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Interpretation of income tax laws regarding the accrual of income in British India, application of exemption under section 14(2)(c) of the Income-tax Act, and the jurisdiction of the High Court in deciding questions not referred to it. Analysis: The case involved the interpretation of income tax laws concerning the accrual of income in British India. The respondent, an assessee, had entered into financing agreements resulting in income due to him. The dispute arose as to whether this income accrued in British India or in the Indian State of Mysore. The assessee claimed exemption under section 14(2)(c) of the Income-tax Act, which exempts income arising within an Indian State if not remitted into British India. The High Court held that the income accrued in the Mysore State, contrary to the taxing authorities and the Tribunal's view. However, the High Court exceeded its jurisdiction by deciding a question not referred to it, leading to the appeal. The relevant provision of section 4(1) of the Act states that the total income of a resident of British India includes income accruing in British India or outside, subject to the Act's provisions. The real issue was whether the income arose in the Indian State of Mysore, as claimed by the assessee under section 14(2)(c) for exemption. The High Court's decision on the accrual location was not the question referred to it, prompting the parties to agree to set aside the judgment and frame specific questions for the High Court to decide. To address the confusion and rectify the error, the parties agreed to remand the case to the High Court with specific questions regarding the location of income accrual and the potential exemption under section 14(2)(c). The Supreme Court allowed the appeal, setting aside the High Court's judgment and remanding the case for a proper determination. No costs were awarded in the Supreme Court due to both parties' oversight in framing the initial question accurately. In conclusion, the Supreme Court clarified the real issue of whether the income accrued in the State of Mysore, emphasizing the importance of correctly framing questions for judicial consideration and maintaining jurisdictional boundaries in legal proceedings.
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