Section 160 (1) (i) of the Income Tax Act deals with the term “Representative Assessee” for all purposes of assessment of income tax. It refers to the status of a non-resident in connection with his income which is deemed to accrue or arise in India under section 9(1) of the Income Tax Act, 1961.
The expression “Representative Assessee” in this connection includes any person who is treated as an agent by the Assessing Officer for making assessment as per section 163 of the Income Tax Act, 1961.
The assessee under section 2(7) includes a representative assessee. The Assessing Officer is empowered to issue notice under section 163 to any person to treat him as an agent of the non-resident foreign assessee.
The term “agent” for this purpose includes:
1. Any person residing in India who is employed by the non-resident or has been employed on behalf of the non-resident;
2. Any person in India having any business connection with the non-resident assessee; or
3. Any person in India through whom the non-resident receives any income whether directly or indirectly; or
4. Any person in India who acts as a trustee of the non-resident; or
5. Any person in India who, whether resident or not has acquired a capital asset in India through a transfer.
Meaning of the term “Representative Assessee”:
If a return is filed by someone else other than the assessee himself, then such person is known as “Representative Assessee”. All particulars such as his name, address and PAN should be furnished, as he would be held liable for the claims, refunds, etc. in absence of the assessee.
Meaning of trust for the purpose:
A trust which is not formed by a formal written instrument (including any wakf deed executed under the Mussalman Wakf Validating Act, 1913) shall be considered as a trust declared by a duly executed written instrument if a written statement duly signed by the trustees stating the purposes of the trust, particulars of the trustees, the beneficiaries and the trust property, is forwarded to the Assessing Officer, if the trust has been declared before the 1.6.1981, within three months from that day; and in any other case, within a period of three months from the date of declaration of the trust.
An oral trust which is not declared by a duly written instrument and which is not considered under the above explanation is also considered to be a trust declared by a duly executed written instrument.
Conditions of treating a person as a representative assessee:
A person cannot be treated as the agent of a non-resident unless he gets an opportunity of being heard by the Assessing Officer as to his liability in connection with the same.
Judicial precedents:
The Hon’ble Delhi High Court in the case of General Electric Co vs. Deputy Director Of Income Tax, W.P. (C) 9100 of 2007, by a judgment dated 12.8.2011 has held that Section 163 provides merely the machinery for implementing Sections 160 and 161, and the appointment of an agent under Section 163 cannot be of any consequence unless there is an income for which the agent can be treated as a representative-assessee under Section 160 and can be assessed under Section 161 of the Act.
A person appointed an agent under Section 163 is assessable only in relation to the income under Section 160. Though there may be a business connection between a resident and non-resident company, if there is no positive evidence to show that any profits have actually accrued to the non-resident company through the business, the resident company cannot be assessed as the agent of the non-resident company and the mere appointment would be of no value.
