' NAZIR AHMAD BHATTI, J.-- The facts of this reference are very simple. The petitioner-firm (hereinafter referred to as the assessee) did not disclose any income from export business for the assessm ent year 1973-74. The Assessing Officer, however, got information from the Customs Check Post at, Turkham that the assessee had exported 203 trucks of Maltas and Kinoes to I Kabul of the value of Rs,6,26,720. Thcre was no entry of these transactions in the books of the assessee. When confronted with the information received from the Customs Check Post the assessee took a stand before the Assessing Officer that the export was not at their account but was made by their Clearing Agent on their own and without their knowledge and consent. The Clearing Agent admitted that he had exported the said goods not on behalf of the assessee but for any other person the particulars of which he declined to disclose. A difference of opinion having arisen between the Income Tax Authorities the reference in hand has been made by the Income Tax Appellate Tribunal under section 136 of the Income Tax Ordinance, 1979 and the following questions have been referred to this Court in this connection:- "Whether on the facts in the circumstances of the case the learned Tribunal was justified to assess the alleged export Income in the hands of Applicant, which Income, never arose, was received or accrued to the Applicant during the year.
' Whether on the facts and in the circumstances of the case, the learned Tribunal has rightly and correctly applied and interpreted the provisions of sections 211 and 216 of the Contract Act, in this case."
2. We have heard learned counsel for the parties at length. The admitted fact is that the goods in question were exported by the Clearing Agent of the assessee not for his principal, that is the assessee, but either for any other person or on his own account. It shall, therefore, be seen that the goods in question were neither exported by the assessee themselves nor on their behalf by their agent. As such neither section 211 nor section 216 of the Contract Act is applicable to the matter in dispute. According to the provisions of section 211, an agent is bound to conduct the business of his principal according to the directions given by the principal, or, in the absence of any such directions, according to the custom which prevails in doing business of the same kind at the place where the agent conducts such business and when the agent acts otherwise, if any loss be sustained, he must make it good to his principal, and, if any profit accrues, he must account for it.
Section 216 provides that if any agent, without the knowledge of his principal, deals in the business of the agency on his own account instead of on account of his principal, the principal is entitled to claim from the agent any benefit which may have resulted to him from the transaction.
3. A perusal of the provisions of sections 211 and 216 of the Contract Act could show that the matter of the provisions of both these sections essentially pertains to the principal and the agent, whereas in the case in hand the assessee was assessed to income tax for the goods which had actually not been exported on its behalf. Under section 211 the agent is bound to conduct the business of his principal according to the directions given by the latter and he is liable to make good any loss sustained by and to pay any profit gained in the transaction to his principal. Under section 216 it is the right of the principal to claim benefit which the agent may have gained by dealing in the business of his agency on his own account. We are, therefore, of the considered opinion that neither section 211 nor section 216 the Contract Act arc applicable to the case. The simple reason for this is that both these sections deal with the agency and between the principal and the agent whereas the matter in dispute pertains to the assessment of income tax for the goods exported not on behalf of the assessee.
4. In our opinion section 215 of the Contract Act would be more helpful in arriving at a correct conclusion of the matter. The Clearing Agent of the assessee was clearly dealing on his own account in connection with the said export of Maltas and Kinoes and not on behalf of the assessee and the latter had actually repudiated the said business. The assessee is not liable for the payment of the tax in question which appears to be the sole liability of the Clearing Agent.
5. As a result of the aforesaid discussion we will answer both the questions in the negative and dispose of the reference in hand accordingly with no order as to costs.