1934 (9) TMI 2 - HC - Income Tax

Court Empowered to Direct Commissioner in Tax Matters

Vadilal Lallubhai Mehta Versus Commissioner of Income-tax

The Court analyzed an application under sub-section (3) of Section 66 of the Income Tax Act, where the assessee sought the Commissioner to state a case ... - Issues:1. Application under sub-section (3) of Section 66 of the Income Tax Act requesting the Court to require the Commissioner to state a case and raise certain points of law.2. Allegation of the assessee that the business assessed was a Hindu joint family business between himself and his son.3. Rejection of the claim by the Income Tax Officer and Assistant Commissioner.4. Refusal by the Commissioner to state a case due to the view that no question of law arose.5. Interpretation of the powers of the Court under sub-section (3) of Section 66.6. Comparison of views between different High Courts on the powers of the Court in directing the Commissioner to state a case.7. Requirement for the assessee to formulate questions of law for reference to the Court.8. Consideration of questions of law arising from the construction of two documents and the impact of the birth of the son on the assessment under the Income Tax Act.Analysis:The judgment involves an application under sub-section (3) of Section 66 of the Income Tax Act, where the assessee sought to require the Commissioner to state a case and raise specific points of law. The assessee contended that the business assessed was a Hindu joint family business between himself and his son, based on the construction of two documents. However, both the Income Tax Officer and the Assistant Commissioner rejected this claim, primarily on the grounds of considering the documents illusory and disputing the existence of a Hindu joint family. The Commissioner refused to state a case, asserting that the issue was a question of fact rather than law. The Court, in its analysis, discussed the interpretation of the powers under sub-section (3) of Section 66, emphasizing the ability of the Court to direct the Commissioner to state a case even if specific questions of law were not initially formulated by the assessee.Moreover, the judgment highlighted the differing views among High Courts regarding the Court's authority to require the Commissioner to raise questions of law not previously formulated. The Court rejected the restrictive interpretation proposed by another High Court, emphasizing the broader scope of the Court's powers under sub-section (3). The judgment emphasized the practical aspect of requiring the assessee to formulate questions of law for reference but clarified that the Commissioner is not bound to refer only those questions. The Court's role under sub-section (3) was discussed, indicating that it is not limited to the precise questions formulated by the assessee.Furthermore, the judgment delved into the specific questions of law arising from the construction of the documents and the impact of the birth of the son on the assessment under the Income Tax Act. The Court identified key questions, including the nature of the partnership firm as a Hindu joint family estate and the effect of the son's birth on the assessment. The judgment concluded by directing the Commissioner to state a case, specifying the points of law that the Court deemed necessary for consideration.