1965 (2) TMI 8 - SC - Income Tax

Appellant succeeds in appeal, High Court directed to review based on existing record only.

Keshav Mills Company Limited Versus Commissioner Of Income-Tax, Bombay North, Ahmedabad

The court upheld the appellant's contention, setting aside the High Court's order and directing the High Court to consider the matter in line with the ... Whether, on the facts and in the circumstances of the case, the sums of ₹ 12,68,460, ₹ 4,40,878 and ₹ 6,71,735, or any them, which represents receipts by the assessee-company of its sale proceeds in British India, include any portion of its income in British India ? Held that:- Having carefully weighed the pros and cons of the controversy which have been pressed before us on the present occasion, we are not satisfied that a case has been made out to review and revise our decisions in the case of the New Jehangir Mills [1959 (5) TMI 4 - SUPREME Court] and the case of the Petlad Co. Ltd.[1962 (11) TMI 45 - SUPREME COURT] That is why we think that the contention raised by Mr. Palkhivala must be upheld. In the result, the order passed by the High Court is set aside and the matter is sent back to the High Court with a direction that the High Court s Issues Involved:1. Whether the two decisions in New Jehangir Vakil Mills Ltd. v. Commissioner of Income-tax and Petlad Turkey Red Dye Works Co. Ltd. v. Commissioner of Income-tax should be reviewed and revised.2. Whether the High Court had jurisdiction to direct the Tribunal to collect additional material and include it in the supplementary statement under section 66(4) of the Indian Income-tax Act, 1922.Issue-wise Detailed Analysis:1. Review and Revision of the Two Decisions:The primary issue before the Special Bench of seven judges was whether the two decisions in New Jehangir Vakil Mills Ltd. v. Commissioner of Income-tax and Petlad Turkey Red Dye Works Co. Ltd. v. Commissioner of Income-tax should be reviewed and revised. The appellant argued that the recent decisions were sound and correct, while the respondent contended that these decisions should be reconsidered due to their significance.The court emphasized the importance of maintaining certainty and continuity in the interpretation of law, as frequent revisions could lead to confusion. It was noted that the court should only reconsider its earlier decisions if there are compelling reasons, such as a clear error or oversight of significant aspects or statutory provisions.The court reviewed the earlier decisions and other relevant judgments, concluding that the decisions in the New Jehangir Mills case and the Petlad Co. Ltd. case were reasonably possible views and had been followed consistently. Therefore, the court found no compelling reason to revise these decisions.2. Jurisdiction of the High Court under Section 66(4):The second issue was whether the High Court had the jurisdiction to direct the Tribunal to collect additional material and include it in the supplementary statement under section 66(4) of the Indian Income-tax Act, 1922. The appellant contended that the High Court exceeded its jurisdiction by directing the collection of additional material, which was not on the record when the question was framed by the Tribunal.The court examined the scheme of the Act, which indicates that evidence should primarily be led before the Income-tax Officer, with additional evidence allowed before the Appellate Assistant Commissioner or the Tribunal under specific provisions. Section 66(4) allows the High Court to call for a supplementary statement of the case if the original statement is insufficient to determine the question raised. However, this power is limited to material already on the record.The court held that section 66(4) does not authorize the High Court to direct the Tribunal to collect new evidence not already on the record. This interpretation aligns with the decisions in the New Jehangir Mills case and the Petlad Co. Ltd. case, which restrict the High Court's power to requiring the Tribunal to include material already on the record in the supplementary statement.Conclusion:The court upheld the appellant's contention, set aside the High Court's order, and directed the High Court to deal with the matter in light of the decisions in the New Jehangir Mills and Petlad Co. Ltd. cases. The court emphasized that the High Court's power under section 66(4) is limited to requiring the Tribunal to include material already on the record in the supplementary statement and does not extend to collecting new evidence. No order as to costs was made.