M/S. ZORASTER AND CO. vs. THE COMMISSIONER OF INCOME TAX, DELHI, AJMER, RAJASTHAN AND MADHYA BHARAT (NOW) MADHYA PRADESH

CIVIL APPEAL No. 30/1958Supreme Court[1961] 1 S.C.R. 21017 August 1960Bench: 3 JudgesAuthor: S.K. DAS, M. HIDAYATULLAH, J.C. SHAH12 pages
AI SummaryDismissed

What were the facts?

The assessee, M/s. Zoraster & Co., entered into contracts with the Government for the supply of goods. For assessment years 1942-43 and 1943-44, income of Rs. 10,80,658 and Rs. 17,45,336 respectively was assessed. Supplies were made F.O.R. Jaipur, and payments were received by cheque at Jaipur. The assessee contended that this income was received outside the then taxable territories. The Income-tax Appellate Tribunal, Delhi, did not accept this contention. The assessee applied for a reference to the High Court under Section 66(1) of the Indian Income-tax Act, 1922. The Tribunal referred the question of whether the profits and gains were received in taxable territories. The High Court, under Section 66(4), remanded the case to the Tribunal for a supplemental statement of case, seeking findings on whether cheques were sent by post or hand and any directions given by the assessee.

What did the Supreme Court hold?

The Supreme Court held that the High Court did not exceed its jurisdiction under Section 66(4) of the Indian Income-tax Act, 1922. The Court reasoned that the question referred to the High Court was broad enough to encompass an inquiry into whether there was any express or implied request for payment by cheque, which could determine the place of receipt of income. This was considered an integral or incidental part of the original question. The Court distinguished the present case from New Jehangir Vakil Mills Ltd. by noting that the question here was wider. While the High Court's direction to the Tribunal to find facts like whether cheques were sent by post or hand and any directions given by the assessee could potentially lead to fresh evidence, the Supreme Court stated that in the absence of anything expressly to the contrary in the High Court's order, it could not be held that it would inevitably lead to admitting fresh evidence. The Tribunal was expected to confine its findings to admitted and/or found facts. Therefore, the High Court's order was not in excess of its jurisdiction.

What were the issues?

1. Whether the High Court exceeded its jurisdiction under Section 66(4) of the Indian Income-tax Act, 1922, by calling for a supplemental statement of case from the Tribunal. Assessee's contention: The High Court exceeded its jurisdiction, relying on the Supreme Court's decision in New Jehangir Vakil Mills Ltd. v. Commissioner of Income-tax, which held that a High Court cannot call for a supplemental statement that leads to fresh evidence or decides a question not considered by the Tribunal. Revenue's contention: The High Court's order was within its jurisdiction. The question referred was wide enough to include an inquiry into the mode of payment and directions given by the assessee, which could bring the matter within the dicta of previous Supreme Court cases like Ogale Glass Works and Jagdish Mills. The High Court's direction did not necessarily imply admitting fresh evidence, but rather seeking findings based on existing facts.

Which sections of the Income-tax Act were involved?

Section 66(4),Section 66(1),Section 4(1)(a)

AI-generated summary — verify with the full judgment below

210 SL'.PIU~;\fE COURT REPORTS [Hl61] '960 standard to satisfy the test of" active member". The burden which lies upon the petitio1wr who impoaches A M;ad1"1""Ghai dh the validity of the classification to show that it 111a11a a cui t • • . v. violates tho guarantee of equal protcctwn has not been n, Fua,;u of discharged. On the material placed before us we can- IHd•a not say that the p<'riod fixed by the Govornme111. as the standard fur ascertaining tho active mcmberohip Suil,a Rao J b. bl ur k 1 August 17. · is ar 1trary or·unn•asOIHL e. n e must ma e it c ear that this finding must be confined only to tho validity of the impugned uotification dated August 31, 1956. The petition accordingly fails and is di"sruissed with costs.

Petition dismissed. :\1/S. ZORASTER AKD CO. v. THE CO:\IMISSlONER OF INCOME TAX, DELHI, AJMEH, RAJASTHAN A~D MADHYA BHARAT (NOW) MADHYA PltADESH. (S. K. DAs, M. HrnAYATULLAn AND .r. C. SHAII, JJ.)

Income-lax - Reference -- l'cr.vcr of High Courl tu call for supplemental stalemetit of case-·- Indian Jnco~-tax Act, 1922 (I I of 1922), S. 66(4).

The appellant entered into contract with Government for the supply of go

The order continues below.

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