TaxTMI 
TaxTMI 
1959 (12) TMI 46
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....ate May 3, 1946 to a limited a company (hereafter called "the company") newly formed and incorporated in Ceylon on April 15, 1946, for a total consideration of 5 lakhs of rupees which was accounted for by allotting 5,000 fully paid-up shares of the face value of ₹ 100 per share, to the assessee, though the book value of such assets for him was only ₹ 1,87,642. One of the contentions of the assessee was that the transfer had been made by him orally on March 31, 1946, and not on April 1, 1946 on which the account books of the company were opened or on May 3, 1946 on which the deeds referred to above were executed. For the assessment year 1947-48, corresponding to the accounting year which ended March 31, 1947 the Income-tax Officer made an assessment under section 12B of the Act on the sum of ₹ 3,12,358 being the excess of the consideration for which the assets were transferred, over their book value. While making a return of its income for the assessment year the company had addressed a covering letter to the Income-tax Officer, which mentioned the date of the company's taking over the business as April 1, 1946. Though later the company's represen....
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....ion also to this court: "Whether on the facts and in the circumstances of the case, the assessment on ₹ 3,12,358 on the applicant is right in law especially having regard to the value of the items transferred and the consideration being satisfied by the issue of shares which could not have had a market value on the date of transfe ?" But it was not so referred, although in paragraph 16 of the statement of the case, the Tribunal did advert to the contention of the assessee, that "the consideration accepted in shares does not reflect accurately the sale price of the assets." In making this reference on the two questions, the Tribunal referred to the grounds set out in paragraphs 5 to 9 of its order, of which paragraph 8 has been extracted above. Though this is a reference of the year 1955, the assessee has preferred a civil miscellaneous petition, numbered as 5361 of 1959, on November 30, 1959 requesting this court "to reframe or resettle the question referred" so as to cover the third contention adverted to above. The reference and the civil miscellaneous petition were accordingly heard together, and this order relates to both. The learned cou....
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....ot been realised and has not brought him any profit, a contention which we have endeavoured to point out was not the basis of the reference on the second question relating to goodwill. On these grounds we answer question (ii) in the affirmative, that is that "Rs. 47,207, being the capital gain on the sale of goodwill is assessable under section 12B." It remains to dispose of C.M.P. No. 5361 of 1959. Clearly, if the matter covered by it were to fall within section 66(2) of the Act, the petition is out of time; this was not disputed. The petition purports to be made, and at the hearing was sought to be maintained, under section 66(4) of the Act. The prayer in the petition as already noted was however to reframe and resettle the questions reserved so as to admit the contention that the amount of ₹ 3,12,358 received on allotment of shares in the company did not represent capital gain to the assessee. We may at once state that on the scope of the reference, there can be no case for reframing or resettling the questions referred, as they are clear as to their content which cannot be altered or enlarged. The learned counsel for the assessee, therefore, pressed us to direc....
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....ine the question raised by the Tribunal. Here again, no new questions can be raised or required to be raised. The case can be sent back for clarification of the statement or filling up any lacuna that may be found therein, but this ought to be with a view to enable the High Court to determine the questions that have actually been raised." The court ruled, that section 66(4) does not apply when the Tribunal states a case on certain questions of law, but refuses to state a case on others, which the assessee or the Commissioner may desire to raise. The Supreme Court had occasion to examine the scope of section 66(4), though in a different context in New Jehangir Vakil Mills Ltd. v. Commissioner of Income-tax [1959] 37 I.T.R. 11, but the observations of the court appear to support the view that we are taking on section 66(4). In that case, the question referred to the High Court was whether the receipt of cheques in Bhavanagar amounted to the receipt of sale proceeds there; the High Court, purporting to act under section 66(4), called for supplementary statement of the case from the Tribunal so as to cover the question which had not been referred, "whether there was any requ....
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....was distinguished by Chagla, C.J., in Pannalal Nandlal Bhandari v. Commissioner of Income-tax [1956] 30 I.T.R. 139. The learned Chief Justice also disagreed with the view taken in Mahabir Prasad Niranjanlal v. Commissioner of Income-tax [1951] 20 I.T.R. 472. It seems to us, that section 66(2) can take in a case, in which on a motion under section 66(1) by the assessee or by the Commissioner to refer certain questions, the Tribunal refers only some of them but not all, because there is a refusal to refer some of the questions. There is no warrant for the extreme position taken by counsel before Chagla, C.J., in the case cited, that section 66(2) is confined to a wholesale and not a partial refusal. No doubt the words in section 66(2) "on the ground that no question of law arises" create some difficulty in interpretation. Section 66(3) deals with cases of rejection on the ground of limitation and stands by itself; under section 66(1), on the prescribed conditions being fulfilled, when a question of law arises out of an order of the Tribunal under section 33(4) of the Act, the Tribunal "shall...draw up a statement of the case and refer it to the High Court". If t....