M C Chagla, C J - (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 wi November, 9, 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 January 8, 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 assessee's 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 Indian 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 that 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 noticed 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 by the Advocate General that, as this question was not dealt 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 itself 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.
(2.)The Advocate General has strongly relied on two decisions, one of the Madras High Court and the other of the Lahore High Court, in support of his contention that inasmuch as although this particular question with regard to Section 44(1)(b) was raised in the grounds of appeal but was not dealt with by the Tribunal, the Tribunal was wrong in referring it to the High Court. The first decision is of the Lahore High Court (Jamna Dhar Potdar V/s. Commr. of Income-tax (1935) 3 I.T.R. 112). That was a ease under the old Act and an application was made under Section 66(2) asking the Commissioner of Income-tax to state a case on certain points. With regard to the second question the Lahore High Court took the view that although a question of law might be involved, as the question was not raised in the appeal to the Assistant Commissioner, the question did not arise out of the order under Section 31 of the Act and the petitioner had no right to demand that the Commissioner should refer that question. The Madras High Court dealt with the question under the present Act in A. Abboy Chetty & Co. V/s. Commr. of Income-tax, Madras (1947) 15 I.T.R. 442, and took the view that a question of law can be said to arise out of an order of the Appellate Tribunal only if such order discloses that the question was raised before the Tribunal. It will be noticed that what this means is that not only the question should be raised before the Tribunal but also that the order itself should disclose that the question was so raised. With great respect if the view taken by the Madras High Court were right, it would amount to this that if an assessee appearing in person or an assessee who was wrongly advised did not think fit to raise a question of law or argue it before the Tribunal, then although such a point of law was apparent on the face of the order or arose on the facts already found by the Tribunal, the assessee would be debarred from raising that question before the Court, The decision of the Madras High Court would also result in this extraordinary situation. An assessee may raise a question and argue it before the Tribunal, but if the Tribunal thought fit to ignore that argument and not to refer to that point of law in its order, then the Court would have no jurisdiction to call upon the Tribunal to refer that question of law to the High Court, It is true that the Income-tax Act is a very technical statute, but I see no reason why when the plain grammatical construction of the section does not make it necessary to come to that conclusion it is necessary to do so and arrive at such an anomalous result. It is not as if it would be open to one party or the other to raise any question before this Court merely because such a question arose out of the order of the Tribunal. The proper safeguard is that this Court cannot advise on any question unless it has been referred to it by the Tribunal or unless we require the Tribunal to state a question of law for our consideration. A similar attempt was made to restrict the jurisdiction of this Court under the old Act and it was repelled by this Court, and the case is reported in Vadilal Lallubhai V/s. The Commissioner of Income-tax (1934) 37 Bom. L.R. 89 Under the old Act it was for the Commissioner of Income-tax to formulate the questions of law arising out of the order made by the Assistant Commissioner, and in the case which came before Beaumont C.J. and Rangnekar J. the Commissioner refused to state a case taking the view that the question of law as formulated by the assessee did not arise out of the order, and, therefore, no question arose of stating the case. The assessee then made an application under Section 66(3) asking this Court to require the Commissioner to state the case. It was then argued that this Court had no jurisdiction to direct the Commissioner to state the case arising on a question of law not formulated before him. Various decisions of other High Courts were cited in support of that view. Beaumont C.J., in delivering the judgment, refused to agree with the views of the other High Courts on this point, and he expressly disagreed from the view of the full bench of the Rangoon High Court, taking the view that their view seemed to restrict the powers of the High Court in a manner not authorised by the Act. In my opinion the present attempt of the Advocate General is also to restrict the powers of the High Court in a manner not authorised by the Act; and to confine the questions of law arising out of the order merely to those questions of law which have been raised before the Tribunal or dealt with by the Tribunal is in my opinion restricting unauthorisedly the advisory jurisdiction of this Court. Kania J. had to consider a similar question in New Piecegoods Bazar Co., Ltd. V/s. Comr. Income-tax (1947) 49 Bom. L.R. 620 The question before the Court (Stone C.J. and Kania J.) was whether certain deductions were permissible in respect of the assessees income from property. Now in the assessees appeal to the Appellate Tribunal one of the grounds taken was that on the proper construction of Section 9 the amount paid for the municipal taxes and Urban Immoveable Property Tax should be allowed as a deduction in computing the income from property. Kania J. pointed out that that contention could cover two grounds : one, that the taxes should be deducted in the first instance before arriving at the bona fide annual value within the meaning of Section 9, and the other, that the annual value of the property being ascertained those were permissible deductions under heads (iv) and (v) of Sub-section (1). The Commissioner argued that the first aspect was never contemplated or urged by the assessee and was, therefore, not dealt with. Kania J. stated in his judgment that there appeared force in that contention although he took the view that the assessee was in a position to raise that contention by the ground of appeal formulated by him. Therefore, Kania J. took the view that, although the contention was put toward as a ground of appeal, it had not been dealt with by the Tribunal. If the Advocate General were right, this Court had no jurisdiction to consider that contention at all. But what the Court there did was to send the reference back to the Tribunal and invited it to rexpress its opinion on that aspect of the contention and raise a proper question of law on that point.
(3.)I may point out that in the case before us the position is more simplified because although the point was not dealt with by the Tribunal the Tribunal has actually raised a question of law and has referred it to us for our opinion. Under Section 66(5) we have to decide the questions of law raised and submitted to us. I do not see how it is open to the Advocate General once a question of law has been raised by the Tribunal to ask us not to give our opinion on it in view of Section 66(5). It may be that a particular question may be irrelevant or unnecessary, and we may refuse to give our opinion on such a question, but I do not think that it is competent to a party to challenge the jurisdiction of this Court to answer a question which has been raised by the Tribunal. The Tribunal wants our advice on a particular question of law and it is our statutory duty to give that advice to the Tribunal.