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Report No. 12

C-Representative assessee-special cases.

173. Who may be regarded as agent.-

(1) For the purposes of this Act, "agent", in relation to a non-resident, includes any person in India-

[Section 43 main para.]

(a) who is employed by or on behalf of the non-resident, or

(b) who has any business connection with the non-resident, or

[Section 41(1) 1st, proviso, main para.]

(c) through whom the non-resident is in receipt of any income, or

(d) who is the trustee of the non-resident.

[Section 40(2)]

Provided that a broker in India who in respect of any transactions, does not deal directly with or on behalf of a non-resident principal but deals with or through a non-resident broker shall not be deemed to be an agent under this section in respect of such transactions, if the following conditions are fulfilled, namely:-

(a) the transactions are carried on in the ordinary course of business through the first-mentioned broker; and

(b) the non-resident broker is carrying on such transactions in the ordinary course of his business and not as a principal.

[Section 43, 1st, proviso]

Explanation.-A person, whether a resident or a non-resident, who acquires whether by sale, exchange transfer or relinquishment, a capital asset in India from a non-resident shall, for the purposes of charging to tax the capital gain arising from such sale, exchange, transfer or relinquishment, be deemed to have a business connection, within the meaning of this section, with such non-resident.

[section 43, Expin.]

(2) No person shall be treated as the agent of a non-resident unless he has had an opportunity of being heard by the Income-tax Officer as to his liability to be treated as such.

[Section 43, 2nd proviso]

Income-Tax Act, 1922 Back

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