1957 (9) TMI 57 - HC - Income Tax

Summary

Issues:
1. Business connection between the appellant firm and Messrs. B.V. Bhumraddi and Company of Bombay.
2. Justification of the Tribunal in refusing to consider the contention of the Commissioner regarding the income of the assessee being received in British India.

Analysis:

Issue 1: Business Connection
The case involved two brothers who owned oil mills in Hyderabad State, with sales in British India giving rise to questions on business connection. The Tribunal found that transactions between the brothers and B.V. Bhumraddi were on a principal-to-principal basis, with B.V. Bhumraddi acting as a buyer in Bombay. The Tribunal's finding was that there was no business connection in British India based on this principal-to-principal relationship. The court held that there was no evidence to support a business connection, and the Department's attempt to argue otherwise was not permissible on the reference. The court emphasized that the facts found by the Tribunal were binding and could only be challenged by questioning the evidence supporting those findings.

Issue 2: Income Received in British India
The second question revolved around whether part of the profits from sales in India were received in British India. The Tribunal had not considered this aspect, and the Department's attempt to raise it before the Tribunal was deemed impermissible. The court highlighted that the Department had not raised this argument during the assessment proceedings, and it was not within the scope of the Tribunal's powers to entertain new grounds not previously raised by the Department. The court scrutinized the sequence of events and found that the Department's attempt to introduce the argument at a later stage was not valid. The court concluded that the Department could not claim that any part of the income was received in British India as it had not been a part of the case presented earlier.

In conclusion, the court ruled against the existence of a business connection in British India and rejected the Department's attempt to introduce the argument regarding income received in British India at a later stage. The judgment emphasized the limitations on raising new grounds before the Tribunal and upheld the findings based on the evidence presented during the assessment proceedings.