Tribunal power to admit new grounds: leave permits raising apportionment and remand but confines remand to apportionment only.

The primary issue concerns whether an Appellate Tribunal may permit an appellant to raise a ground of apportionment not in the grounds of appeal and remit that issue to an Appellate Assistant Commissioner. The Tribunal's jurisdiction is confined to the appeal's subject matter unless leave is granted; under the rules (analogous to Order XLI r.2 CPC) the appellant may, with leave, urge new grounds provided affected parties have opportunity to be heard. The Tribunal properly allowed the apportionment ground, gave the assessee adequate opportunity, and remanded only to determine apportionment consistent with the finding that income accrued in the Indian States; the merits were not decided.

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Issues: Whether the Appellate Tribunal could, under section 33(4) and Rule 12 of its rules, permit the appellant to raise and decide (or remit for decision) a ground of apportionment not contained in the grounds of appeal, and whether the Tribunal's remand to the Appellate Assistant Commissioner on apportionment was competent and properly confined.

Analysis: The Tribunal's jurisdiction is confined to the subject-matter of the appeal constituted by the grounds of appeal unless leave is given to expand those grounds. Rule 12 of the Tribunal's rules (identical in effect to Order XLI, rule 2 CPC) permits the appellant, with leave, to urge grounds not in the memorandum; the proviso requires that any party affected by a new ground must have sufficient opportunity to be heard. The Court examined prior authorities distinguishing the position of an appellant (who may, with leave, raise new grounds) from that of a respondent (who cannot obtain relief adverse to the appellant without cross-appeal). The Tribunal had allowed the Commissioner (appellant) to press apportionment as a ground and the assessee was given adequate opportunity to meet the point. The Tribunal accepted the Appellate Assistant Commissioner's finding that the income accrued in the Indian States but directed a remand limited to determining if any process occurred in British India necessitating apportionment in accordance with existing precedents. The Tribunal's order did not decide the merits of apportionment; it confined the Appellate Assistant Commissioner to determine apportionment within the established finding of accrual in the Indian States. The Court also rejected the Department's contention about including the sums merely for rate purposes, observing companies are taxed at a flat rate and no separate rate issue arises.

Conclusion: The Tribunal was competent to permit the appellant to raise the apportionment ground and to remand the matter to the Appellate Assistant Commissioner for determination of apportionment; the remand is confined to apportionment consistent with the finding that the income accrued in the Indian States. The Tribunal did not decide the merits of apportionment.

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