MADANLAL DHARNIDHARKA Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) . This is a reference in respect of the assessment year 1944-45. The assessee was held to be a resident for that year. The previous year or the accounting year in respect of this assessment year was the Maru year 1999-2000 beginning with the 9th of November, 1942. The assessee commenced doing business in Bombay from that date and there was a credit entry in his books of account on that very day for a sum of Rs. 51,000. On the 8th of January, 1943, there was another credit entry for a sum of Rs. 1,50,000. In that year the assessee suffered a loss of Rs. 73,779 in his business which he was carrying on at Indore. The two questions which are submitted for our determination are concerned with these two sums of Rs. 2,01,000 and Rs. 73,779. With regard to the sum of Rs. 2,01,000 the assessees case before the Department was that he was adopted by his uncle many years ago, that his uncle left a large fortune and it was out of this large fortune that this amount was brought into British India. The Appellate Assistant Commissioner taxed this amount of Rs. 2,01,000 under Section 4(1)(b)(iii) of the Income-tax Act. It was found by him that after the death of his adoptive uncle the assessee did business at Indore and he failed to produce his books of account relating to that business. The Tribunal to which an appeal was preferred from the decision of the Appellate Assistant Commissioner also held that the sum of Rs. 2,01,000 represented remittances and profits received in British India by the assessee during the year and they were rightly taxed under Section 4(1)(b)(iii). With regard to the sum of Rs. 73,779 the Tribunal held that the loss could not be set off against the sum of Rs. 2,01,000. The first question that we have to consider is whether the remittance of Rs. 2,01,000 out of profits made by the assessee in the years preceding the Maru year 1999-2000 as a non-resident could be included under Section 4(1)(b)(iii) of the Indian Income Tax Act in his total income of the year of account in which he was a resident in British India. It will be notice that the point sought to be taken up by the assessee in this question is that he was a non-resident during the year when the profits and the income of the business arose in the Indian State. Now this particular question was included in the grounds of appeal before the Appellate Tribunal, but it was not argued before them, and a question of considerable importance affecting the jurisdiction of this court has been raised but the Advocate-General that, as this question was not deal with by the Tribunal, it was not open to the Tribunal to raise it and it is not open to us to decide it. In my opinion it is necessary clearly to re-state the jurisdiction of this Court. This is not a Court of appeal. This Court merely exercises an advisory jurisdiction. Its judgments are in the nature of advice given on the questions submitted to it by the Tribunal. Its advice must be confined to questions referred by the Tribunal to this Court and those questions must be questions of law which must arise out of the order made by the Tribunal. Now, looking at the plain language of the section apart from any authority, I should have stated that a question of law arose out of the order of the Tribunal if such a question was apparent on the order it self or it could be raised on the facts found by the Tribunal and which were stated in the order. I see no reason to confine the jurisdiction of this Court to such questions of law as have been argued before the Tribunal or are dealt with by the Tribunal. The section does not say so and there is no reason why we should construe the expression "arising out of such order" in a manner unwarranted by the ordinary grammatical construction of that expression. This Court has no jurisdiction to decide questions which have not been referred by the Tribunal. If the Tribunal does not refer a question of law under Section 66(1) which arises out of the order then the only jurisdiction of the Court is to require the Tribunal to refer the same under Section 66(2). It is true that the Court has jurisdiction to resettle questions of law so as to bring out the real issue between the parties but it is not open to the Court to raise new questions which have not been referred to it by the Tribunal.