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Income-tax Act (XI of 1922)---S.18(3-B)(7)-Question for consideration depended upon two equally possible interpretation of expression "unless he is himself liable to pay any income-tax and super-tax thereon as an agent" in S. 18(3-B) of Income-tax Act-Question likely to affect large number of cases-Leave to appeal granted.-Constitution of Pakistan (1973), Art. 185(3). ORDER ABDUL KADIR SHEIKH, J.-The petitioner, a Public Limited Company, in order to set up and install a Sugar Mill purchased heavy machinery from Messrs Mitsubishi Heavy Industries Limited, Japan, a non-resident-Com­pany, and one of the terms of the contract for the supply of machinery was that the payment for the service by the supervisory staff deputed by the non-resident-Company would be made by the petitioner to the non-resident-Company, in accordance, with the prescribed formula, free of tax, in the Pakistan currency, and the tax-liability rested on the .petitioner. On 27-3-1970 the Income-tax Officer, B-Circle, Sargodha, completed, the assessment directly against the non-resident-Company for the assess­ment year 1966-67 and 1967-68 under section 23 (4) for default of notice issued under sections 34 and 22 (4) of Income-tax Act. On 1-4-1970, the Income-tax Officer passed another order holding the petitioner to be an assessee in default under section 18 (7) read with section 18(38) of the Income-tax Act for the Income-tax demand of Rs. 7,32,830 due from the non-resident Company for the said two years. In addition, the Income-tax Officer also levied penal interest for the assessment years 1967-68 under section 18 (7) at the rate of 2 % per annum, amounting to Rs. 5,52,402 for the default of deduction and payment of tax under section 18 (3-B). The petitioner filed three appeals before the Income-tax Appellate Tribunal, two of these were directed against the assessments made on the non-resident-Company, and the third against the order under sec­tion 18 (7) of the Act holding the petitioner to be a defaulter under section 18 (3-B). Two appeals were held be incompetent for the reason that the petitioner had no locus standi to file them in respect of assess­ment made directly on the…

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