1960 (8) TMI 5 - SC - Income Tax

Whether the High Court had jurisdiction in this case to call for the supplemental statement? Held that - First limit to the jurisdiction of the High Court as laid down by this court is thus not exceeded by the High Court in exercising its powers under section 66(4) of the Income-tax Act. The question is wide enough to include the alternative line of approach that if there was a request, express or implied, to send the amount due under the bills by cheque, the post office would be the agent of the assessee, and the income was received in the taxable territory when the cheques were posted. The direction be interpreted to mean that the Tribunal in giving the finding must confine itself to the facts admitted and/or found by it, the direction cannot be described as in excess of the jurisdiction of the High Court. It would have been better if the High Court had given directions confined to the record of the case before the Tribunal; but, in the absence of anything expressly to the contrary, we cannot hold that the direction would lead inevitably to the admitting of fresh evidence. This, at least, now cannot be done. Appeal dismissed.

Issues Involved:
1. Jurisdiction of the High Court to call for a supplemental statement under section 66(4) of the Indian Income-tax Act.
2. Determination of the place where income was received for tax purposes.
3. Application of precedents regarding receipt of income by cheques.

Issue-wise Detailed Analysis:

1. Jurisdiction of the High Court to Call for a Supplemental Statement:
The central issue in this appeal is whether the Punjab High Court had jurisdiction to call for a supplemental statement of the case from the Income-tax Appellate Tribunal under section 66(4) of the Indian Income-tax Act. The High Court had remanded the case to the Tribunal to determine the manner in which the cheques were sent to the assessee and any directions given by the assessee regarding the payment method. The Supreme Court referenced the decision in New Jehangir Vakil Mills Ltd. v. Commissioner of Income-tax, where it was held that the High Court had exceeded its jurisdiction by calling for a supplemental statement. The Supreme Court reiterated that section 66(4) does not allow the High Court to raise new questions of law or direct the Tribunal to investigate new facts not previously considered.

2. Determination of the Place Where Income Was Received for Tax Purposes:
The assessee, a partnership firm, contended that the income from sales to the Government of India was received at Jaipur, outside the then taxable territories, as the cheques were received and endorsed in Jaipur. The High Court, however, sought additional information on whether the cheques were sent by post or by hand and the directions given by the assessee regarding the payment method. The Supreme Court examined earlier cases, including Keshav Mills Co. Ltd. v. Commissioner of Income-tax and Sir Sobha Singh v. Commissioner of Income-tax, which dealt with the place of receipt of income when cheques are involved.

3. Application of Precedents Regarding Receipt of Income by Cheques:
The Supreme Court discussed several precedents, including Kirloskar Bros. Ltd. v. Commissioner of Income-tax and Ogale Glass Works Ltd. v. Commissioner of Income-tax, which established that unless the payee expressly requested the cheque to be sent by post, the receipt of the cheque did not constitute receipt of income at the place where the cheque was posted. The Supreme Court further referenced its decisions in Commissioner of Income-tax v. Ogale Glass Works Ltd. and Commissioner of Income-tax v. Kirloskar Bros. Ltd., which ruled that an intimation to remit the amount by cheque was sufficient to constitute the post office as the agent of the payee.

The Supreme Court also considered the broader question framed in the present case, which allowed for an enquiry into whether there was an express or implied request by the assessee for the cheques to be sent by post, thereby making the post office the agent of the assessee. The Court concluded that the High Court's direction for a supplemental statement did not exceed its jurisdiction as the question was broad enough to include this line of enquiry.

Conclusion:
The Supreme Court held that the High Court did not exceed its jurisdiction in calling for a supplemental statement under section 66(4) as the question framed was wide enough to include the enquiry into the manner of cheque receipt. The appeal was dismissed with costs.

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