not paid, the clearance certificate can be withheld to the ship. We have scrutinised the sample assessment order which have been place on record. They clearly show that the assessment orders have been in substance made on the company. It is true that in some of the assessment orders the name of the assessee is mentioned as the ship; but when that is read in conjunction with the assessment order itself, no doubt is left that the assessee has been East and West Company. Separate assessment order has been made in respect of each shipment. The profit earned by the company are computed on the basis of 5 per cent. of its freight earnings of that shipment; the rate at which tax is levied are the rates prescribed by the Finance Act which came into force on 1st April, 1947. These being the features of these assessment orders in our opinion, they substantially appear to fall under section 44B(2) of the Act, and not under any other provisions of the Act. Mr. Kolah, however, contends that the two principal requirements of Chapter V-A are predominently absent in this case. They are that the returns have not been furnished by the masters and the tax is not paid by the masters before the ships left Indian shores. But, on the other hand, the returns have been furnished by agents, and the tax has been paid by the agents after the ships had left the shores. The non-compliance of the provisions of Chapter V-A of the Act takes the assessment orders out of the provisions of Chapter V-A. We, however, find it difficult to accept this contention in view of finding of the Tribunal. We have already reproduced the finding of the Tribunal, and it is to effect that it was only a concession given to the company with a view to avoid inconvenience to the ships concerned in the matter of getting port clearance. As the Tribunal finds, an understanding was reached between the department, port authorities, and freight agents, according to which the freight agent held themselves responsible to pay tax that may be due from the masters before the respective ships are allowed to leave the ports, and this is the reason according to the Tribunal why the ships are allowed to leave port even without the master having paid the tax due on the earnings of the company in that shipment. Mr. Kolah contends that this finding is reached without there being any evidence to support it. Such, however, is not the question before us which we have been called upon to answer, nor can it be said that such a question is included in the question which we have directed the Tribunal to state to us. That being the position, the aforesaid finding of fact arrived at by the Tribunal will have to be accepted. If that be true position, in our opinion, the features on which reliance is placed by Mr. Kolah cannot have the effect of taking away the assessment orders out of the provisions of Chapter V-A of the Act. In our opinion, therefore, the assessment orders have been made under section 44B(2) of the Act.
10. One more argument of Mr. Kolah still remains to be considered, and that is whether there being a freight-agent, it was obligatory on the Income-tax Officer to proceed under the latter part of section 44A, and not under the provision of Chapter V-A of the Act. The argument of Mr. Kolah also was that the freight agent is an agent within the meaning of section 43 of the Act. In our opinion, it is not necessary to consider whether the freight agents of the company were agents within the meaning of section 43 of the Act. Even assuming them to be so, in our opinion, the latter part of section 44A does not make it obligatory on the Income-tax Officer to proceed to assess an agent under the general provisions of the Act. On the other hand, on the language of the latter part of section 44A, it appears that merely because there is an agent, it is not obligatory on the Income-tax Officer to proceed to assess the agent under the general provisions of the Act, but it is optional to him if he feels satisfied that tax would be recoverable from such agent in the following year after the expiry of the current year. Having regard to the assessment orders which we have examined in detail, it is clear that the Income-tax Officer has not chosen to assess an agent after the expiry of the accounting year under the general provisions of the Act other than the provisions of Chapter V-A of the Act.
11. One more argument advanced by Mr. Kolah was that the assessee under the provisions of Chapter V-A of the Act is only the master of the ship and not any other person. None of the assessment orders has been made against the master, and, therefore, they are not orders under the provisions of Chapter V-A of the Act. In support of this contention, he argued that section 44B says that the tax is payable by the master. A person by whom tax is payable is the assessee under the definition clause of section 2(2) of the Act. That clause reads : "Assessee" means a person by whom income tax or any other sum of money is payable under this Act, and includes every person in respect of whom any proceedings under this Act has been taken for the assessment of his income or of the loss sustained by him or of the amount of refund due to him." Now, under this clause, two categories of persons have been included in the definition of assessee : (1) a person by whom income-tax or any other sum of money is payable, and (2) a person in respect of whom any proceedings under this Act has been taken for the assessment of his income. It is clear that the person in respect of whom income-tax is levied under the provisions of Chapter V-A is a non-resident who carries on business as owner or charterer of the ship. It is therefore, difficult to hold, on the strength of the definition of "assessee", that the master of the ship alone is an assessee under the provisions of Chapter V-A of the Act, and no order of assessment could be made against his principal.
12. For the reasons stated above, in our opinion, the Tribunal was right in holding that the application for refund made by the applicant on or about 5th January, 1953, was barred by reason of the provisions of section 44C of the Act. We, therefore, answer the question referred to us in the affirmative. The assessee shall pay the costs of the department. No order on motion.