1952 (6) TMI 23 - HC - Income Tax

Tribunal Rejects Assessee's High Court Reference, Upholds One Question on Security Deposits as Valid

Punjab Distilling Industries Ltd. Versus Commissioner of Income-tax

The Tribunal rejected the assessee's applications for reference to the High Court under Section 66 of the Income-tax Act, 1922, stating no questions of ... - Issues:1. Application for reference under Section 66 of the Indian Income-tax Act, 1922 regarding questions of law.2. Rejection of applications by the Tribunal for reference to the High Court.3. Interpretation of Appellate Tribunal Rules, 1946, in relation to the grounds for reference under Section 66(2) of the Act.4. Determination of whether specific questions of law arise from the Tribunal's orders.5. Assessment of security deposit as income under Section 10 of the Income-tax Act.Analysis:The judgment pertains to Income-tax Cases where the assessee applied for reference to the High Court under Section 66 of the Income-tax Act, 1922. The applications sought to address questions regarding the treatment of security deposits and cash held by the assessee. The Tribunal rejected the applications, stating that no questions of law arose from their orders. Subsequently, the assessee applied under Section 66(2) for directions to the Tribunal to refer the cases to the High Court. Additional questions of law were raised by the assessee, including the nature of the sum received and its classification as a security deposit or sale proceeds.The interpretation of the Appellate Tribunal Rules, specifically Rule 12, was crucial in determining the grounds on which the assessee could seek reference to the High Court. Rule 12 restricts the appellant from urging grounds not set forth in the memorandum of appeal, unless permitted by the Tribunal. However, Rule 12 was found not applicable to applications under Section 66(1) of the Act. Consequently, the Tribunal was justified in not allowing the assessee to raise additional questions of law beyond those initially stated.The judgment also addressed the specific questions of law raised by the assessee. It was observed that one of the questions did not arise from the Tribunal's orders, leading to its dismissal. However, another question concerning the treatment of security deposits as assessable income under Section 10 of the Act was deemed valid. Drawing parallels to a relevant case law, the judge found the treatment of security deposits to be a matter of assessable income, thus requiring a reference to the High Court for decision.In conclusion, the judgment highlighted the procedural and substantive aspects of seeking reference to the High Court for questions of law in Income-tax Cases. It emphasized the importance of adherence to the rules governing such references and the necessity of establishing the legal basis for the questions raised by the assessee.