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Issues:
1. Interpretation of provisions under section 66 of the Income-tax Act regarding the power of reference to the High Court. 2. Determining the scope of the Appellate Tribunal's powers under section 33 and section 66(5) in relation to finality of decisions. 3. Clarification on the appellate process and obligations of the Appellate Tribunal post a reference to the High Court. Analysis: The High Court considered the interpretation of the power of reference under section 66 of the Income-tax Act in an appeal where the petitioner company transferred business to a subsidiary, involving the valuation of goodwill. The Tribunal initially rejected the application, prompting the petitioner to approach the High Court under section 66(2). The High Court directed the Tribunal to state a case, emphasizing the inclusion of goodwill value in capital computation. Subsequently, the Tribunal valued the goodwill, leading to another application by the petitioner, which the Tribunal dismissed. The petitioner then sought relief through a writ petition before a Judge, who granted the relief. The Income-tax authorities contended that the power of reference is limited under section 66 and questioned the Tribunal's second order under section 33(4). The Court analyzed the scheme of the Act, highlighting the Tribunal's appellate authority under section 33 and the role of the High Court in references under section 66(5). The Court emphasized that the decision of the Appellate Tribunal is not final when a reference is made to the High Court, as the Tribunal must give effect to the High Court's decision. It clarified that the Appellate Tribunal's role post-reference is to reconsider the matter and decide based on the High Court's directions. The Court rejected the argument that the Tribunal's obligations under section 33(4) do not apply post-reference, emphasizing that the appeal is not finally disposed of until the Tribunal acts in accordance with the High Court's judgment. The Court highlighted that questions of law arising post-reference can be referred to the High Court, provided they were not considered in the initial order. The judgment affirmed the Judge's decision, concluding that the appeal failed and must be dismissed with costs. In conclusion, the judgment provides clarity on the power of reference under section 66, the role of the Appellate Tribunal post-reference, and the obligations of the Tribunal to act in accordance with the High Court's directions. It establishes that the final decision in an appeal post-reference lies with the Appellate Tribunal under section 33(4) and allows for the consideration of new questions of law arising after the initial order.
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