(1.) THE assessment proceedings out of which this petition for a writ arises have had a chequered career, and what is sought to be challenged on this petition now is an order made by the Appellate Tribunal under Section 66 (5) of the Income-tax Act after the High Court had answered certain questions referred to it.
(2.) THE assessment year with which we are concerned is the year 1942-43 and the accounting, year was the calendar year 1941. The assesses company carried on business in the Holkar State at Indore and was assessed in the status of a non-resident company. During the accounting year it had sales of cloth amounting to Rs. 50,33,183/- and the company itself supplied to the Income-tax Officer an analysis of these sales which the Income-tax Officer by his order accepted. It is essential to set out that analysis in order to understand the contentions of the parties that arise for determination of this writ petition: it will be noticed that in this table the total sales under items V and VII are Rs. 6,02,911/- and Rs. 4,21,873 respectively. Both these items were subjected to tax by the Income-tax Officer on the basis that the income accrued in British India and, therefore, Section 4 (1) (c) was attracted. Indeed, these two items were included in the first seven items in the statement given above, the total of which is Rs. 12,74,751/- and these entire sales were held to be taxable under Section 4 (1) (c) on the basis of accrual. The I. T. O. also brought to tax the two amounts of Rs. 9,57,687/- and Rs. 1,37,470/- appearing in the third and fourth columns of the statement under item VIII as receipts in British India under Section 4 (1) (a ). Against this order of the Income-tax Officer, there was an appeal to the A. A. C. The appeal was unsuccessful. There was a further appeal to the Tribunal. That again was unsuccessful and out of the order of the Tribunal the two following questions were referred to this Court on the 25th of November, 1950: (1) Whether the profits on the sale of goods to the Government of India accrued or arose in British India? (2) Whether the profits on the sale of goods through the company's paid employees in British India accrued or arose in British India? it will be noticed at once that these two questions relate to the two amounts of Rs. 4,21,873/-and Rs. 6,02,911/- respectively. The reference was heard by the Chief Justice and myself on the 29th August, 1951 and by our judgment we held that the sales of Rs. 4,21,873/- took place at Indore and the sale proceeds were received at Indore, but the statement of the case did not enable us to determine where the contracts were accepted. We then pointed out the importance of knowing the place where the contracts were entered into and referred the matter back to the Tribunal to dispose of the matter on the basis of our judgment. With regard to the sum of Rs. 6,02,911/- we held that the Tribunal had omitted to take into account various documents and we directed the Tribunal to take them into account and to decide the matter themselves. In the course of the judgment of the Division Bench delivered by the learned Chief Justice, it was also pointed out that the I. T. O. had found that a sum of Rs. 5,80,069/- out of the sum of Rs. 6,02,911/- had been actually received in British India and this fact appeared to have been completely overlooked by the Tribunal. We, therefore, directed the Tribunal that they should take this fact into account upon remand. Against this judgment of the Division Bench, there was an appeal to the Supreme Court and their Lordships of the Supreme Court were pleased to hold that this Court was in error in requiring the Tribunal to dispose of the matter themselves instead of asking for a supplemental statement of the case; they also held that the direction that this Court had given in regard to the sum of Rs. 5,80,069/- was "uncalled for". Thereafter a supplemental statement was submitted by the Tribunal to this Court and the reference was heard again by the same bench; and on the 5th of September, 1956 we answered both the questions referred to us in the negative. The order of the High Court was forwarded to the Tribunal for disposal of the matter in conformity with the judgment as required by Section 66 (5) of the Indian Income-tax Act.
(3.) WHEN the matter went before the Tribunal, it was contended on behalf of the Department that as these two items of Rs. 6,02,911/-and Rs. 4,21,873/- had been brought to tax under Section 4 (1) (c), the question of applying Section 4 (1) (a) to a part of the sum of Rs. 6,02,911/- which was received in British India as shown in the statement we have set out above had not been considered by the I. T. O. , the A. A. C. or the Tribunal, although the I. T. O. had in fact found that a sum of Rs. 5,80,069/- had been received in British India; and the Department, therefore, submitted to the Tribunal that the question of subjecting to tax any portion of the income arising from the sales of Rs. 6,02,911/- on a receipt basis under Section 4 (1) (a) should be referred to the Income-tax Officer. The Tribunal upheld this contention of the Department and, therefore, they sent the matter back to the Income-tax Officer to revise the assessment according to law in respect only of the sum of Rs. 6,02,911/- after considering whether Section 4 (1) (a) was applicable in respect of the sum of Rs. 5,80,069/- The Tribunal further stated that this matter may not have been properly examined in the first instance by the Income-tax Officer at the time of making the assessment and he should, therefore, reconsider the matter. It is against this order that this writ petition has been presented and the contention of Mr. Kolah is that the Tribunal acted without jurisdiction in making this order.