1965 (12) TMI 29 - SC - Income Tax

Whether the profit on the amounts received by the assessee s bankers in British India as price of goods sold by the assessee on railway receipts in the names of the consignees or as price of goods delivered ex-godown Bhilwara was liable to tax under the Indian Income-tax Act ? Held that - The Appellate Tribunal at the instance of the assessee attached a number of documents to the statement of the case, including the six documents mentioned above, but we find no mention of these documents either in the appellate order of the Appellate Tribunal or in the body of the statement of the case. We feel that it is not consistent with the advisory jurisdiction of a High Court under the Act that the Appellate Tribunal should attach to the statement of the case documents, other than the proceedings of the income-tax authorities, which are not mentioned and discussed either in its own appellate order or in the statement of the case. Suppose a dispute arises as to the interpretation of a document which is annexed in the manner above mentioned. If the High Court decides the dispute it would be deciding questions not decided by the Tribunal, and which the High Court would be incompetent to decide, under the Indian Income-tax Act. In the result we accept the appeal, set aside the order of the High Court of Rajasthan as far as the assessment year 1943-44 is concerned and remand the case to the High Court.

Summary

Issues:
1. Interpretation of tax liability on profit received by assessee's bankers in British India.
2. Determination of taxability of specific item amounting to Rs. 2,73,488.
3. Consideration of technical objection regarding the mention of the disputed item in the appeal.
4. Assessment of the High Court's omission in addressing the taxability of the disputed item.
5. Decision on whether to decide the taxability of the item or remand the case to the High Court.
6. Examination of documents presented by the appellant and their relevance to the disputed item.
7. Evaluation of the procedural irregularity in attaching documents to the statement of the case by the Appellate Tribunal.

Analysis:
1. The Supreme Court heard an appeal concerning the tax liability under the Indian Income-tax Act on profits received by the assessee's bankers in British India. The specific issue was whether the profit on goods sold by the assessee on railway receipts in the names of consignees or delivered ex-godown Bhilwara was taxable.

2. The main focus of the appeal was the taxability of a specific item amounting to Rs. 2,73,488. The Appellate Tribunal had held this amount not liable to taxation, but the High Court failed to address this specific item in its judgment, leading to a technical objection raised by the appellant regarding the appeal's coverage of this amount.

3. The appellant argued that despite the lack of explicit mention of the disputed item in the appeal documents, the general nature of the facts and grounds covered the item. The Court rejected the technical objection, allowing the appellant to argue for the taxability of the Rs. 2,73,488 amount.

4. The High Court's judgment omitted consideration of the taxability of the disputed item, focusing instead on other amounts in different assessment years. The Court noted this omission and highlighted the need to address the specific issue of the tax liability of the Rs. 2,73,488 amount.

5. Given the unclear facts surrounding the disputed item and the lack of agreement between counsels on relevant facts, the Court decided to remand the case to the High Court for a decision. Despite the lengthy duration between the assessment year and the appeal, the Court found it necessary to ensure a proper determination of the tax liability.

6. The appellant presented documents to support their argument regarding the disputed item. However, the Court expressed doubts about the relevance of these documents to the specific item of Rs. 2,73,488, as they were initially filed for different questions referred by the Tribunal.

7. Lastly, the Court addressed a procedural irregularity where the Appellate Tribunal attached documents to the statement of the case without discussing them in its order. The Court emphasized the importance of consistency in the advisory jurisdiction process and highlighted the potential issues that could arise from such actions.

In conclusion, the Supreme Court allowed the appeal, set aside the High Court's order, and remanded the case for a decision on the taxability of the disputed item of Rs. 2,73,488 in accordance with the law.