CHAKRAVARTTI, C.J. - (1.) THIS is a reference under s. 66(1) of the Indian IT Act made by the Calcutta Bench of the Tribunal of two questions of law, one at the instance of the assessee and the other at the instance of the CIT, West Bengal. The question brought up by the assessee is a question under the IT Act, but the question brought up by the CIT is a question of constitutional law.
(2.) THE facts are these. THE assessee, the Calcutta National Bank Limited, now in liquidation, is, or rather was, a banking company in a large way of business. It owns a six-storeyed building where its own offices are located in the ground floor and a part of the sixth floor, while the rest of the space is let out to tenants. THE annual rental income derived from the building is about Rs. 86,000 and the finding of the Tribunal is that the portion let out is about four to five times larger than the portion occupied by the assessee for the purposes of its banking business. In its assessment to excess profits tax for the chargeable accounting period ending on 31st March, 1946, the assessee was assessed on this rental income. THE EPTO purported to make the assessment under sub-r. (4) of r. 4 of Schedule I to the EPT Act, but when an appeal was taken to the AAC, he upheld the assessment by reference to sub-r. (2). On further appeal the Tribunal reverted to sub-r. (4) and it based its decision on the finding that the house had been built partly with a view to using it as the head office of the assessee and partly with a view to letting it out to tenants. In other words, in part there was an investment in immovable property. THE Tribunal accordingly held that the letting out of so much of the building as was not occupied by the assessee for its own business was a part of its business and the rental income fell to be included in the business income of the assessee under sub-r. (4) of r. 4 of Schedule 1 to the Act. THErefore, the assessee required the Tribunal to refer the matter to this Court and a question has been referred in the following form : "Whether in this case, the rental income from immovable property was a part of the business income, taxable under s. 2(5), with r. 4, sub-r. (4), of Schedule I attached to the EPT Act, 1940." It will be convenient to deal with the assessee's question first before I take up the question brought up by the CIT. It was contended by Mr. Pal, who appears on behalf of the assessee, that the income concerned could not be charged to excess profits tax, inasmuch as though it was income derived from the holding of property, the functions of the assessee company did not consist wholly or mainly in the holding of investments or other property, as required by the proviso to s. 2 (5) of the EPT Act. The contention in substance was that in order that income of this character could be brought to charge under the EPT Act, it was necessary that the activity from which the income was derived should be capable of being "deemed", for the purpose of the definition of "business" , to be a business carried on by the assessee. Since that requirement was not satisfied, no question of applying subl-r. (4) of r. 4 arose at all. But even if sub-r. (4) did fall to be considered, that rule, it was contended, ought to yield to the definition in so far as it was in excess of the definition, if indeed in excess it was. A second contention urged by Mr. Pal also requires to be noticed. The Tribunal had referred to sub-cls. (b) and (e) of cl. 3 of the assessee-company's memorandum of association and had held that since under those clauses the assessee was authorised to construct, own and manage immovable property, it followed that the construction of the building in question and letting it out in the course of management was a part of the assessee's business. Mr. Pal contended that cl. (b) was of a perfectly general character and so far as cl. (e) was concerned, it contemplated the acquisition of immovable property which the company "may think necessary or convenient for the purpose of its business". In view of those terms of cl. (e), Mr. Pal contended that unless it could be shown from other clauses of the memorandum of association that holding and letting out immovable property was a part of the assessee-company's business, it could not be said that cl. (e) brought the income from the building in question within the mischief of the EPT Act, because the building not having been constructed or acquired for the purpose of the business of the company, as required by sub- cl. (e) of cl. 3 of the memorandum of association, the construction or the letting out of the building could not be a part of the assessee's business. In my opinion, the first contention of Mr. Pal is sound and ought to be accepted.
(3.) BEFORE I proceed to deal with the first question, I might point out that, as framed, it is limited to sub-r. (4) of r. 4 of Schedule I to the EPT Act and all that we are required to say is whether the decision of the Tribunal to the effect that the income in question was chargeable under that sub- rule was correct. Mr. Meyer submitted to us that he would prefer to rely rather on sub-r. (2) of r. 4 and invited us to admit an argument on that sub-rule so that we might answer the question in favour of his client, if sub-r. (2) was found to justify the assessment even if sub-r. (4) did not. It was pointed out to us that the AAC had proceeded on sub-r. (2) and that the argument on behalf of the Department before the Tribunal included a reference to that sub-rule. In my opinion, it is not possible to expand the question so as to make room for an argument which the Tribunal has not referred to us for consideration. It is true that in summarising the argument on behalf of the Department before it, the Tribunal does refer to sub-r. (2) of r. 4, but it also appears that in the course of its decision no further reference to that rule was made. The debate before the Tribunal seems to have been limited to sub-r. (4), so far as one can see from the order itself, though a passing reference to sub-r. (2) might have been made. Be that as it may, if the CIT had at least suggested to the Tribunal, at the time that this reference was being made, that a question under sub-r. (2) should also be referred, we might have considered whether we should not reframe the question so as to extend its scope and include in its sub-r. (2) as well. It appears that no such suggestion was made on behalf of the CIT at all. All that was said was that the question was purely one of fact and no reference should at all be made, but it was not further said that if a reference was nevertheless made, it should be wide enough to cover sub-r. (2) in addition to sub-r. (4). The omission suggests that in fact there was no controversy before the Tribunal on sub-r. (2) and no question as to that sub-rule is covered by the Tribunal's order. In those circumstances, I find it wholly impossible to accede to Mr. Meyer's request. This Court, as I have often pointed out and as is indeed the law, is only an advisory Court and its sole jurisdiction is to give its advice on points which are submitted to it. It is no part of its duty, nor, I believe, within its jurisdiction to give unsolicited advice. The question must, therefore, be answered as framed and referred. Reverting now to the merits of the question, our attention was drawn to the decision of this Court in the case of Bengal Jute Mills Co., Ltd. vs. CIT (1949) 17 ITR 308 (Cal), which, on the facts, appears to have been almost identical. I do not, however, propose to follow the line of reasoning adopted in that case, because in my view a simpler approach to the question and a quicker arrival at the decision is possible, if one simply travels along the track of the relevant sections of the Act and that of the Rules contained in the Schedule.;