COMMISSIONER OF INCOME-TAX, WEST BENGAL versus CALCUTTA AGENCY LTD.

Citation: [1950] 1 S.C.R. 1008 · Decided: 21-12-1950 · Supreme Court of India · Bench: HARILAL JEKISUNDAS KANIA · Disposal: Appeal(s) allowed

Judgment (excerpt)

1950 
Patntalal 
Jankid-:u 
v, 
Mohanlal and 
Another, 
Pata1tjali 
S11stri J. 
!950 
Deo, 21. 
1008 
SUPREME COURT REPORTS 
[1950] 
of section 14, it seems to me, they would be bringing 
themselves under the bar of section 18 (2). 
The 
respondents cannot therefore claim that the loss of the 
goods was explosion damage within the meaning of the 
Ordinance so as to bring the case within section 14 and 
at the same time contend that the loss was not "due 
to or did not in any way arise ont of the explosion" in 
order to a void the bar under section 18. 
Both sec-
tion 14 and section 18 have in view the physical cause 
for the loss or damage to property for which compen-
sation is claimed and not the cause of action in rela-
tion to the person against whom relief is sought. The 
respondents cannot, in my opinion, be allowed to take 
up inconsistent positions in order to bring themselves 
within the one and to get out of the other. 
I would therefore allow the appeal and dismiss the 
counter-claim. 
DAS J. agreed with the Chief Justice. 
Appeal dismissed. 
Agent for the appellants: Mohan Behari Lal. 
Agent for the respondents : I. N. Shroff. 
COMMISSIONER OF INCOME-TAX, 
WEST BENGAL 
v. 
CALCUTTA AGENCY LTD. 
[SHRI HARILAL KANIA CJ., PATANJAL! SASTRI 
and DAS JJ.] 
fo·li.tn Income-tax Act (XI of 1922), ss. 10 (2) (xv), 66-Refer-
ence-Jwrisdiction of High Ooilf·t-Duty to decide case ori facts 
stated by Tribuna.l-Accepting arauments of CO'ltnsel as proved fa.cts 
and basing decision on them, impropriety of-Business expenditnre-
Payments to avoid disclosure of misfeasance of director.~-Burden of 
prcof. 
The jurisdiction of the High Court in the matter of income-
tax references is an advisory jurisdiction and under the Inco:ne-
tax Act the decision of the Appellate Tribunal on facts is final 
unless it can be successfully assailed on the ground tha~ there was 
,_ 
S.C.R. 
SUPREME COURT REPORTS 
1009 
no evidence for the conclusions on facts recorded by the Tribnnal. 
1950 
It is therefore the duty of the High Court to start by looking at 
tbe facts found by the Tribunal and ans~'e!: the questions of lHW Cornmiss:oritr of 
on that footing. 
It is not p1·oper to depart fron1 this rule of law 
Incnme-tax, 
as it will convert the High Court into a fact finding authority, 
Wcst Bengal 
which it is not, under the advisory jurisdiction. 
v. 
As the statement of the case prepared by the Appellate Tri· Calcutta Ag•ncy 
bunal in accordance v.'ith the rules fran1ed under the Income-tax 
Ltd. 
Act is prepared with the knowledge of the parties concerned and 
they have full opportunity to apply for any addition or deletion 
from that statement, if they have approved of the state1nent n1ade 
by the Tribunal, it iR the agreed etatement of facts by the parties 
on w bich the Iligh Court has to pronouncs its judgment. 
The 
High Court would be acting improperly if it takes the arguments 
of the counsel for the assessee as if they were facts and bases its 
conclusion on tboso arguments. 
One of the directors of the assessee company, acting in the 
capacity of managing agents of certain l\'fills, had dra\vn some 
hundis in the name of tho Mills, aod as the Mills repudiated lia-
bility, suits were filed on the hundis against the Mills and the 
assessees. The assessees thereupon agreed to reimburse the Mills 
by permitting the latter to deduct a moiety of the commission 
pa.yable to them under the agreement of managing agency, against 
payments which the Mills may have to make under the decrees. 
In their assessment fio income-tnx the assessees claimed that the 
amounts so deducted should bo excluded from their asRessable 
income as business cxpenditme under s. 10 (2) (xv) of tbe Income-
tax Act. 
The Appellate Tribunal found that the assessees had 
agreed to pay off the decree a1nount from the remuneration due to 
them, that the decre.e was passed against them evidently for some 
misfeasance committed by their directors, that the books of both 
companies showed that the assessees were paid their remunera-
tion in full, and that the expenditure was not therefore laid out 
for the purpose of carrying on the business, and also that, as the 
payment was made for the liquidation of a debt, it was not a 
revenue expenditure. In the High Court the assessees' counsel 
argued, relying on the case cf Mitchell v. B. W. Noble Ltd.(1), 
that the payments were made by th• assessees to avoid the 
publicity of an action against them and the consequent exposu

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