MUHAMMAD ZAHOORUI, HAQ, J.--These are eight connected I. T. R. Cases relevant for the assessm ent year 1954-55 to 1960-61 and 1964-67. Messrs Pakistan Petroleum Ltd., the preset:- respondent, were treated as the agents of Messrs Morton Air Services Ltd. And after issuing notice to them under section 43 of the Income-tax Act, 1922 as well as notice under section 34(1) read with section 34 (2-B) the assessm ent orders were passed. From one of the assessment orders, is apparent that Messrs Morton Air services Ltd. Had also been issued notice under section 34 (I) read with section 24(2-B) of the I. T. Act, 1922 and by assessment order of even dated they were also assessed on the same day in respect of the same liability.
2. The question referred before us is as under :- "Whether on the facts and in the circumstances of the case, the Appellate Tribunal was justified in cancelling the assessm ent made on Messrs Pakistan Petroleum Limited, Karachi, being the agent of Messrs Morton Air Services Ltd."
The question is common in all the appeals.
3. The facts are not much involved. It is an admitted position that the respondents had taken on hire an aeroplane from Morton Air Services Ltd. For the relevant years and bad made a number of payments to Morton Air Services Ltd. As the rent charges of the Aeroplane. Messrs Morton Air Services Ltd. Were non-residents and the respondent had only business dealing with them. Section 43 of the Income-tax Act reads as under:- "Any person employed by or on behalf of a person residing out of Pakistan or having any business connection with each person or through whom such person is in the receipt of any income, profits or gains upon whom the Income-tax Officer has caused a notice to be served of his intention of treating him as the agent of the non-resident person shall, for all the purposes of this Act, be deemed to be such agent."
The rest of the provisions of this section are not relevant. The bare reading of section 43 makes it clear that any person having business connection with a person residing out of Pakistan can be treated as agent of the non-resident and consequently it cannot be denied that the respondent can be treated as agent of Messrs Morton Air Services Ltd.
4. However the question is whether in the face off Messrs Morton Air Services Ltd. Having been principally assessed to tsar in Pakistan the respon--dent could also be assessed at the same time in respect of the same income which had been sileged to have been received by Morton Air Services Ltd. And they had already been assessed for the wane. In this respect It would be relevant to refer to the First Part of section 42 of the Income-tax Act which reads as under :- "42. All income, profits or gains accruing or arising, whether directly or indirectly through or from any business connection in Pakistan or through or from any property in Pakistan or through or from any asset or source of income in Pakistan or through or from any money Lat at interest and brought into Pakistan in cash or in kind or through or from the sale, exchange or transfer of a capital asset in Pakistan, shall be deemed to be income accruing or arising within Pakistan and where the person entitled to the income, profits or gains is not resident in Pakistan shall be chargeable to income-tax either in his name or in the name of his agent, and in the latter case such agent shall be deemed to be, for all the purposes ofthis Act the assesses- in respect of such income-tax."
5. This section allows the income of the principal to be taxed either in, his name or in the name of his agent.
6. For pointing out that section 43 was relevant for the purposes of this question before us, we are thankful to Mr. Lqbal Naeem Pasha, Advocate, who was sitting in the Court at the time of the arguments of this case. Mr. Sharif, has brought our attention to (1958) 33 I T R 154 where it was held that section 42 gave the Income-tax Officer a choice to assess either the non-resident principal or the resident agent and if the non-resident was assed after notice then the assessment was valid. It was further observed in that judgment that the question as to how tax could be recovered for that assessm ent did not arise after the validity of the assessment. Mr. Sharif therefore had argued that it was not open to the Income-tax Officer to make a double assessment in respect of the same income against the principal Morton Air Services Ltd. As well as their agent viz. The respondent. He therefore argued that it was a case of double taxation and therefore the Tribunal was justified in setting aside this assessm ent.
7. Mr. Dareshani had, however, taken the position on behalf of the applicant that it was not a case of double taxation or dual assessm ent inas--much as both the assessments against Morton Air Services Ltd. And the respondent assessee had been made on the same day and the only purpose was to ensure that the ultimate tax liability which was determined in the case could be recovered from the person who was available in Pakistan and there--fore it was a case of alternate or protective assessm ent. The learned counsel relied upon (1961) 43 I T R 387 (SC) where it was held that if a certain income had been received but it was not clear between A and B as to who had received the income then in that case it would he open to the Income-tax authorities to determine the question as to who was responsible to pay tax by taking assessment proceedings against both A and B. Learned counsel also relied upon certain observations which were in the nature of obiter dicta in (1967) 64 I T R 428 (All.) where it was observed that tae Tribunal ought to have heard both the appeals together and decided the question whether the husband or the wife were responsible to pay the tax liability. However in that case it was held that the protective assessment could be made by the I. T. O. And the same could not be maintained by the Appellate Tribunal and on the facts of the particular case liability should have been determined and it was further held that a notice under section 34 could not be issued merely on the basis of surmise but it could be issued only on the basis of definite information.
8. However, we do not consider this case to be of a protective asses went inasmuch as the protective assessm ent is usually made in a case when the payments are clear but the person who has received those payment denies to have received the same and in those cases the Department has the choice of proceeding against both the persons about whom they have the in--formation that either of theta had received the payment and they can determine in that case the liability of the person who had actually received the payment or at least the Appellate Tribunal could finally determine that liability.
9. But in the present case the admitted facts were that the receipts o payment by Morton Air Services Ltd. Were admitted by them and the respon--dents had also admitted that they had made those payments to Morton Air Services Ltd., and therefore it was not a case of any doubt as to who had received the payment but it was a case of clear-cut liability and in such an event tinder section 42 of the Income-tax Act the choice had to be, made by the Income-tax Officer to assess either the principal or the agent and once the I.-T. O. Had exercised the option in taxing the principal fear par ticula income then the same income could not be reassessed; as -against the agent as well.
10. Mr. Dareshani had. Particularly pointed out that in (1957) 31 I T R 603 the High Court of Culcutta had held that protective or alternate assessment could be made by the I. T. O. Where owing to the litigation between the parties concerned, or for other reasons the person who is really liable to pay the tax could not be finally determined by the Income-tax authorities, and unless such alternative or protective assessm ent is made proceedings for assessment against the party ultimately found to be liable may become time-barred.
11. The learned counsel wanted to emphasize that the expression "or for other reasons" used in the above ruling was wide enough to cover a host of other situations apart from the litigation between the parties and therefore the present case should be covered by that expression "or for other reasons". We do not agree with this submission of the learned counsel in view of the fact that even the expression "or for other reasons" again refers back to the situation where the tax liability is not possible to be determined at the initial stage, and it is then alone that the expression "for the other reasons" could be resorted to. And of course there would be very many situations in which the initial liability in respect of the taxability of a person could not be determined in a prima facie manner. But in the present case the liability was clear and if I. T. O. Had trade a correct choice he should have taxed only the respondent as an agent for the income received by Morton Air Services Ltd. From the respondent. Therefore the observa--tions in 31 I T R 603 are really of no help to the applicant as the choice was made up when Morton Air Services were directly assessed and this liability was clearly known in advance. Thereafter there was no scope of any assessment against the respondent. Mere possibility of non-recovery of the tax finally assessed amount furnish a ground for alternate or protective assessment when the liability for the payment of the same is clearly known.
12. In these circumstances we are of the view that the order of the Appellate Tribunal was justified and the reference is, therefore, answered in the affirmative.