1934 (3) TMI 33 - HC - Income Tax

Summary

Issues:
1. Proper procedure for referring a question of law under Section 66 of the Indian Income Tax Act.
2. Interpretation of Section 13 regarding computation of income for assessment.
3. Assessment method adopted by the Income Tax Officer and its legality.

Analysis:
1. The judgment deals with a petition requesting the High Court to direct the Commissioner of Income Tax to submit a question of law for decision under Section 66 of the Indian Income Tax Act. The Court highlighted the correct procedure under Sub-sections (2) and (3) of Section 66, emphasizing that the parties must formulate the question they desire to be referred. The Court noted that in this case, the parties failed to properly formulate the question before the Commissioner, and the petition to the Court did not specify the desired question. The Court acknowledged its authority to direct the Commissioner to refer a different question but cautioned against straying from the question formulated by the parties.

2. Regarding the interpretation of Section 13 for computing income, the Court explained that the section mandates income computation based on the method of accounting regularly employed by the assessee. However, if no regular method is employed or the method used does not properly deduce income, the Income Tax Officer can determine the computation basis. The Court observed that both the Income Tax Officer and the Assistant Commissioner concluded that no regular accounting method was employed by the assessee, justifying the Officer's chosen method. The Court emphasized that such factual determinations are binding and that the only legal question that can arise is the legality of the assessment method adopted.

3. The Court evaluated the assessment method employed by the Income Tax Officer, who based the assessment on the capital shown in the books, adjusted for alleged lost capital, and applied a fair interest rate. The Court deemed this method appropriate and found no legal question necessitating referral to the Court. The judgment concluded by discharging the rule and awarding costs to be taxed on the original side scale by the Taxing Master.