TaxTMI 
TaxTMI 
1965 (11) TMI 159
X X X X Extracts X X X X
X X X X Extracts X X X X
.... of S. 2(6-A)(e) and that the development rebate reserve with the company could not be considered as accumulated profits for the purpose of that section. The Income Tax Officer accepted the position that but for the development rebate reserve, there was no accumulated profits strictly so called, but was of the view that though the development rebate reserve would not be available for distribution by way of dividends or profits nevertheless, it, in a sense, represented accumulated profits like any other reserve, and the question whether the creation of particular reserve was a statutory necessity or not was irrelevant in considering the substantial nature or character of the development rebate reserve. On that reasoning he further considered that it was not necessary to correlate the loans with any particular reserve or accumulated profits so long as the same accumulated profit was there with the company. The Income Tax Officer took that view because he thought the funds transferred from the development rebate reserve did not ipso facto go out of the funds of the company and they were only an appropriation out of the company's profits. There were certain other contentions als....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nary in character, so that in particular cases, no question of legality or lawfulness of the exercise of the jurisdiction can properly arise, but the question would be whether, in the particular circumstances, the Court should exercise its discretion and invoke its powers. In the nature of things that consideration will have to be applied in the context of the circumstances in each case. If the Court feels that the circumstances and exigencies of the case taken as a whole require that the Court should exercise its power, it will do so. 4. Certiorari normally goes out to correct errors of jurisdiction, either the lack of it or excess or irregular exercise of it. It also goes out to correct an error apparent on the face of the record, which does not, of course, include an error of a factual nature, or violation of the principles of natural justice. The English Courts in issuing prerogative writs, particularly certiorari, decline to exercise that jurisdiction where an alternative remedy exists which a party may well resort to. But, under Art 226, strictly that limitation may not be applicable, as the jurisdiction of the Hindu Courts to issue directions is entirely based on the lang....
X X X X Extracts X X X X
X X X X Extracts X X X X
....count Co. Ltd. v. income-tax officer [1961]41ITR191(SC) , Bhopal Sugar Industries Ltd., M. P. v. D. P. Dube, 14 STC 410: (AIR 1967 SC 549); Shivram Poddar v. Income-tax Officer [1964]51ITR823(SC) ; Santmal Pitambar Prasad v. Income Tax Officer, 1963-17 ITR 562 and Transport Co. (P) Ltd. v. Second Income Tax Officer, 1964-51 ITR 82 . On the other hand, for the Revenue, reference was made to Rex v. Inspector of Taxes and Commissioner of Income Tax, (1922) 8 TC 327; C. A. Abraham v. Income-tax Officer, kottayam [1961]41ITR425(SC) ; Thansingh Nathmal v. Supdt. of Taxes, Dhubri [1964]6SCR654 ; Lalji Haridas v. R. H. Bhatt,1 955 55 ITR 415 ; Sales Tax Officer v. Shivaratan C. Mohatta [1965]3SCR71 and Madhya Pradesh Industries Ltd. v. Income-tax Officer [1965]57ITR637(SC) . We do not think it necessary to deal with all these decisions. It will suffice if we refer to the last three decisions which also happen to be the latest. 6. [1965]55ITR415(SC) , is a case where, before making an order of assessment, notice was issued against the assessee under S. 46(1)(a) of the Saurashtra Income Tax Ordinance, 1949, which corresponds to S. 34(1)(a) of the Indian Income Tax Act. The assessee made a....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... under the Rajasthan Sales Tax Act. The High Court did not accept this objection, because, as it thought, the contention of the petitioner was that in view of Art. 286(1)(b) of the Constitution, the Sales Tax Officer had no jurisdiction to assess the petitioner to pay sales tax on the sale of goods in the course of import into the territory of India. The High Court proceeded to deal with the merits of the case and came to the conclusion that the assessee was a dealer and that the sales were also in the course of import. In the circumstances, the State with a certificate of fitness from the High Court filed the appeal before the Supreme Court. There, on behalf of the State, two points were raised, one of which was that on the facts of that case the High Court should have refused to entrain that petition. The Supreme Court accepted this ground and held: We are of the opinion that the High Court should have declined to entertain the petition. No exceptional circumstances exist in this case to warrant the exercise of the extraordinary jurisdiction under Art. 226. It was not the object of Art. 226 to convert High Courts into original or appellate assessing authorities whenever ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ties who are invested with power to deal with the merits do the contentions raised before them [1965]55ITR415(SC) . The High Court must in each case consider, whether the act or omission complained of has resulted or is likely to result in a grave injustice, and whether the party approaching it has another adequate remedy which is equally efficacious, whether he has approached the Court without acquiescence, and without undue delay, whether the problem posed raises complicated questions of disputed facts which it would be inappropriate for the High Court to determined, whether the aggrieved party has been guilty of misrepresentation or suppression of material facts, and whether notwithstanding the apparent breach it would be inequitable to grant relief. It is clear, having regard to these three decisions as well as the other cases that while the power under Art. 226 is discretionary, a certain restraint upon its exercise will be called for. The very wide amplitude of the power itself justifies such a restraint and the power could be exercised only in proper cases. Where a statue create a liability and indicates the forum which will determine such liability and sets up a hierarch....