9911796707
TMI Blog1965 (4) TMI 115X X X X Extracts X X X X X X X X Extracts X X X X ..... 7; 10,000 and immediately the Development Board gave a part of it to him on lease for 999 years on a nominal rent after receiving the premium of ₹ 10,000. He was permitted to sell the land to anybody as a freehold property and accordingly he sold a major part of it during the accounting year for ₹ 1,26,870. During his assessment two questions arose, one whether the net receipts from the sale of the land amounted to profits of business, e.g., an adventure in the nature of trade or commerce liable to tax and the other being the quantum of the net receipts. The Income-tax Officer held that the receipts were profits and fixed the amount at ₹ 1,16,870 by deducting ₹ 10,000 paid as the premium from ₹ 1,26,870, the sale proceeds. The assessee filed an appeal to the Appellate Assistant Commissioner, who confirmed the Income-tax Officer's finding that the receipts from the sale were profits but disagreed with the finding that ₹ 1,16,870 were the profits. There was no dispute that the sale of the land yielded to the assessee ₹ 1,26,870 and the real dispute was about the cost of the land to the assessee, which was to be deducted from the sale proc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndamental issue of the assessability as such." So it disallowed the counsel to argue the matter. Coming to the question of the quantum of the net receipts it held that the price paid by him for purchasing the land in dispute should be taken to be the cost price and remanded the case for determining it and then arriving at the amount of the net receipts. The assessee applied to the Tribunal for referring the case to this court under section 66(1) and hence this reference. The following are the relevant provisions of law. Section 30 of the Income-tax Act provides for an appeal by an assessee objecting to the amount of the income assessed to the Appellate Assistant Commissioner against the assessment within a certain period of time. The Appellate Assistant Commissioner's powers are stated in section 31(3). He can confirm, reduce, enhance or annul the assessment or set it aside and direct the Income-tax Officer to make a fresh assessment but cannot enhance an assessment without giving the assessee-appellant a reasonable opportunity of showing cause against it. The Commissioner of Income-tax is empowered by section 33(2) to appeal to the Tribunal from any order passed by an A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that both or either of them is valid and cannot succeed unless he shows that at least either of them is valid. Complications arise when one ground of attack is accepted and the other rejected or one ground of defence is accepted and the other is rejected. When one ground of attack is accepted the appeal must of necessity be by the defendant because on either ground being accepted the judgment is in the plaintiff's favour and he cannot file an appeal merely against the finding rejecting the other ground of attack. An appeal lies from the operative judgment and not from the reasons in support of it or the findings given on the issues whether of fact or law on which the operative part of the judgment is based. A successful party cannot appeal merely to have a finding given adversely to him corrected; as notwithstanding the adverse finding the operative judgment is in his favour he is not aggrieved by it and cannot gain anything by appealing against the adverse finding. Similarly, when one of the two grounds of defence is accepted and the other is rejected, the appeal must be by the plaintiff and there can be no appeal by the defendant since the operative judgment is in his favour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respect of the part of his claim that was rejected and the defendant in respect of the part that was accepted. If the plaintiff wants a decree for the remaining part of the claim he must file an appeal or a cross-objection as permitted by rule 22(1) of Order 41, Civil Procedure Code, in an appeal by the defendant and if a defendant wants that the decree for part of the claim should be quashed he must file an appeal or a cross-objection in the plaintiff's appeal as permitted by rule 22(1) of Order 41. It is to be noted that an appeal and the cross-objection filed in the appeal relate to two different subject-matters even though both arise out of one decree or judgment of the trial court. The subject-matter of a cross-objection has nothing to do with the subject-matter of the appeal. On account of part of the suit being decreed and part being dismissed the decree is split up into two parts or is treated as two decrees and the appeal is from one decree and the cross-objection from the other. This is made clear by rule 22, which speaks of an appeal from part of a decree and of the decree being supported by the respondent on any of the grounds decided against him. If the plaintiff ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... omething and partly disallowing assessment of another thing. When a person is assessed he is assessed on all the income found assessable. There are no two parties before an Income-tax Officer or an Appellate Assistant Commissioner and there is no claim by one party to be met by the other; so the analogy of a suit, part of which may be decreed and part rejected, does not apply to an assessment proceeding. A dispute may arise in an assessment proceeding about certain receipts being income or not income or the assessees being entitled to a certain deduction or being not entitled to it and the assessment order is passed after deciding this dispute. The dispute may be decided partly in favour of the assessee and partly against him. But since the assessability is indivisible the order assessing the income is treated as one indivisible order and the facts on account of which the various receipts are held to be assessable income are treated as various grounds of attack and the various facts on account of which deductions or exemptions are allowed or receipts are not treated as assessable income are treated as grounds of defence. So an assessment order is based upon allowing and disallowing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... all and other grounds, if any, and the department, on the ground that something more should have been included in his assessed income. So either of them can file an appeal. If he files an appeal, the department can urge in support of the assessed income any ground of attack that might have been rejected by the Appellate Assistant Commissioner but it cannot ask for an increase in the assessed income; it can ask for an increase only by appealing. If the department files an appeal, which must be for an increase in the assessed income, the subject-matter of the appeal is the increase claimed by the department and the assessee can urge any ground of defence, even though it might have been rejected by the Appellate Assistant Commissioner, for showing that there should be no increase. That he is not liable to be assessed is a ground for showing that there should be no further assessment. Whole includes part and if no receipt is assessable the particular receipt claimed by the department to be assessable also is not assessable and the department's appeal can be resisted on this ground. The Appellate Assistant Commissioner rejected this ground of defence and holding him assessable asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... incongruity in respect of reasons for the two orders. Two orders should not be incompatible with each other, so that one can be enforced and the other cannot be, but if two orders can both be enforced it is immaterial that they are based upon contradictory reasons. Two orders not mutually exclusive have been maintained even though they are based on mutually exclusive reasons: vide Dunn v. United States(76 L.Ed. 356; 284 U.S. 390), Bartkus v. Illinois(3 L.Ed. 2d. 684; 356 U.S. 121), Hoag v. New Jersey(2 L.Ed. 2d. 913; 356 U.S. 464) and In re William Barron(10 Criminal Appeal Reports 81). It is also irrelevant to consider what relief could have been allowed to the assessee if this ground of defence is allowed to be urged by him in the department's appeal if the appellant does not ask for it. No relief can be given to an assessee unless he asks for it and is entitled in law to get it; the Tribunal has no jurisdiction to give him any relief though he may be entitled to it, if he does not ask for it in the appeal. The power conferred upon it by section 33(4) is certainly very wide but is so wide only within the subject-matter of the appeal. However wide it may be, it is limited by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t would be erroneous to say that the effect of accepting the ground of defence of the assessee would be the annulment of the assessment order and that this would be quite the reverse of supporting it by the ground of defence. Sri Gulati cited before us a number of decisions in support of his contention that even when an assessee does not pray for annulment of an assessment order he cannot be permitted to urge the defence that he was not liable to be assessed in the department's appeal for an increase in the assessable income. In Shailesh Chandra Guha v. Bechai Gope A.I.R. 1925 Cal. 94 there were two grounds of defence to a suit on the foot of a mortgage, one that it was defectively framed and the other that the amount due was less. The trial court rejected the former and accepted the latter ground and the plaintiff appealed for a larger amount. Newbould and Ghose JJ. held that in that appeal the defendant could not be permitted to urge that the suit was badly framed. It does not appear that the defendant asked for cancellation of the decree; presumably he only objected to the increase in the amount on the ground that the suit was so badly framed that no relief could have been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d for some positive relief in his favour; he did not merely defend the decree for continued possession in his favour and clearly Order 41, rule 22, was against him. In Mst. Mewa v. Amar Singh A.I.R. 1959 Punj. 515 a plaintiff in a suit for partition got a decree for one-fourth share and appealed for onefourth share more and the defendant was debarred by Bishan Narain J. from contending in the appeal that the plaintiff had no possession at all. The reasons given by the learned judge were that if the plea prevailed the plaintiff's suit was liable to be dismissed; that the defendant had not appealed from the decree and that it would be "improper" to examine the plea. For the reasons given above I respectfully disagree with the observation of the learned judge that "this objection goes to the root of the case and, if upheld, the suit necessarily fails" (page 516). The suit would not have failed automatically, the defendant-respondent had not prayed for the dismissal of the suit and the learned judge was not required by any law to dismiss it simply on finding substance in the proposed ground of defence. In the case of Motor Union Insurance Co. [1954] 13 I.T.R. 27 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .J. and Lakshmana Rao and Krishnaswami Ayyangar JJ. It was a case governed by Order 41, rule 22, Civil Procedure Code. The facts were that the plaintiff sued on a promissory note for ₹ 1,450 and the defence was that the promissory note was executed in lieu of a prior promissory note and that under the Agriculturists' Relief Act nothing was due from him under it. The trial court held that the promissory note was a new cash transaction and not in lieu of an earlier note, that the defendant was entitled to certain reliefs under the Agriculturists' Relief Act and that accordingly the plaintiff was entitled to decree for ₹ 274 only. The plaintiff appealed and the defendant did not file any cross-objection. The lower appellate court held that the defendant was not entitled to the relief under the Agriculturists' Relief Act and did not allow him to urge that the trial court had erred in finding that the promissory note was a new cash transaction and not in lieu of an earlier note. The learned judges held that the lower appellate court was in the wrong and that the defendant was entitled to take the plea to defeat the plaintiff's claim for additional amount. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the purpose of claiming the relief of the quashing of the assessment order. In other words, so long as it did not ask for the quashing of the assessment order its plea that the receipts were not profits ought to have been entertained. It will become at once apparent from the above conclusion that the answer to the question referred to us depends upon what the assessee prayed for before the Appellate Assistant Commissioner. If it prayed that the assessment order be quashed it was not entitled to be heard whereas if it simply prayed that the department's appeal be dismissed it was entitled to be heard. What the assessee prayed before the Tribunal is essentially a question of fact, which cannot be investigated by this court and on which no finding can be given by it for the first time or given adversely to the finding recorded by the Tribunal. In Commissioner of Income-tax v. Calcutta Agency Ltd. [1951] 19 I.T.R. 191; [1950] S.C.R. 1008 the Supreme Court observed at pages 196-197: "It is therefore the duty of the High Court to start by looking at the facts found by the Tribunal and answer the questions of law on that footing. Any departure from this rule of law will conv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the assessability of the whole of the profits and not only part of the profits which was the subject-matter of the department's appeal. The reason given by the Tribunal was that, if it was allowed to argue it successfully, it would completely destroy the assessment order. This reason would have applied only if it had prayed for relief from the whole assessment. If it had prayed for relief only from the additional burden sought to be imposed upon it by the department, the burden already imposed would have remained intact and there would have been no occasion for saying so. The question formulated by itself makes it clear that the assessee desired to argue against the whole of the assessment; the words in the question are "entire profit". The draft statement of the case prepared by the assessee itself does not show that it had sought permission to argue only against increase in the assessed income and not against the assessment itself. It itself never distinguished between the contention that it wanted to raise and its effect and did not say that though its effect might be to render the assessment already done invalid it did not seek invalidation of it. Actually if ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e was no question of its being permitted to argue it before the Tribunal and, therefore, of the Tribunal's giving to it a relief smaller than the one claimed by it. It was for itself to adopt the restricted argument without any permission. The Tribunal was not bound by any rule to say that it should confine its argument to the question of the increased assessment. The answer to the question is, therefore, in the negative. I reject the contention of Sri Gulati that the reference is not maintainable because it is from a remand order passed by the Tribunal inasmuch as the assessee does not challenge the order of remand itself as being unjustified. It is true that under section 66(5) the Tribunal on receipt of the High Court's judgment has to dispose of the case conformably to it. But there is no difficulty in the Tribunal's complying with this provision if the High Court rules that the remand order was unjustified. A remand order can be challenged not only on the ground that it could not be passed but also on the ground that it was preceded by an illegal order on an interlocutory matter. If the Tribunal's order on the interlocutory matter was wrong on the High Court& ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
