THE AGGARWAL CHAMBER OF vs M/s GANPAT RAI HIRA LAL

The Supreme Court ruled that under Sections 40(2) and 42(1) of the Indian Income-tax Act, 1922, an agent is liable for income-tax on profits made on behalf of a non-resident principal, regardless of the principal's overall taxable income. The court held that the liquidator could claim the income-tax amount paid by the agent on behalf of the principal, affirming that the principal cannot dispute this liability post-factum. The appeal was decided in favor of the liquidator, allowing the claim for the tax amount paid by the Hapur firm.