HUKUMCHAND MILLS LTD. vs. COMMISSIONER OF INCOME-TAX, CENTRAL BOMBAY & ORS.

CIVIL APPEAL No. 411/1965Supreme Court[1967] 1 S.C.R. 46322 September 1966Bench: 3 JudgesAuthor: J.C. SHAH, V. RAMASWAMI, VISHISHTHA BHARGAVA B6 pages
AI SummaryDismissed

What were the facts?

The assessee, Hukumchand Mills Ltd., a public company, was assessed as a resident from assessment year 1950-51 onwards. A dispute arose regarding the written down value of its buildings and machinery for calculating depreciation allowance under Section 10(2)(vi) of the Income-tax Act, 1922. The assessee contended for using original cost, while the Department argued for deducting depreciation previously allowed. The Income-tax Officer and Appellate Assistant Commissioner rejected the assessee's claim. The Appellate Tribunal, on appeal, allowed the Department to raise a new ground concerning Paragraph 2 of the Taxation Laws (Part B States) (Removal of Difficulties) Order, 1950, which required deducting depreciation allowed under Industrial Tax Rules. The Tribunal remanded the matter to the Income-tax Officer for further inquiry. The High Court upheld the Tribunal's decision. The assessee appealed to the Supreme Court, questioning the Tribunal's jurisdiction to entertain the new ground and order a remand.

What did the Supreme Court hold?

The Supreme Court held that the Appellate Tribunal has the jurisdiction to entertain the argument of the Department regarding the application of Paragraph 2 of the Taxation Laws (Part B States) (Removal of Difficulties) Order, 1950, and to remand the case to the Income-tax Officer for further inquiry. The Court reasoned that Section 33(4) of the Income-tax Act, 1922, grants the Tribunal wide powers to pass such orders as it thinks fit after giving both parties an opportunity of being heard. The Appellate Tribunal Rules, 1946, are merely procedural and do not circumscribe the Tribunal's powers under Section 33(4). The Court noted that the subject-matter of the appeal was the written down value, and it was open to the Department to support the lower authorities' findings on any grounds. Therefore, the Tribunal's action in entertaining the new ground and remanding the case was justified. The appeals filed by the assessee were dismissed.

What were the issues?

1. Whether the Appellate Tribunal has the jurisdiction to entertain a new ground raised by the Department for the first time in appeal, specifically regarding the applicability of Paragraph 2 of the Taxation Laws (Part B States) (Removal of Difficulties) Order, 1950, and to remand the case for further inquiry, under Section 33(4) of the Income-tax Act, 1922. Assessee's Contention: The assessee argued that the Tribunal lacked the jurisdiction to entertain the new ground and order a remand, as it was not raised before the lower authorities and the Tribunal's powers are circumscribed by the Appellate Tribunal Rules, 1946. Revenue's Contention: The revenue contended that the Tribunal possesses wide powers under Section 33(4) to pass such orders as it thinks fit, including entertaining new grounds and remanding cases, and that the Rules are procedural and do not limit these powers. The revenue also relied on Rule 27, allowing a respondent to support the order on any ground decided against them.

Which sections of the Income-tax Act were involved?

Section 10(2)(vi),Section 10(5)(b),Section 33(4),Section 5A(8),Section 31,Section 66(1),Section 66-A

AI-generated summary — verify with the full judgment below

A B c D E F G HUKUMCHAND MILLS LTD. · v. COMMISSIONER OF INCOME-TAX, CENTRAL BOMBAY & ORS.

September 22, 1966 (J, C. SHAH, V. RAMASWAMI AND V. BHARGAVA, JJ.] Income-tax Act (11 of 1922), s. 33(4)-Appel/ate Tribunal-Juris· diction .to entertain new points in appeal and order remand.

The subject-matter of the assessee's appeal before the Income-tax Appellate Tribunal was the question as to what should be the proper written down value of its buildings, machinery etc., for calculating the depreciation allowance unMr s. 10(2) (vi) of the Income-tax Act, 1922. The Department sought to support the orders of the Income-tax Officer and the Appellate Assistant Commissioner on the new ground that para· graph 2 of the Taxation Laws (Part B States) (Removal of Difficulties)

Order, 1950, was applicable, and that certain amounts of depreciation which were allowed under the Industrial Tax Rules had to be deducted in arriving at the written down value. The Tribunal permitted the con· tention to be raised and remanded the matter to the Income-tax Offic~r for considering the question whether the Industrial Tax Rule.s related to income-tax or super-tax or any law relating

The order continues below.

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