High Court Of Calcutta
Grindlays Bank Ltd. vs. Income Tax Officer & Ors.
Sections 133, 133(6), 192, 200
Susanta Chatterji, J.
Civil Rule No. 10538 of 1979
25th January, 1990
Dr. D. Pal & Smt. Monisha Sil, for the Petitioner : N. Pal, for the Respondents
SUSANTA CHATTERJI, J.:
The present rule was issued on 18th Sept., 1979, at the instance of the writ petitioner-bank praying, inter alia, for a writ of mandamus commanding the respondents to cancel, rescind and/or withdraw the impugned notices and the letters dt. 16th July, 1979, 10th Aug., 1979, 21st Aug., 1979, and 10th Sept., 1979, and to cancel and/or rescind all proceedings taken under the said letters and/or notices and other consequential reliefs on the ground that in view of the fact that no proceeding under s. 201 or s. 201(1A) or s. 231 or s. 221 of the IT Act is pending against the petitioner in respect of any of the payments made of furlough pay to the expatriate staff of the petitioner for any of the financial years 1968-69 to 1975-76, the respondents have no competence, jurisdiction and/or authority to issue the notice under s. 133(6) of the IT Act and/or to take any requisition under the aforesaid provisions of the Act in the manner it has been done. It is stated in the writ petition that the business of the petitioner in India is carried on from several places in India and for efficient running of the entire business and its branches, the petitioner had to employ several hundreds of officers having taxable income. Of the other staff, some of them have taxable income. At all material times, the petitioner duly deducted the income-tax and surcharge at source before making of the salary to the said officers and other employees and duly paid tax to the said ITOs concerned. The expatriate officers of the petitioner-bank, to work in India, used to receive furlough pay from the London head office of the petitioner-bank in sterling in London while on leave there. Under the terms and conditions applicable to them, the said expatriate officers were duly assessed under the IT Act, 1961. It is further alleged that, in the assessment of the said expatriate staff, the expatriate officers of the petitioner-bank used to receive the furlough payment in sterling and it was included in their salary income which was assessed by the said Act. On 18th July, 1979, the petitioner suddenly received a letter dt. 16th July, 1979, whereby the petitioner was asked to furnish particulars of payments on account of furlough for the financial years 1968-69 to 1975-76, relevant assessment years being 1969-70 to 1976-77, made outside India. On 13th Aug., 1979, the petitioners received another letter requiring the petitioners to comply with the requisition within a specified period. By another letter dt. 22nd Aug., 1979, the petitioner was informed that respondent No. 1 has reason to believe that the petitioner-bank has failed to discharge the obligations under s. 192(1) and s. 200 of the Act in so far as the payment of furlough pay made to the employees concerned. By a letter dt. 10th Sept., 1979, respondent No. 1 found that the request for withdrawing the requisition dt. 10th Aug., 1979, is untenable or these letters have been challenged in this writ petition by stating that, under s. 133(6) of the Act, that respondent No. 1 can require the petitioner to furnish the information whenever, in his opinion, the information will be useful or relevant to the proceedings under the Act. Respondent No. 1 will have to apply his mind in respect of a particular proceeding and he formed his opinion as to the usefulness of relevancy of the information vis-a-vis the said proceeding for which he is requiring the petitioner to furnish the information.
Dr. Pal, learned counsel appearing for the petitioner-bank, has argued at length that no proceeding under s. 201(1) or s. 201(1A) of the Act or s. 221 of the Act is pending and no such proceeding can also be initiated after 31st March, 1977. Regard being had to the materials on record, respondent No. 1 cannot issue the impugned notices mechanically and without application of mind and, as such, the said notices are, ex facie, illegal, invalid and without jurisdiction. Dr. Pal has further argued that, if it is contended that the petitioner is liable to deduct tax under s. 192 of the Act in respect of the payments of furlough pay made to the expatriate staff of the petitioner in the U.K. in sterling, in that event as the payments have been made outside India in the U.K., the provisions of s. 192 of the Act cannot have extra-territorial operation as the same is a fiscal enactment and, as such, on a plain and fair reading of s. 192(1) of the Act, the liability to deduct the tax in respect of any payment to be made by way of salary cannot arise where any payment is made outside India. He has further submitted that the conditions for the exercise of the power under s. 133(6) of the Act did not exist and the power as sought to be utilised is a mere cloak or pretence in fishing investigation and there is colourable exercise of jurisdiction which cannot be sustained in law.
Mr. Pal, the learned advocate appearing for the petitioner, has taken this scope to various paragraphs of the writ petition as well as the relevant provisions of the IT Act to justify the acts done and/or caused to have been done by the respondents.
Having gone through the materials on record and considering the objections taken by the petitioner against the impugned letters and/or notices, this Court is of the view that the furlough pay is assessable under the head “Salaries” irrespective of the terms and conditions between the employer and the employees. The provisions of s. 192(1) and s. 200 of the IT Act read with the relevant rules are attracted to the facts and circumstances of the present case. Respondent No. 1 has thought it fit to require the petitioner-bank to furnish certain particulars. There were reminders to make payments on account of the furlough pay in the financial years 1968-69 to 1975-76. The materials on record convince this Court that the ITO has reason to believe that the petitioner-bank failed to discharge the obligation under s. 192(1) and s. 200 of the IT Act read with the relevant rules and the steps taken by the respondents do not appear to be contrary to or inconsistent with the provisions of law. The steps taken by the respondents are not unwarranted and uncalled for and, in fact, Dr. Pal has submitted that during the pendency of the writ proceedings, the payments have been made and the grievance of the writ petitioner is negligible. However, considering the materials on record and the submissions of the learned lawyers of the respective parties, this Court finds that there is no merit in the writ petition. The rule is, accordingly, discharged. All interim orders are vacated. There will be no order as to costs.
Stay of operation of the order as prayed for and is refused.
[Citation :183 ITR 62]