# Co. Ltd. 1 Petlad v. Commissioner of

- **Citation:** [1963] Supp. 1 S.C.R. 871
- **Court:** Supreme Court of India
- **Decided:** 1960-04-21
- **Bench:** S. K. Das, J. L. Kapur, A. K Sarkar, M. Hidayatullah, Raghubar Dayal
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/co-ltd-1-petlad-v-commissioner-of-2753
- **Pages:** 14

## Headnote

Income Tax-Reference to High Court-Order calling for
supplemental statement. of case and allowing further evidenceValidity-Appeal against the order to Supreme Court-Competence-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 received 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 Tribunal 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 recording evidence as directed by the High Court, sent a supplemental 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 affirmative 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 Sltpplemental 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 competent 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 alterations as it may direct, but the statement must be based on
facts which are alread

## Text

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 evidenceValidity-Appeal against the order to Supreme Court-Competence-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 received 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 Tribunal 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 recording evidence as directed by the High Court, sent a supplemental 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 affirmative 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 Sltpplemental 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 competent 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 alterations 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 but would be a statement based on some:
thing which was not before the Appellate Tribunal when it
passed its appellate order.
The 'New Jehangi.r Vakil Mills v. The Commissioner of
Income-tax, (1960] 1 S.C.R. 249,Mrs. Kusumben D. Malwdevia
v. Commis.Wne1· of Income-tax, Bombay, [1960] 3 S.C.R. 417
and Zoraster
&; Co. v. Commissioner of Income-tax, [1961]
I S.C.R. 210, followed.
Crvn. APPELLATE j URISDICTION : Civil Appeals
Nos. 158 and 159 of 1962.
1 S.C.R. SUPREME COURT REPORTS . 873
Appeals from the judgment and order dated
21, 1960, of the Bombay High Court in lucome-tax
Reference No. 16 of l \l55.
PUJrshottam TricUJmdas, R. J. Kolah and/. N.
Shrofl, for the appellant.
Gopal Singh and R. N. Sachthey, for the respondent.
l!Jo2.
November 2.
The Judgment of the
Court was delivered hy
KAPUR, ].-These two appeals pursuant to a
certificate are from the decision of the High Court
of Bombay in Income-tax Reference No. 16 of 1955
answering the question referred by the Income-tax
Appellate Tribunal in the affirmative and against the
assessee company. The appellant in both the appeals
is the assessec company and the Cc.mmissioner of
Income-tax is the respondent.
The facts of these
appeals are shortly
as
follows : The assessee company was
registered in
the erstwhile Baroda State and its status during the
assessment years was that of a non-resident. The
relevent assessment
y~ars were 1941-42 and 1942·43
the previous years being the calendar years Hl40 and
1941. It carried on the business of dyeing and selling
dyed yarn.
It effected sales of dyed yarn of the total
value of Rs. 14,22}J9(i/. and Rs. 19,22,107 in the pre·
vious years relevant to the assessment years 1941 ·42
and 1942-43 respectively. The sales were made to purchasers both in the Indian States and in what was
British India. During the previous year relevant to
1941-42 out of the total sales of the
value of
Rs. 14,22,996/-, Rs. 11,88,063/- were to merchants
in British India and out of these some sales were to
Calcutta merchants which· are not now in dispute
and the balance amounting to Rs. 9,53,304/- were to
1962
Plllad Tork1y Rttl
Dyt Works
Co. Ltd .. Pet/ad
v.
CommissiOMT vf
lucome·tax,
Bom6ay, AhFMtl•bM
1962
Petlatf Tur"key Red
D1tWorks
Co . Lttl., Pet/ aef
v.
Commissioner of
lneM'lll-tax,
ollombay, A/n,,,ikbad
--.-
Kapur, J.
874 SUPREME COURT REPORTS [1963]SUPP.
purchasers in other parts of British India and dispute
in regard to that year relates to the assessment on
the profits of those sales. Similarly in the previous
year relevant to 1942-43 out of the total sales of a
sum of Rs. 6,04,588/- were made to
purchasers in
British India and assessment in regard to profits out
of that sum is in dispute. The Income-tax Officer
found that the sale price was received by the assessee
company at Petlad in the erstwhile Baroda State by
means of cheques, drafts and hundis in the years
relevant to the two assessment years and it is not
disputed that they were sent by
post. These
cheques, drafts and hur1dis were sent back by the
assessee company either to its creditors in British
India jn payment of its liabilities or to the credit of
its accounts with its bankers in British India. The
contention of the assessee company was that these
sums were received by it at Petlad in the erstwhile
Baroda State and therefore the profits on these sales
were not taxable in the taxable territories in asmuch
as they were received in an Indian State. After appeal
.was taken to the Appellate Assistant Com.aissioner
appeal to the Income-tax Appellate Tribunal which
held that the cheques and hundis which were sent
by the assessee company to its bankers and creditors
were received by them as agents of the assessee company and therefore the profits were received in British India and were liable to tax.
Against that
order the assessee company applied under s. 66 of
the Income-tax· Act for a statement of the case to the
High Court. On February 21, 1955, the Appellate
Tribunal referred the following question to the High
Court:-
"Whether the proportionate profits on the sale
proceeds aggregating Rs. 9,53.304/- for
the
assessm!'nt year 1941-42 and Rs. 6,04,588/- for
the assessment year 1942-43 or any part thereof were received by or on behalf of the assessee
company in British India • "
I S.C.R.
SUPREME COURT REPORTS
875
The Appellate Tribunal in the statement of the case
remarked that no attempt had been made at a previous stage to investig:ite as to whether the post office
had acted as the agent of the assessee company or of
the buyers. The High Court on September 23, 1955,
made the following order calling for a supplemental
statement :
"The same question arises on this reference as
in the last reference (I.T. Reference No. 15 of
1955) and we want a supplemental statement of
the case on the same lines as we have indicated
in the last reference. The supplemental statement of the case will be confined to the two
amounts mentioned in the question raised on
this reference viz., Rs. 9,53,304/- for the assessment year 1941-42 and Rs. 6,0i,585 for the
year 1942-43."
The parties by this order were allowed to adduce
further evidence. Thereupon the case was sent hack
to the Appellate Tribunal for a supplemental statement of the case and after recording evidence as
directed by the High Court the Tribunal gave the
following findings :-
"Therefore in the circumstances of the case and
on the evidence and in the absence of correspondeuce we must necessarily infer an implied
request by the assessee to remit by post, the
parties having adopted the normal accepted
commercial practice for making the payment
in such type of cases".
The High Court on April 21, 1960, answered the
question in the affirmative and against the assessee.
It also observed that the mode of payment accepted by
the assessee company was that the payment had to be
made by sen?~ng the .cheque~, drafts and hundis by
post from Bnosh India ;md 1t could not be said that
1962
P1tl•d Turk•J Rtd
Dye Works
Co. Ltd., Plllad
v.
Commis.doner of
lneome·lox,
Bombay, A"""dobad
Kapur,J.
1962
Petlad Turkey Red
Dye Works
Co. Ltd., Pet/ad
v.
876 SUPREME COURT REPORTS [1963) SUPP.
GommissiMier oj
lncome·tJx,
Bombay, Ahm1dabad
there was no evidence before the Appellate Tribunal
for holding that there was an implied request by the
assessee company to the buyer to send the cheques
etc., by ,post.
Against that judgment and order
these two appeals have been brought pursuant to a
certificate by the High Court.
Kapur, J.
For the appellant two contentions were raised :
( l) the order of the High Court dated September 23,
1955, asking for
a supplemental statement and
allowing additional evidence was without jurisdiction;
(2) that on the statement of the case the answer to
the question submitted should have been in the
negative and in favour of the assessee.
A third
question has been raised and that was by counsel for
the respondent, the Commissioner of Income-tax,
that as no objection was taken to the calling for a
supplemental statement and as that order was not
appealed against, the question whether the order was
within jurisdiction of the High Court or not cannot
be raised at this stage. We shall first deal with the
objection taken on behalf of the Commissioner of
Income-tax as that is of a preliminary nature and
relates to jurisdiction. The nature and the amplitude
of the jurisdiction of the High Court in regard to
cases dealing with income-tax are contained in s.66 of
the Income-tax Act. Sub-section (1) of that section
provides that if any question oflaw arises out of the
order of the Appellate Tribunal and it is required by
the assessec or the Commisssoncr to be referred to the
High Court the Appellate Tribunal shall draw up a
statement of the case and refer it to the High Court
for its opinio11. If the Tribunal refuses to state the
case
then
under
sub-s. (2)
of
s. 66 on an
application being made to it, the High Court
can, if it is not. satisfied with the correctness of
the Appellate Tribunal's decision require the Tribunal
to draw up a statement of the case and refer it to the.
High Court.
By sub-s. (4) of s. 66 the High Court
1 S.C.R.
SUPREME COURT REP,ORTS
877
may if not satisfied with the statement contained in
the case referred to it refer the case back to the
Appellate Tribunal for additions or alterations.
Under sub-s. (5) of s. 66 the High Court is required
to decide the question of law raised and to deliver its
judgment thereon containing the grounds on which
such decision is founded and thereafter a copy of the
judgment is to be sent to the Appellate Tribunal
which shall pass such orders as are necessary to dispose
of the case in conformity with the judgment of the
High Court. This shows that the jurisdiction of the
High Court is purely advisory.
On the advice being
given to it the Appellate Tribunal shall be guided by
the decision given and shall make the assessment
accordingly, the ultimate result being that au a~sess
ment is made at an amount which, in conformity
with the opinion of the High Court, is considered to
be correct and it is then that the tax liability is
definitely fixed or concreted. The judgment of the
High Court does not in any manner enforce the discharge of that liability. The Privy Council held that
the High Court's judgment is merely the expression
of the opinion as to whether a certain question of
law which arises during the course of assessment has
to be used one way or the other and that the word
"judgll.lent" is not used in s. 51 of the Income-tax
Act, now s. 66 of that Act, in its strict legal and
proper sense.
Tata Iron & Swel Co. v. Chief Revenue Authority (1).
Delhi Cloth & General Jfills
Co. Ltd. v. Income-tux Commiss-ioner ('). In Tata
Iron & Steel Co's. case(') appeal was taken to the Privy
Council against the judgment of the High Court
given under s. 51(3) of the Income.tax Act, now
s. 66( 5), on a certificate of the High Court.
A
preliminary objection was taken in the Privy Council
that the appeal was incompetent as the decision of
the High Court on a reference made by the Chief
Revenue Authority under s. 51 of the then Incometax Act was not a final judgment within cl. 39 of the
Letters Patent of the Bombay High Court. The Privy
(I) [1923] L.R. 50 I.A. 212, 223,
(2) [1927] L.R. 54 I.A. 421.
1962
Pet/ad T•rklJ Re<
D,t Wo1ks
Co. Ltd., Petl1ul
Y.
Commissionrt of
lncomt·lax,
Bombay, .4hmedahaa
Kapur, J.
1962
'1tlad T urkly Rid
Dye Wnrks
Co. ltt/., Pttlad
....
878 SUPREME COURT REPORTS [1963] SUPP.
Commissioner of
ln&ome·tax,
lli'cmijay, A.hmedahad
Council held that where the case is stated for the
opinion of the High Court under the Incorrie·tax Act
the judgment is merely advisory and therefore it was
not a final judgment within the meaning of cl. 39 of
the Letters Patent. This led to the enactment of
what is now s. 66A of the Income-tax Act. Even after
the introduction of that provision the Privy Council
held in Delhi Cloth & General 1lfill8 Go's. case (1) that
that section had no retrospective operation and therefore it did not apply to those judgments under s. 51(3)
of the then Income-tax Act which had become final
at the date when it came into force and that appeal
was competent only if certified to be a fit one for
appeal.
Ko;u.r, J.
Section 66A was introduced in the Income-tax
Act bys. 8 of the Indian Income-tax (Amendment)
Act (24 of 1926) to provide for appeals againstjudg'
ments of the High Courts to the Privy Council and
by the Adaptation Order of 1950 to the Supreme
Court. Sub-section (2) of s. 66A provides :-
"An appeal shall lie to the Supreme Court from
any judgment of the High Court delivered on
a reference made under section 66 in any case
which the High Court certifies to be a fit one
for appeal to the Supreme Court".
No. appeal lies to the Supreme Court unless it falls
within that section, one of the requirements being a
certificate of the High Court. See also Delhi Cloth
& General Mill8 Go's. case (').
We are not here concerned with Art. 136 of the Constitution. Under
sub·s. (3) of s. 66A the provisions of the Code of Civil
Procedure have been made applicable in the case of
appeals under s. 66A "so far as may be" which
confines the right of appeal under the statute to cases
mentioned in sub-s. (2). Delhi Cloth J'.o General Mills
Go',;. cai;e ('). Before the enactment of s. 66A no
appeal was competent against a judgment under the
(I) [1927] L.R. 54 I.A. 421.
1 S.C.R.
SUPREME COURT REPORTS
8711
then s. 51(3) now s. 66(5) of the Income-tax Act.
The word "judgment" under s. 51(3) as under the
present s. u6(5) of the Act is the decision of the High
Court of the question of law referred to it and the
grounds on which such decision is based. It is not
used in the section in its strict and proper sense.
Tata Iron & Steel Go's. case(').
An order asking for
a supplemental statement of the case does not fall
within that definition and is therefore not appealablr
under s. 66A(2).
This Court in Seth Premchand Sritramdas v.
The State oj Bihar ('), which was a case under the
Bihar Sales Tax Act and in which the High Court
refused to direct tlie Board of Revenue to state a case
and refer it to the High Court, held the order of
refusal not to be a final order within cl. 31 of the
Letters Patent of the Patna High Court inasmuch as
the jurisdiction exercised by the High Court was
advisory and standing by itself the order did not bind
or affect the rights of the parties. The court relied
on the decision in Tata Iron&: Steel Go's. case (1). At
p. 805 Fazal Ali, J., observed as follows :-
"But the High Court acquired jurisdiction to
deal with the ca~e by virtue of an express
provision of the Bihar Sales
Tax Act.
The crux of the matter therefore is that the
jurisdiction of the High Court was only consultative and was neither original nor appellate."
Even in cases tried under the civil jurisdiction of the
courts it has been held that an order is final if it
decides the rights of the parties in a civi 1 proceeding
but if after the order the proceedings have still to be
continued and rights in dispute between parties have
to be determined then the order is not final within
Art. 133.
Jethanand & Sons v. Stute of U. P. (')
and Sardar Syedna 7'(1her Saifuddfo Sahiu v. The
State oj Bombay('). Considering the history of legislation of s. 66A of the Income-tax Act and thr· fact
(I) (1923) L.R. 50 I.A. 212, 223.
(S) A.I.R. 1961 S.C. 794.
(2) [IY50] S.C.R. 799,
(4) [1958] S.C.R. 1007,
1962
Pelland Turk11
Red DJ• Wurks
C.. Lid. Pet/ad
v.
Commissioner of
Income-tax,
Bom0.1, Ahmti•hsd
Katur J.
1962
1'11/od Turk" R•d
Dy1 U.'orAs
Co. LlJ., Petlad
v.
Commi.uiotl4T of
Income-tax,
!hnnbay, A/rnudabad
880 SUPREME COURT REPORTS [1963] SUPP.
that the High Court was exercising its advisory
jurisdictiort and that it passed an interlocutory order
calling upon the tribunal to make a supplemental
statement of the case it cannot be said that it was a
judgment against which an appeal was competent
under the provisions of s. 66A(2) of the Income·tax
Act.
We shall next deal with the question whether
the order passed asking for a supplemental statement
with a direction for taking additional evidence was
permissible to the High Court under s. 66( 4) of the
Income-tax Act.
As we have said the jurisdiction
of the High Court is only advisory and is acquired
by virtue of an express provision of the Income-tax
Act and is limited to answering the questions stated
to the High Court for the purpose of soliciting its
opinion on those questions and those questions must
arise out of the order passed in appeal by the Appe•
Hate Tribunal. This is clear from sub-ss. (1) and (2)
of s. 66. Under tliose provisions the only question
of law which can be referred to the High Collllt is
any question of law arising out of the order of the
Tribunal and thus if a question does not arise out of
the order of the Appellate Tribunal it cannot be
referred to the High Court. For the drawing up of
the statement of the case the Tribunal has before it
f.acts admitted or found and they form the basis. of
the statement submitted to the High·Court. If necessary facts which will lay the foundation of raising a
question of law are not there then there in no basis
for reference of that question to the High Court because only on th~ basis of facts found by the Tribunal
or admitted before it can a question of law arise.
Thus onlv on the basis of facts admitted or found on
the record can a statement of case be submitted.
When the case stated comes to the High Court and
the High court finds it necessary to have a supplemental statement of the case in order to answer the
question of law which is raised then it can direct such
1 S.C.R.
SUPREME COURT :REPORTS
881
statement to be submitted with such additions and
alterations as it may direct but the statement must
necessarily be based on facts which are already on
the record and the High Court cannot ask for additional facts to be brought in because these would not
be in regard to a question which arises from the order
of the tribunal but would be a 'statement based on
something which was not before the Appellate Tribunal when it passed its appellate order. Therefore
although the High Court has the power to direct a
supplemental statement to be made it has no power
to direct additional evidence being taken. It was so
held in The New Jahangir Vakil Mills v. The Commi.~sioner of Income-tax('). That was a case similar
to the one before us and the question for decision
there was whether the sale proceeds had been received
at Bhavnagar because the cheques etc., were sent to
Bhavnagar.
The High Court held that the mere
receipts of cheques by post at Bhavnagar was not
conclusive in the absence of a further finding whether
the cheques were sent by post by request, express or
implied, of the assessee.
In that case the High
Court asked for a supplemental statement of the case
and also allowed additional evidence to be given and
this Court held that s. 66(4) did not empower the
High Court to direct additional evidence being taken
and that additions and alterations mentioned in that
sub-section related only to such facts as already
formed part of the record but had not been included
by the Appellate Tribunal in the statement of the
case.
In a latter case Mrs. Kusumben D. Mahadevia
v. Commissioner of Income-tax, Bombay(') the assessee
received dividends out of the profits of a company
which had accrued partly in British India and partly
in Baroda State.
The assessee did not bring the
income into British India and claimed benefit of para
4 of the Merged States (Taxation Concessions) Order.
The Appellate Tribunal held that the income did not
accrue to the assessee in Baroda State but did not
decide the question whether she was entitled to the
(I) (1960] 1 s.c.R. 249.
121 [19601 s s.c.R 417.
1962
P1tlad Turkly 1W
Dye Works Co. Lid.
Petlod
v.
Co1mniJ.sion1r of
lncotn1-ta:x,
Bumb~" Ah1111daboi
KtTpur, J.
Pe/lad T urkty Red
Dy1 Wo,ks Co. Ltd.,
Pit/ad
v.
Commiss/..,r of
lnanu--tax,
Bomb~., Ahmedabad
Kapur, J.
882 SUPREME COURT REPORTS f1963} SUPP.
benefit of Taxation Concessions Order. The High
Court held that the Taxation Concessions Order did
not apply to the assessee but did not decide the question as to whether the income had accrued to the
assessee in Baroda State. Thus the Appellate Tribunal raised one question and the High Court answered
another. This Court held that the High Court had
exceeded its jurisdiction in going out of the point
raised by the Appellate Tribunal and decided a
different point of law and that s. 66 of the Income·
tax Act empowered the High Court to answer a question of law arising out of the order of the Appellate
Tribunal and it did not confer any jurisdiction to
decide a different question of law not arising out of
such order but it was possible that the same question
of law may involve different facets and the High
Court could amplify the question to take in all the
facets but the question must still be one arising out of
the Appellate Tribunal's order which was before the
Tribunal or was decided by it. It could not decide
an entirely different question.
In a later case Zoraster & Go. v. Commissioner
of Income-tax('), the assessee supplied to the Central
Government F.O.R. Jaipur certain goods and payment was received by cheques which were also received at Jaipur. The assessee contended that the
income was received at Jaipur outside the taxable
territories.
This contention was not accepted by the
Income-tax Appellate Tribunal. The assessee then
applied for reference to the High Court under s. 66(1)
of the Income-tax Act and a question of law was
referred to the High Court. The High Court remanded the case to the Appellate Tribunal for a
supplemental statement of case
to find
whether
cheques were sent to the assessee by post or by hand
and what direction, if any, had been given by the
assessee firm to the Government department. H was
held that such a supplemental statement could be
called for and in the absence of anything expressly
(I) [1961] I S.C.R. 210.
..
' I
1 S.C.R.
SUPREME COURT REPORTS
883
stated in the order of the High Court to the contrary
it cannot be said that the direction given would
include the admitting of any fresh evidence as that
had been prohibited by the New Jehangir Vakil
Mill's case(1).
At p. 219 the Court observed:-
"It follows from this that the enquiry in such
cases must be to see whether the question decided by the Tribunal admits the consideration of
the new point as an integral or even an incidental part thereof. Even so, the supplemental
statement which the Tribunal is directed to
submit must arise from the facts admitted and
or found by the Tribunal, and should not open
the door to fresh evidence."
Another case where the scope of s. 66( l) was defined
is Commissioner of Income-tax v. Scindia Steam
Navigation Ou. LU.('). It was there held that the High
Court acted purely in its advisory capacity on a reference which properly came before it under s. 66(1) or
(2). It gave advice to the Appellate Tribunal but
ultimately it was for the Tribunal to give effect to
that advice. The Court interpreted the words "any
question of law arising out of" in sub-s. (1) of s. 66.
Supplemental statement of the case was also called
for in Commissioner of Income-tax v. Ogale Glass
Works (9) but no additional evidence was ordered to
be taken. In that case no objection was taken to the
order for a supplemental statement.
Thus it appears that the jurisdiction of the
High Court is advisory under s. 66 of the Income-tax
Act. Under that section a question of law can be
referred soliciting its opinion but the jurisdiction of
the High Court is confined to giving an opinion on
that question of law arising out of the order of the
Appellate Tribunal. It has no jurisdiction to raise
another question or to answer a different question.
In order to answer the question raised in the statement
(I) [1966] 1 S.C.R. 249.
(2) [1962] l S.C.R. 7118.
(3) [1955] I S.C.R. 185, 188.
1962
Petlad Turkl.1 iu ..
D71 Works Co. Ltd
P1tlad
v.
Cammissioair of
lneom1-ta, Bor11k.;
.dlnnatla"""
K•pur, J.
1962
P1I• Gd T urU, lW
DH Wort< Co. Lid.,
Plllod
v.
c...,.w;.,,,, of
'ncome-ta, Bemhay,
A. .... dabad
Kapur, J.
884 SUPREME COURT REPORTS [1963] SUPP.
of the case the High Court may ask for a supplemental statement but that statement also is to be
confined to the- placing of facts already on the record.
The supplemental statement of the case may contain
alterations or additions as the High Court may direct
but those facts must be already on the record as the
High Court has no power to ask for additional
evidence to be taken. Secondly, when the supplemental statement of the case is directed to be submitted it is not a judgment or a final order as understood
in its strict legal and proper sense nor a judgment in
the sense it is used :n the Income-tax Act i. e., s. 66(5)
ors. 66A (2) i. e., a judgment which sets out reasons
for the opinion which the High Court gives on the
question submitted to it.
In this view of the matter we are of the opinion
that the High Court had no jurisdiction to direct the
Tribunal to submit a supplemental statement of the
case after takhlg additional evidence.
As was done
in the New J ehangir Vakil Mill's (') case the order of
this Court is that the appeals be allowed and the
matter remitted to the High Court to give its decision
on the question of law referred to it as required under
I
s. 66(5) of the Act. We express no opinion on the
:
question whether the High Court should, in this case,
ask for a supplemental statement of the case confined
to the facts already on the record.
That is a matter
which should be left to the High Court. The respondent will pay the costs of the appellant in this Court
and in the High Court.
Appeals allowed. Oases remitted.
OJ (1960] I s.c.R. 249.