PREMJI BHIMJI Vs. COMMISSIONER OF INCOME TAX
HIGH COURT OF CALCUTTA
COMMISSIONER OF INCOME TAX
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P.B. Mukharji, C.J. -
(1.) Adventure in the nature of trade is the central controversy in this Income Tax reference. It has truly been an adventure in many ways. The procedural adventure in this reference has lasted for about 17 years. The legal adventures, the procedural adventures and this adventure of trade have produced many misadventures in the process of time. Some history, therefore, is inevitably involved in deciding this reference.
(2.) Originally, it was an Income Tax reference of 1953 under Sec. 66(2) of the Indian Income Tax Act, 1922. The question raised in the statement of the case in this reference was simple enough and was in these terms :
" Whether, under the facts and circumstances and on the materials available', the Appellate Tribunal was justified in holding that the gain of Rs. 49,400 made by the sale of 200 shares of Radha Films Ltd. was a venture in the nature of trade and whether the said amount of gain was of a 'capital nature' or 'an income from business' taxable under the Indian Income Tax Act -
(3.) We shall first deal with the procedural adventure in this case. On December 22, 1953, a rule nisi was granted by this High Court for a reference. The rule was made absolute on April 7, 1955. The statement of the case was made by the Tribunal on the 24th January, 1956. The assessment year was 1946 -47. When the reference was heard by this court, a Division Bench of this court on December 15, 1959, remanded the case to the Tribunal for findings on specific points after taking additional evidence. Such additional findings in a supplementary statement of the case were filed by the Tribunal before this court on 25th October, 1960. Thereafter, the Division Bench of this court decided the reference on June 21, 1963, answering the question in the negative and in favour of the assessee. The High Court refused to grant certificate to appeal to the Supreme Court on February 12, 1964. Thereafter, the Commissioner obtained special leave to go to the Supreme Court. The Supreme Court by an order dated 9th March, 1967, l allowed the appeal of the Commissioner and set aside the judgment and answer of this court. The Supreme Court pointed out that the judgment of the High Court was vitiated because the High Court authorised the Tribunal to record additional evidence on the matters set out in their order and followed the previous decision of the Supreme Court in Keshav Mills Co. Ltd. v/s. : 56ITR365(SC) , where it was said:
" In calling for a supplementary statement of the case under Sec. 66(4) of the Indian Income Tax Act, 1922, the High Court can require the Tribunal to include in such supplementary statement only such material and evidence as may already be on the record but which has not been included in the statement of the case made initially under Sec. 66(1) or Sec. 66(2). It has no jurisdiction to direct the Appellate Tribunal to collect additional material and make it a part of the supplementary statement.";
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