1978 (3) TMI 100 - HC - Income Tax

Jurisdiction Ruling: Delhi High Court lacked authority, case referred to Allahabad High Court. Parties to bear own costs.

The court held that the Delhi High Court lacked jurisdiction to entertain the reference under section 66(1) of the Indian Income-tax Act, 1922, as the ... Jurisdiction of the High Court for references under section 66 - bench jurisdiction determined by location of the assessing officer's office - place of assessment under section 64 - Appellate Tribunal standing orders governing distribution of appeals between Benches - intermediate character of references under section 66 and final disposal by the Tribunal - choice of High Court where a Tribunal Bench has jurisdiction over more than one StateJurisdiction of the High Court for references under section 66 - bench jurisdiction determined by location of the assessing officer's office - Appellate Tribunal standing orders governing distribution of appeals between Benches - choice of High Court where a Tribunal Bench has jurisdiction over more than one State - Appropriate High Court to which a Bench of the Appellate Tribunal having jurisdiction over more than one State must refer questions of law under section 66. - HELD THAT: - The Court held that, in the absence of a direct statutory rule, the basis already adopted for determining the jurisdiction of a Bench should be applied when selecting the High Court for a reference under section 66. The Standing Orders issued by the President of the Appellate Tribunal determine the ordinary jurisdiction of a Bench by reference to the location of the office of the assessing Income-tax Officer (i.e., the State from which the appeal arises), rather than by the criterion in section 64 (place of business or residence of the assessee). Applying that basis is appropriate because (i) the Standing Orders expressly select the location of the assessing officer's office as the Bench jurisdictional criterion, (ii) the Bench hears and determines appeals as coming from the States assigned to it, and (iii) this construction gives effect to the words in section 66(8) that link 'the High Court' to the State concerned and preserves the intermediate nature of the reference which the Tribunal finally disposes of after receiving the High Court's judgment. The Court rejected the alternative bases of (a) applying section 64's place-of-assessment criterion, and (b) adopting the territorial location of the Bench's seat as the determinative test, on the ground that those approaches would be inconsistent with the scheme of the Standing Orders and would produce anomalous concentration of references in only those few High Courts in whose territories Benches are physically located.Where a Tribunal Bench has jurisdiction over more than one State, the Bench must refer a question of law to the High Court of the State from which the appeal originated, the State being determined by the location of the office of the assessing Income-tax Officer as fixed by the Tribunal's standing orders.Jurisdiction of the High Court for references under section 66 - Appellate Tribunal standing orders governing distribution of appeals between Benches - Whether the Delhi High Court had jurisdiction to entertain the reference in the present case arising from appeals which originated from Meerut. - HELD THAT: - Applying the principle that Bench jurisdiction is determined by the location of the assessing officer's office and that references should be made to the High Court of the State from which the appeal came, the Court found that the appeals arose out of assessment orders of the Income-tax Officer at Meerut (State of Uttar Pradesh). Although the appeals were heard and disposed of by a Delhi Bench after the Standing Order of 1967 reallocated Meerut to the Delhi Benches, the operative basis for the reference requires that the High Court of the State from which the appeal originally arose (Allahabad High Court) is the proper forum. Consequently, the Delhi High Court had no jurisdiction to entertain the reference in this case.The reference in this case should have been made to the High Court of Allahabad; the Delhi High Court lacked jurisdiction and the statement of case is returned to the Delhi Bench for appropriate action.Final Conclusion: The Court declined to answer the reference because the questions of law should have been referred to the High Court of the State from which the appeals arose (Allahabad High Court); the statement of case is returned to the Delhi Bench for further action and the parties shall bear their own costs. Issues Involved:1. Jurisdiction of the High Court to entertain the reference under section 66(1) of the Indian Income-tax Act, 1922.2. Determination of the appropriate High Court for references when the Appellate Tribunal has jurisdiction over multiple states.Issue-wise Detailed Analysis:1. Jurisdiction of the High Court to entertain the reference under section 66(1) of the Indian Income-tax Act, 1922:The assessee, a Hindu undivided family, and the Commissioner of Income-tax filed applications under section 66(1) of the Act, leading to a reference of seven questions of law to the High Court. The primary objection raised was whether the Delhi High Court had jurisdiction to entertain the reference given that the assessee resided and conducted business in Meerut, Uttar Pradesh. The assessment orders were passed by the Income-tax Officer in Meerut, and the appeals were disposed of by the Appellate Assistant Commissioner in Meerut. Consequently, it was argued that the appropriate High Court should be the Allahabad High Court, not the Delhi High Court, despite the Appellate Tribunal, Delhi Bench, being situated in Delhi.The court examined relevant statutory provisions, including sections 5, 30, 33, 64, and 66 of the Act, and the Appellate Tribunal Rules, 1946 and 1963. It was noted that the jurisdiction of an Income-tax Officer to assess an assessee is based on the location of the business or residence of the assessee, as per section 64. However, the jurisdiction of the Appellate Tribunal is determined by the location of the office of the assessing officer, not the place of business or residence of the assessee.The court concluded that the jurisdiction of the High Court for references under section 66(1) should be determined by the location of the office of the assessing officer, aligning with the jurisdiction of the Appellate Tribunal Bench that heard the appeal. Therefore, the Delhi Bench had jurisdiction to hear and determine the appeals from Meerut, but the reference should have been made to the Allahabad High Court, not the Delhi High Court.2. Determination of the appropriate High Court for references when the Appellate Tribunal has jurisdiction over multiple states:The court considered the decision of the Madras High Court in Commissioner of Income-tax v. S. Sivaramakrishna Iyer, which suggested that the High Court's jurisdiction should be determined by the place where the assessee carries on business or resides. However, the court found this principle inapplicable for determining the High Court's jurisdiction for references under section 66(1).The court reasoned that the appropriate High Court should be determined based on the jurisdiction of the Appellate Tribunal Bench, which is guided by the location of the office of the assessing officer. This approach ensures consistency and aligns with the provisions of the Act and the Appellate Tribunal Rules.The court rejected the suggestion that the location of the Bench hearing the appeal should determine the High Court's jurisdiction, as this would result in a few High Courts having exclusive jurisdiction over all references, excluding other High Courts. Instead, the court emphasized that the High Court for references should be the one in the state where the assessing officer's office is located.Conclusion:The court concluded that the Delhi High Court did not have jurisdiction to entertain the reference, as the appropriate High Court was the Allahabad High Court. The reference was declined, and the statement of the case was returned to the Delhi Bench for appropriate action. The parties were directed to bear their own costs.