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TMI Blog1993 (4) TMI 4X X X X Extracts X X X X X X X X Extracts X X X X ..... -Under section 256(1) of the Income-tax Act, 1961, the Income-tax Appellate Tribunal, Madras, stated the following question of law for the opinion of the Madras High Court (at page 614 of 132 ITR ) : " Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the sum of Rs. 19 being the interest received on the deposit made with the electricity company, is a business receipt and, accordingly, deleting the additional surcharge of Rs. 81,920 charged for the assessment year 1963-64 ? " The High Court returned the reference unanswered. It directed the Tribunal to consider the case " on all points that require consideration of the question whether additional surcharge was attracted ". In short, if a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al, the Appellate Assistant Commissioner upheld the contention of the assessee that the said sum of Rs. 19 also constituted its business income and, therefore, was exempt. Accordingly, he held that the levy of surcharge was unsustainable. The Revenue appealed to the Appellate Tribunal. Its case was that the said receipt cannot be treated as a business receipt and that it was rightly treated by the Income-tax Officer as " income from other sources ". The Tribunal recorded in its order ( at page 615 of 132 ITR ) : 'Before us, it is made clear by both sides that the levy of additional surcharge and interest would depend upon the classification of the head of income for this interest income of Rs. 19 and that if it fell under income from busine ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nal that the liability to surcharge is not attracted in case the said sum of Rs. 19 represented business income may not be warranted and that, in such a situation, the High Court does possess the power to correct the error so long as the point arose out of the Tribunal's order. The High Court held : "This court cannot look on helplessly with reference to an error which is manifested in the contention of both sides before the Tribunal. This court has jurisdiction to correct an error in the order of the Tribunal, so long as the point arose out of its order, whoever be the author of the mistake or error in taking up a particular contention. Having regard to the nature of the issue that was before the Tribunal and having regard to what we hav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enue resiling from an erroneous assumption of law. In CIT v. Scindia Steam Navigation Co. Ltd. [1961] 42 ITR 589 (SC), the facts were these : a steamship belonging to the respondent company was requisitioned by the Government. The ship was lost by enemy action on March 16, 1944. The company received a sum of Rs. 20 lakhs by way of compensation on July 17, 1944, a sum of Rs. 23 lakhs on December 22, 1944, and, a sum of Rs. 33,333 on August 10, 1946. The total compensation so received exceeded the cost price of the steamship. The difference between the cost price and written down value was Rs. 9,26,532. In the assessment proceedings for the assessment year 1946-47, the Revenue sought to charge the said amount under the fourth proviso to sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d for the opinion of the High Court. The High Court overruled the objection opining that the form in which the question was framed was sufficiently wide to take in the new contention and that the company was entitled to raise it even if that aspect of the question had not been argued before the Tribunal. It upheld the new contention raised by the assessee and answered the question in its favour. On appeal, this court affirmed the view of the High Court. It was held that the High Court had jurisdiction to entertain the new contention raised by the assessee for the first time inasmuch as it was within the scope of the question framed by the Tribunal and was implicit therein. This court enunciated several principles relating to the nature of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 81(i)(a). In tune with this submission, the assessee submitted that the said sum of Rs. 19 was also a business income and, therefore, the liability to additional surcharge did not attach to the assessee. The Incometax Officer took the view that the said sum of Rs. 19 represented income from other sources and, therefore, the liability to additional surcharge was attracted. On appeal, the Appellate Assistant Commissioner and the Tribunal upheld the assessee's contention that it was business income and, therefore, the liability for surcharge was not attracted. The High Court, however, thought that, having regard to the language of the provisions of the relevant Finance Act, the Tribunal ought to examine whether the liability to addition ..... X X X X Extracts X X X X X X X X Extracts X X X X
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