COMMISSIONER OF INCOME-TAX, DELHI AND RAJASTHAN versus THE MEWAR TEXTILE MILLS LTD.

Citation: [1966] 3 S.C.R. 34 · Decided: 10-12-1965 · Supreme Court of India · Bench: K. SUBBA RAO · Disposal: Appeal(s) allowed

Judgment (excerpt)

COMMISSIONER 01' INCOME-TAX, DELHI AND 
RAJAS111AN 
v. 
TIU: :\1EWAR TEXTILE MILLS LTD. 
December 10, 1965 
IK. ScHBA RAo. J.C. SHAH ANDS. M. S1KRI, JJ.] 
Income Tax Act, ( 11 vf 1922). s. 66( 1 )-Procedure for refertnce of 
queslions of law by J'ribunal to l/igh Court-At the instance of asJU.Stt 
Tribu11a/ an11exin1? frt•Jh dcx:111nenrs, not discussed, to statement of ca.tt-
Propriety of. 
At the time of making an upplication lo the Income-tax 
Appellate 
Tribunal under s. 66( 1) of the Income-tax Act, 1922, to refer ce.W. 
questions of law to the High Court, the asse~sce filed certain document& 
as annexures to hi• application and the Tribunal attached these documeut& 
to the Statement of Case. 
There wa.• no mention of any of the documcol< 
either in the Appellate order of the Tribunal or in the body of the State-
ment of Case. 
The High Court decided 
the questions referred to it ia 
favour of the asses5ec. 
On an appeal to thi' Court. 
HELD : (i) The case must be remanded to the High Coun a• the 
relevant facts were not clear, nor agreed upon by the parties. 
(ii) II is not consistent with the advisory juri5diction of a High Uiurt 
under the Act that the Appellate Tribunal should attach to the Statement 
A 
B 
c 
D 
of Case document•. other than the proceeding<; of the Income-tax autho-
E 
ritjes, which are not mentioned or discussed either in its own appellate 
order or in the Statement ot Case, If the High Court were to decide any 
di•pute concerning the interpretation of any such document, it would be 
deciding question• not decided by the Tribunal and which the High Courl 
is incompetent to decide under the A.ct [3 8 G, HJ 
CIVIL APPELI.ATF. JURISDICTION : Civil Appeal No. 969 of 
1964. 
F 
Appeal from the judgment and order, dated March 21, 1963 
of the Rajasthan High Court in D. B. Civil Income-tax Ref. No. 41 
of 1960. 
A. V. Viswanatha Sastri, S. K. Aiyar, B. R. G. K. A char, and 
R. N. Sachthey, for the appellant. 
S. T. Desai, Z. S. Meeratival and Naunit Lal, for respondent. 
The Judgment of the Coun was delivered by 
G 
Sikri, J. This appeal, by certificate granted under s. 66A(2) 
of the Indian Income Tax Act, 1922, hereinafter referred to as 
H 
the Act, read with s. 261 of the Indian Income Tax Act, 1961, a 
<lirected against the judgment of the Rajasthan High Court in a 
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C.I.T. V. MEWAR MILLS (Sikri, J.) 
35 
A consolidated reference made to it by the Income Tax Appellate 
Tribunal, Delhi Branch, under s. 66 (1) of the Act. This appeal 
relates to the assessment year 1943-44 and the relevant question 
with which we are concemed is as follows :-
"Whether the profit on the amounts received by the 
B 
assessee's bankers in British India as price of goods 
sold by the assessee on railway receipts in the _names of 
the consignees or as price of goods delivered ex-godown 
Bhilwara was liable to tax under the Indian Income-Tax 
Act?" 
C 
This question was referred at the instance of the appellant and 
the item in dispute now before us is the item amounting to 
Rs. 2,73,488, which was held not liable to taxation by the 
Appellate Tribunal. 
The question which arises in this appeal is 
wltether the Tribunal was right. The first submission, however, 
of Mr. A. V. Viswanatha Sastri, the learned counsel for the 
D 
appellant, is that the High Court has not dealt with this question 
insofar as it relates to this sum. Mr. Desai, on the other hand, 
·contends that the appellant has not appealed as far as this item is 
concerned; and, therefore, before we attempt to answer the question 
we must first see whether the appellant's appeal covers this item. 
E 
Mr. Desai refers us to the petition for leave to appeal to the 
Supl'C'"1e Court, filed in the High Court, and says that there is no 
express mention of the item of Rs. 2,73,488. He is right as far 
as this is concerned, but the appellant apparently felt it was not 
necessary to mention expressly this item. 
Mr. Sastri poin1!! to 
:r 
paras 12 and 13 of the petition which read as follows: 
G 
H 
"12. That on account of applying the principle of 
accrual basis and allowing apportionment of profit 
between the manufacturing and selling processes in the 
ratio of 75% : 25% the revenue that would be lost to 
the Department would be approximately Rs. 36,000. 
13. That the point of law decided by this Hon'ble 
Court while returning the answer to question No. 2, 
namely, whether the liability to pay tax can be fastened 
on the assess

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