B. P. Jeevan Reddy, J. - (1.) Under Section 256(l) of the Income-tax Act, the Income-tax Appellate Tribunal, Madras stated the following question of law for the opinion of the Madras High Court."Whether on the facts and in the circumstances of the case, the Tribunal was right in holding that the sum of Rs. 19/- being the interest received on the deposits made with the Electricity company is a business receipt and accordingly deleting the additional surcharge of Rs. 81,920/- charged for the assessment year 1963-64 -
(2.) The High Court returned the reference unanswered. It directed the Tribunal to consider the case "on all points that require consideration of the question, whether additional surcharge was attracted", In short, it asked the Tribunal to examine whether the additional surcharge was attracted even if the income of Rs. 19/- is chargeable under the head 'profits and gains of business'. The learned Counsel for the assessee submits that the High Court exceeded its jurisdiction in making the above direction. It is submitted that the matter be sent back to the High Court for answering the question of law as stated by the Tribunal, The contention of the learned Counsel is that by giving the impugned direction the High Court has sought to widen the scope of enquiry which it is not empowered to do in a reference under Section 256.
(3.) The assessee is a co-operative society engaged in the business of banking. The previous year relevant to the assessment year 1963-64 was the year ending June 30, 1962. Its business income was exempt under the provisions of Section 8l(l) as it then stood. During the said accounting year, the assessee received a sum of Rs. 19/- being the interest on the deposit made by it with the Salem-Erode Electricity Distribution Company. This deposit was made by the assessee as required by the conditions notified by the said company for supply of energy. The deposit carried interest and it is on account of the said interest that the sum of Rs. 19/- was received by the assessee. The Income-tax Officer treated the said amount of Rs. 19/- as 'income from other sources'. On that basis, he levied additional surcharge, in a sum of Rs. 81,920/ under the provisions of the relevant Finance Act. On appeal, the Appellate Assistant Commission upheld the contention of the assessee that the said sum of Rs. 19/- also constituted its business income and, therefore, exempt. Accordingly, he held, the levy of surcharge was unsustainable. The Revenue appealed to the Appellate Tribunal. Its case was that the said receipt cannot be treated as a business receipt and that it was rightly treated by the I.T.O. as 'income from other sources'. The Tribunal recorded in its order:"Before us it is made clear by both sides that the levy of additional surcharge and interest would depend upon the classification of the head of income for this interest income of Rs. 19/- and that if it fell under income from business, the appeal has to be dismissed and that if it fell under 'income from other sources', the appeal has to be allowed and the levy of surcharge and interest restored. So we proceed to discuss the vital issue in this case on which hangs the result of this appeal. The Tribunal held it 'income from business' and accordingly dismissed the appeal filed by the Revenue. At the instance of the Revenue, the Tribunal stated the aforesaid question.;