- (1.) THE appellant-Assistant Commissioner of Income-tax, Circle Jodhpur, has filed this income-tax appeal against the order dated November 9, 1998, received on December 9, 1998, passed by the Income-tax Appellate Tribunal, Jaipur, in Income-tax Appeal No. 586/JP of 1992 for the assessment year 1997-98. This appeal was initially placed for admission before the Division Bench consisting of Shri Shivaraj V. Patil (Chief Justice) and Justice Bhagwati Prasad. After hearing learned counsel, Shri Sandeep Bhandawat, for the appellant, this appeal was dismissed by a brief reasoned order because according to their Lordships no substantial question of law was arising in appeal for consideration and on the admitted facts the Tribunal did not find any merit in the appeal filed by the Revenue with the observation that though the learned Tribunal has not specifically referred to a proviso to Section 161(1A), it applied the law correctly to the admitted facts of the case and decided the matter.
(2.) THE aforesaid order passed by the Division Bench of this court was challenged by the appellant before the Supreme Court by way of Civil Appeals Nos. 872 to 877 of 2001. All those civil appeals were disposed of by an order dated January 25, 2001 -- CIT v. Ajay Vijay Traders [2001] 248 ITR 100 (SC). It is a brief order which we would like to reproduce, which is as under (page 101) : "Special leave granted. After hearing counsel for the parties, we are of the opinion that the High Court should have admitted the appeals under Section 260A of the Income-tax Act, 1961, and decided the cases on merit. We, accordingly, allow the appeals, set aside the judgments of the High Court and restore the appeals filed by the appellant on the board of the High Court. We make it clear that we are not expressing any opinion on the merits of these cases." On the strength of the above order, it was submitted by learned counsel, Shri Bhandawat, that this court has no option but to admit this appeal and after issuing notice to the other side decide the same. It is true that the Supreme Court has observed in the order that the High Court should have admitted the appeals under Section 260A of the Income-tax Act, but at the same time their Lordships have also said that the High Court should have decided the cases on the merits. We must state that this is neither a miscellaneous appeal nor a regular first appeal or even special appeal which can be entertained easily by this court. This is an appeal under Section 260A of the Income-tax Act. We would like to reproduce the relevant provisions of Section 260A of the Act, which is as under: "260A. Appeal to High Court,--(1) An appeal shall lie to the High Court from every order passed in appeal by the Appellate Tribunal, if the High Court is satisfied that the case involves a substantial question of law . . . (3) Where the High Court is satisfied that a substantial question of law is involved in any case, it shall formulate that question. (4) The appeal shall be heard only on the question so formulated, and the respondents shall, at the hearing of the appeal, be allowed to argue that the case does not involve such question : Provided that nothing in this sub-section shall be deemed to take away or abridge the power of the court to hear, for reasons to be recorded, the appeal on any other substantial question of law not formulated by it, if it is satisfied that the case involves such question. (5) The High Court shall decide the question of law so formulated and deliver such judgment thereon containing the grounds on which such decision is founded and may award such cost as it deems fit. (6) The High Court may determine any issue which-- (a) has not been determined by the Appellate Tribunal; or (b) has been wrongly determined by the Appellate Tribunal, by reason of a decision on such question of law as is referred to in Sub-section (1)." This provision for appeal under Section 260A of the Income-tax Act is almost pari materia to the provision of Section 100 of the Civil Procedure Code, 1908, for second appeal. Before coming to the conclusion as to whether any question much less a substantial question of law is involved in this appeal, we would like to narrate some important and relevant facts, which are necessary for the adjudication of the case because we are supposed to dispose of this appeal on the merits as directed by the Supreme Court, which are as under :
(3.) SHRI Ghanshyam Das created a trust by trust deed dated April 12, 1982, for the benefit of the children of his sister, Smt. Bhagwati Bai. The shares of the beneficiaries were specific and determined. The trustees were only the representatives of the assessee of the beneficiaries. Invoking the provisions of Section 161(1A) the appellate authority by applying the marginal rate instead of the maximum rate of tax assessed the total income of the trust relying upon the judgment of the Supreme Court in CWT v. Trustees of H.E.H. Nizam's Family (Remainder Wealth) Trust [1977] 108ITR 555. In the income-tax appeal the Tribunal observed that the cases on hand before it were similar to the cases decided by the Special Bench of the Tribunal in Mohd. Omer Family Trust v. ITO [1992] 40 ITD 1 and accordingly all the appeals fifed by the Revenue were dismissed. The same were challenged by the Department by way of this and other five appeals. Mr. Bhandawat, learned counsel for the Department, submitted that the following two substantial questions of law are arising in this appeal, which are as under : "1. Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was justified in law in upholding the decision of the Commissioner of Income-tax (Appeals) that charging of tax at the maximum marginal rate in the status of association of persons is not valid, ignoring the specific and overriding provisions of Section 161(1A) of the Act? 2. Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was justified in law in relying upon the judgment of the apex court cited at CWT v. Trustees of H.E.H. Nizam's Family (Remainder Wealth) Trust [1977] 108 ITR 555, in spite of the facts that the same is not applicable to the case of the assessee inasmuch as the new provisions of Section 161(1A) were inserted with effect from April 1, 1985, much after the delivery of the judgment by the apex court and further the facts and circumstances of that case are distinguishable from the case of the assessee ?" The aforesaid questions of law are at page 6 para. 5 of this appeal. On the facts, the appellate authority and the Tribunal were required to decide as to whether the marginal rate or maximum rate should be applied. On the facts stated above, in our considered opinion, the appellate authority as well as the learned Tribunal have not committed any error in coming to the conclusion that in the instant case the marginal rate would only apply and not the maximum rate. Thus, in our considered opinion, having carefully gone through the orders passed by the Tribunal and the appellate authority, we are of the opinion that none of the aforesaid questions framed by Shri Bhandawat for the Department can said to be a question much less a substantial question of law, which is required to be decided by this court. The appeal can only be admitted if the appellant makes out a case that in the instant case a substantial question of law of public importance is arising which requires to be decided by this court otherwise not. Accordingly, we do not find any substance or merit in this appeal as the appellant fails to make out any case for adjudication of a substantial question of law. Therefore, this appeal fails and is hereby dismissed. ;