Tribunal jurisdiction and reference costs: assessment could not be enlarged on assessee's appeal, but reference fee was recoverable as costs.

Section 41 was treated as an enabling provision for representative assessment of beneficiaries, and the appellate tribunal's power was confined to the subject-matter of the assessee's appeal. In the absence of a departmental appeal, it could not enlarge the controversy or direct a fresh assessment under section 10 as an association of persons where that would increase the assessee's liability; the remand power under rule 28 could not be used to achieve that result indirectly. The fee paid for obtaining a reference under section 66(1) was also treated as part of the costs of the reference, and could be awarded to the successful party under section 66(6).

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Issues: (i) Whether, in an appeal by the assessee alone, the Appellate Tribunal could direct a fresh assessment of receivers under section 10 of the Indian Income-tax Act as an association of persons, thereby altering an assessment originally made under section 41; (ii) whether the High Court could direct the institution fee paid for obtaining a reference under section 66(1) of the Indian Income-tax Act to be taxed as costs of the reference.

Issue (i): Whether, in an appeal by the assessee alone, the Appellate Tribunal could direct a fresh assessment of receivers under section 10 of the Indian Income-tax Act as an association of persons, thereby altering an assessment originally made under section 41.

Analysis: Section 41 was treated as an enabling provision creating vicarious liability, under which the Department may assess the representative of beneficiaries, but when it adopts that course the assessment must proceed on the basis of the beneficiaries' respective interests. The Tribunal's jurisdiction under section 33(4) was held to be confined to the subject-matter of the appeal. In the absence of a departmental appeal, it could not expand the controversy so as to convert an assessment made under section 41 into a direct assessment under section 10 if that would enhance the assessee's tax burden. The power of remand under rule 28 was held to be incidental to the appellate jurisdiction and could not be used to do indirectly what the Tribunal had no power to do directly.

Conclusion: The Tribunal had no jurisdiction to direct assessment under section 10 as an association of persons, and the assessment had to remain one under section 41.

Issue (ii): Whether the High Court could direct the institution fee paid for obtaining a reference under section 66(1) of the Indian Income-tax Act to be taxed as costs of the reference.

Analysis: The fee deposited under section 66(1) was treated as incidental to the reference itself. Once the reference reached the High Court and was finally disposed of under section 66(5), the discretion as to costs under section 66(6) extended to the full costs of the reference, including the amount deposited as institution fee. The form of the order was immaterial so long as the substance was to award that amount to the successful assessee.

Conclusion: The institution fee could be directed to be recovered as part of the costs of the reference.

Final Conclusion: The reference was answered against the Revenue on the main jurisdictional question, and the assessees were also granted consequential costs, including the institution fee paid for the reference.

Ratio Decidendi: In the absence of a departmental appeal, the appellate tribunal cannot, under the guise of remand or by enlarging the subject-matter of the appeal, direct a fresh mode of assessment that increases the appellant's tax liability.

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