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TMI Blog1969 (7) TMI 26X X X X Extracts X X X X X X X X Extracts X X X X ..... duction on the ground that the transfer of shares to the subsidiary was not a business transaction. The Income-tax Officer found that the market price of the transferred shares was Rs. 2,69,09,937. He called for an explanation for these transfers at a rate which was below the market rate and even the cost price but was not satisfied with the explanation offered. He added the difference between the market price and the cost price amounting to Rs. 1,02,40,546 as the assessee's profit on the sale of shares to its subsidiary. Before the Appellate Assistant Commissioner it was urged that there was complete identity in the instant case between the transferor and the transferee and, therefore, no profit should have been computed on the transaction. The contention, however, did not find favour with the Appellate Assistant Commissioner. He was of the view that the assessee's subsidiary, as a public limited company, was a separate and distinct entity and the plea of identity between the transferor and the transferee was not sustainable but he observed that, in this case, there was no suggestion that the assessee received anything more than the sale price. In his view, therefore, it was "im ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uestion No. 1 be in the affirmative whether on the facts and in the circumstances of the case the Tribunal exercised its discretion judicially in not allowing the applicant's petition for raising the additional grounds? 3. Whether, on the facts and in the circumstances of the case, the Tribunal erred in dismissing the appeal summarily on the grounds stated in the appellate order dated September 3, 1964?" Now, sub-section (4) of section 33 of the Indian Income-tax Act, 1922, provides: " The Appellate Tribunal may, after giving both parties to the appeal an opportunity of being heard, pass such orders thereon as it thinks fit, and shall communicate any such orders to the assessee and to the Commissioner." Learned counsel for the revenue argues that, in the instant case, the Tribunal's order of the 22nd July, 1964, was passed under section 33(4). His point is that the appeal was heard on the 4th June, 1963; to meet the objections raised by the assessee, the department made the application for admission of the two additional grounds of appeal; and the Tribunal, upon considering this application for admission of additional grounds, made an order on the 22nd July, 1964, that the appl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r of the Appellate Assistant Commissioner on any of the grounds decided against him." Rule 28 provides: " Where the Tribunal is of opinion that the case should be remanded, it may remand it to the Appellate Assistant Commissioner or the Income-tax Officer, with such directions as the Tribunal may think fit." The Supreme Court, in this case, has observed that: " The word 'thereon' in section 33(4) restricts the jurisdiction of the Tribunal to the subject-matter of the appeal. The words 'pass such orders as the Tribunal thinks fit' include all the powers (except possibly the power of enhancement) which are conferred upon the Appellate Assistant Commissioner by section 31. Consequently, the Tribunal has authority under section 33 to direct the Appellate Assistant Commissioner or the Income-tax Officer to hold a further enquiry and dispose of the case on the basis of such enquiry. " The subject-matter of appeal before the Tribunal, in the Supreme Court-case, was the question as to what should be the proper written down value of the buildings, machinery, etc., of the assessee for calculating the depreciation allowance under section 10(2)(vi). According to the Supreme Court, it was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e must look at the section which confers jurisdiction upon the Tribunal to hear appeals from the decisions of the Appellate Assistant Commissioner. Sub-section (4) of section 33 provides that the Appellate Tribunal may, after giving both parties to the appeal an opportunity of being heard, pass such orders thereon as it thinks fit, and shall communicate any such orders to the assessee and to the Commissioner. The expression 'thereon' has come in for considerable judicial comment and observation, and the authorities lay down that the power of the Tribunal is confined to dealing with the subject-matter of the appeal and the subject-matter of the appeal is constituted by the grounds of appeal preferred by the appellant. This subject-matter cannot be expanded even by the appellant unless leave is granted to him to do so by the Appellate Tribunal. The subject-matter can certainly not be expanded by the respondent, as already pointed out, if he has not either appealed or cross-objected. Now, there is a rule of procedure framed by the Tribunal with regard to the hearing of appeals, which rule is in the following terms: 'It will be noticed that this rule is identical in terms with rule 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ombay High Court in J. B. Greaves v. Commissioner of Income-tax once again, at page 125 explicitly stated: " . . . . the subject-matter of appeal would get confined to the limits of the grounds specifically raised in the memorandum of appeal, the new grounds raised by the appellant with the previous permission of the Tribunal and the grounds urged by the respondent in support of the decree passed in his favour, even though the decision of the court, against which the appeal is filed, is against him." The Bombay High Court expressed the same view in Pokhraj Hirachand v. Commissioner of Income-tax. A Special Bench of the Madras High Court in S. Chenniappa Mudaliar v. Commissioner of Income-tax has said that the order of the Appellate Tribunal should be co-related to the actual subject-matter in controversy; a dismissal for default of appearance has nothing to do with the matter in controversy; it merely puts an end to the appeal; and such a method of disposal cannot be said to be in accordance with section 33(4). Let us now refer to decisions of our court. In Kannan Devan Hills Produce Co. Ltd. v. Commissioner of Wealth-tax, this court had to deal with the provisions of section 24 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orders and cannot be said to be orders under section 33(4). According to the Allahabad High Court, there are two kinds of remand orders that may be passed by an appellate authority, namely, (1) keeping the appeal pending before it and remanding the case for further enquiry and a further finding on an issue, and (2) allowing the appeal, setting aside the order of the inferior court and directing it to pass a fresh order; the second kind of remand order passed by the Tribunal is an order under section 33(4); it is the final order on the appeal and it is an order under section 33(4) even though the assessment proceedings may remain pending before the Income-tax Officer; but the same cannot be said in respect of an interlocutory remand order which is not the final order disposing of the appeal. In the instant reference, the facts appear to be that when the appeal was part heard the Income-tax Officer sought to raise two additional grounds. The Tribunal by an order which it has described as an "interlocutory order" made on the 22nd July, 1964, refused to entertain these additional grounds. Thereafter, on the 3rd September, 1964, the Tribunal by another order dealt with the maintainabi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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