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TMI Blog1923 (6) TMI 2X X X X Extracts X X X X X X X X Extracts X X X X ..... pital and the average profits of these four years and of their capital and profits for the year 1918, whereby they purported to show that the percentage of profit for 1918 was not in excess of the average profit on the average capital of the four standard years; and they claimed, therefore, to be exempt from excess profits duty. 3. The Collector of Income Tax, however, made an assessment upon them whereby he brought out their excess profits at upwards of 17 lacs of rupees, on which a 50 per cent, duty would have to be paid after some minor deduction had been made and he required the payment of this duty by three installments. 4. The appellants appealed to the Chief Revenue Authority, and their appeal was heard on the 3rd August 1920. At the hearing of that appeal, Counsel for the appellants asked the Authority to state a case for the opinion of the High Court, and by letter dated the 5th, their agents set out the questions upon which they desired the case to be stated. In the meanwhile, and apparently before this letter had reached the Authority, he by letter dated the 5th, informed them that at the hearing he had confirmed the assessment made by the Collector of Income Tax. In hi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 555 and now stands at the sum of ₹ 30,15,292. 7. And there was a further submission that an allowance of 6 lacs was the allowance of an arbitrary figure. 8. On showing cause, the Authority exhibited to an affidavit copies of "the decisions"--in other words, the reasons for the decisions, of the Primary Revenue Authority and of the Chief Authority on appeal. From these it appears that both the Revenue Authorities had purported to follow the principle of construction laid down by them in a previous case, whereby they had arrived at the conclusion that in calculating capital, only the capital actually employed in the business was to be taken into account; that in this case the Income Tax Collector found that 50 lacs of rupees were invested in securities or kept as fixed deposits in other concerns, that in his view this money was money employed in those concerns and not in the business of the Company, that from the statement of the representative of the appellants it appeared that at the most about 16 lacs would be required in the near future for the expansion of the business, that the whole of it could be safely disregarded in computing capital employed in the busine ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pecific Relief Act would not be applicable, and there would be no power in the Court to compel him to give relief to the subject, is to state a proposition to which their Lordships must refuse assent. Section 45 of the Specific Relief Act enables any of the three High Courts to "make an order requiring any specific act to be done or forborne... by any person holding a public office whether of a permanent or a temporary nature, or by any Corporation or by any Court of Judicature," provided that "such doing or forbearing is, under any law for the time being in force, clearly incumbent on such person or Court in his or its public character, or on such corporation in its corporate character," and subject to other certain conditions not material to this case. 12. It is true that the section is not to authorise the High Court "to make any order which is otherwise expressly excluded by any law for the time being in force." The excluding law is suggested to be the already cited clause in Section 106, Sub-section (2), of the Government of India Act, which is in the following terms: The High Courts have not and may not exercise any original jurisdiction in a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he application of the assessee unless it is satisfied that the application is frivolous or that a reference is unnecessary. (2) If the High Court is not satisfied that the statements contained in the case are sufficient to enable it to determine the questions raised thereby, the Court may refer the case back to the Revenue Authority by which it was stated, to make such additions thereto or alterations therein as the Court may direct in that behalf. (3) The High Court upon the hearing of any such case shall decide the questions raised thereby, and shall deliver its judgment thereon containing the grounds on which such decision is founded, and shall Send to the Revenue Authority by which the case was stated, a copy of such judgment under the seal of the Court and the signature of the Registrar; and the Revenue Authority shall dispose of the case accordingly, or if the case arose on reference from any Revenue Officer subordinate to it, shall forward a copy of such judgment to such officer who shall dispose of the case conformably to such judgment. (4) Where a reference is made to the High Court on the application of an assessee, costs shall be in the discretion of the Court. 16 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9. So far their Lordships are in agreement with the High Court. There remains the question which has led to this appeal. The High Court has apparently considered that there is no serious point of law involved in this case. It was, indeed, contended by Counsel for the respondent that the High Court had accepted the position that there was a question of law and then had gone on to decide it adversely to the appellants; but their Lordships think this contention inadmissible. If there is a point of law, it ought to be decided in a regular manner and upon proper materials; and here it should be said that the manner is not regular and that it is at least doubtful whether the materials are complete. 20. Their Lordships must, therefore, consider whether the High Court should have ordered a case to be stated. This, as it appeared to the learned Chief Justice, depended upon the question whether the Chief Revenue Authority had reasonable grounds for being satisfied that a reference was necessary. This is not quite the way in which their Lordships would put it. But to proceed: In the view of the Chief Justice profits not employed in the business are not capital for the purpose of this Act, an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sman whom it employed may have thought it unnecessary to introduce provisions like those contained in paragraphs 8 and 12 of Part I of the Fourth Schedule of the English Act, and may have meant no variation from the scheme of the English Act when it and he introduced the words "securities" and spoke of interest on certain securities as being profits from the business. Too much stress, therefore, should not be laid on these differences. At the same time, it is noteworthy that the Indian Act takes notice of the English Act in Schedule I, paragraph 4; and the Court may come to the conclusion that the reason for the differences between the two Acts is not a mere difference of drafting, but a deliberate variation due to the different conditions under which business is carried on in India and in England. 25. On the whole, their Lordships think that the Chief Revenue Authority should have been ordered to state a case, and they will humbly advise His Majesty that this appeal should be allowed, and that the Rule nisi should have been converted into an order absolute in the terms of the first alternative expressed in the Rule nisi, and that the appellants should have their costs i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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