THE PETLAD TURKEY RED DYE WORKS CO. LTD., PETLAD versus THE COMMISSIONER OF INCOME-TAX, BOMBAY, AHMEDABAD

Citation: [1963] SUPP. 1 S.C.R. 871 · Decided: 02-11-1962 · Supreme Court of India · Bench: S.K. DAS · Disposal: Appeal(s) allowed

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Judgment (excerpt)

I S.C.R. 
SUPREME COURT REPORTS 
871 
THE PETLAD TURKEY RED DYE WORKS 
CO. LTD., PETLAD 
·v. 
THE COMMISSIONER OF INCOME-TAX, 
BOMBAY, AHMEDABAD 
(S. K. DAS, J. L. KAPUR, A. K SARKAR, 
M. HIDAYATULLAH and RAGHUBAR DAYAL, JJ.) 
Income Tax-Reference to High Court-Order calling for 
supplemental statement. of case and allowing further evidence-
Validity-Appeal against the order to Supreme Court-Compe-
tence-Indian Income-tax Act, 1922 (11 of 1922), ss. 66, 
66A(2). 
The assessee company carried on the business of dyeing 
and selling dyed yarn as Petlad in the erstwhile State of Baroda 
and its status during the relevant assessment years was that of 
a hon-resident. 
In respect of sales made to purchasers in what 
was British India the Income-tax Officer found that the sale 
price was received by the company at Petlad by means of 
cheques, drafts and hundis which were admittedly sent by post. 
These cheques etc., were sent back by the compauy either to 
its creditors in British India in payment of its liabilities or to 
the credit of its accounts with its bankers in British India. 
The assessee company claimed that as the sale price was re-
ceived by it at Petlad, the profits on the aforesaid sales were 
not taxable in the taxable territories. The Appellate Tribunal 
held that the cheques etc., which were sent by the assessee to 
its bankers and er editors were received by them as agents of the 
assessee and therefore the profits were received in British India 
and were liable to tax. On an application made by the asse!See 
under s. 66(1) of the Indian Income-tax Act, 1922, the Tribu-
nal referred the question to the High Court as to whether the 
profits or any part thereof were received by or on belialf of the 
assessee company in British India. 
In the statement of the case 
the Tribunal pointed out that no attempt had been made at a 
previous stage to investigate as to whether the post office had 
acted as the agent of the company or of the buyers. On 
September 23, 1955, the High Court passed an order calling 
for a supplemental otatement of the case and giving the parties 
liberty to adduce further evidence. The Tribunal, after reco-
rding evidence as directed by the High Court, sent a supple-
mental statement in which a finding was given that "in the 
circumstances of the case and on the evidence and in the 'lhsencc 
1962 
Nov1mber, 2. 
/962 
Pttlad Turkey Red 
Dye Works 
Co. Ltd. 1 Petlad 
v. 
Commissioner of 
lncom~-tux, 
"1ombay. Ahmed:Jbad. 
872 SUPREME COURT REPORTS [1963] SUPP. 
of correspondence we must necessarily infer an implied request 
by the assessee to remit by post ........ " 
On April 21, 1960, 
the High Court :mswered the question referred in the affirma-
tive and against the assessee. 
In the appeal filed against that 
judgment the assessee challenged the validity of the order of the 
High Court dated September 23, 1955, asking for a Sltpplemen-
tal statement of case after taking additional evidence, on the 
ground that it was without jurisdiction. 
For the Commi~sioner 
of Income-tax, it was contended that as no appeal had been 
filed against the order of the High Court dated September 23, 
1955, the question as to the validity of that order could not be 
raised at the later stage. 
Held, that the order of the High Court dated September 
23, 1955, calling upon the Appellate Tribunal to make a 
supplemental statement of the case was not a final order, nor a 
judgment within the meaning of s. 66( 5) or s. 66A(2) of the 
Indian Income-tax Act, 1922, and was not appealable. 
Tata Iron & Steel Co. v. Chief Revenue Authority, (1923) 
L. R. 50 I. A. 212, Delhi Cloth & Oeneral Mills Co. Ltd. v. 
Income-tax Commissioner, (1927) L. R. 54 l. 1;.. 421 and Sardar 
Syedna Taher SaifwUin Sahib v. State of Bombay, [1958] S. C. 
R. 1007, relied on. 
Held, further, that though the High Court had power to 
direct a supplemental statement ·to be made, it was not compe-
tent to direct additional evidence to be taken. 
Under s. 66 of the Act when the High Court finds it 
necessary to have a supplenental statement of the case in order 
to answer the question of law which is raised, it can direct 
such statement to be submitted with such additions and altera-
tions as it may direct, but the statement must be based on 
facts which are already on the record, and the High Court 
cannot a'k for additional facts to be brought in, because those 
would not be in regard to a question which arises from the 
order of the Tribunal

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