TaxTMI 
TaxTMI 
1958 (5) TMI 3
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....he account year 1942-1943 and aggregating to Rs. 27,30,094 are liable to be taxed under the Act. The appellant admits that it received those monies during that period, and further that they represent profits made by it on certain forward contracts in Jarilla cotton. But it contends that those contracts were entered into at Gwalior with three brokers, viz., Lashkar Trading Company, Banwarilal Shivkumar and Meghraj Mundra, that the agreements between the parties specifically provide that the goods are to be delivered and prices paid at Gwalior, that, in fact, the sum of Rs. 27,30,094 is made up of differences paid in settlement of the contracts at Gwalior, that thus the profits accrued and were received wholly at Gwalior, and that, in consequence, they were not liable to be charged under the Act. The Department, on the other hand, contends that the contracts which resulted in the profits of Rs. 27,30,094 were as a fact entered into by the managing agents of the appellant with the firm of Jwaladutt Kishanprasad at Bombay, that those profits accrued in Bombay, and that they were therefore taxable under the Act. It is common ground that the sum of Rs. 27,30,094 received by the appella....
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....the links in the chain of contracts beginning with those of the appellant with the three brokers of Gwalior and of the payments ending with those by the brokers to the appellant. Pursuant to this order, the Appellate Assistant Commissioner took fresh evidence, and examined as many as seven witnesses, and on a careful and detailed analysis of their evidence, he held in his report dated August 17, 1951, that the forward contracts in question had been entered into with Jwaladutt Kishanprasad by G. D. Birla and R. D. Birla in person or by phone at Bombay, and that the contract notes with the three brokers were bogus transactions. On this report, the appeal came up for further hearing before the Appellate Tribunal, which by its order dated February 28, 1952, agreed with the conclusions of the Appellate Assistant Commissioner and affirmed its decision. The appellant then applied under section 66(1) of the Act for referring certain questions for the opinion of the court, but the said application was dismissed by the Tribunal on June 13, 1952, on the ground that the points raised were pure questions of fact. The appellant then applied to the High Court of Bombay under section 66(2) of the ....
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....s found is final its decision as to the legal effect of that finding is a question of law which can be reviewed by the court. (3) A finding on a question of fact is open to attack under section 66(1) as erroneous in law when there is no evidence to support it or if it is perverse. (4) When the finding is one of fact, the fact that it is itself an inference from other basic facts will not alter its character as one of fact. " Mr. Kolah contends that the finding of the Tribunal in the present case is erroneous in law in that there is no evidence to support it, and even if there is some, the finding based thereon is perverse, and that that is a contention which falls within proposition No. 3 stated above, and is open to him. That renders it necessary that we should examine the record, not indeed with a view to decide whether the Tribunal has properly appreciated the evidence, or whether its conclusion is a right one to come to on that evidence, but with a view to see whether there is evidence to support its finding and whether that finding is one which could, on that evidence, be reasonably reached. Approaching the question from this standpoint, we pose the question, what is the....
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.... of Pillani that at the earlier stages of the dealings, profits were paid to the account of Cotton Agents Ltd., Bombay, and that it was only later on that they were credited to J.R. Pillani, Gwalior. To follow the argument of Mr. Kolah on this point, it is necessary to mention that J.R. Pillani had two businesses in Bombay, one in cotton in the name of Jwaladutt Kishanprasad and another in shares in the name of J. R. Pillani, Bombay. Now, the position revealed in the accounts of Jwaladutt Kishnaprasad with reference to the present contracts will appear from the following abstract of transactions standing in the name of J.R. Pillani, Gwalior. Date. Dr. Cr. 29-1-1943 Rs. 2,52,576 4-2-1943 Cotton Agents, Ltd., Bombay ... Rs. 2,00,000 5-2-1943 Rs. 2,28,250 Do. Cotton Agents, Ltd., Bombay ... Rs. 2,50,000 1-3-1943 Cr. J. R. Pillani, Bombay .... Rs. 5,65,500 Dr. J. R. Pillani, Bombay ..... Rs. 5,66,000 (Rs. 5,65,000 Out of this is paid to Cotton Agents Ltd., by J. R. Pillani, Bombay.) ..... 3-3-1943 Cr. J. R. Pillani, Gwalior (On Rs. 4,62,750 11-3-1943 Cotton Agents Ltd. Bombay issued a cheque in favour of J. R. Pillani, Bombay for Rs. 9,50,000 who credit ....
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....nection that while the payments dated February 4, 1943, and February 5, 1943, were directly by Jwaladutt Kishanprasad to Cotton Agents Ltd., the payments of Rs. 5,65,000 on March 1, 1943, and Rs. 4,62,750 on March 3, 1943, were by Jwaladutt Kishanprasad in favour of J. R. Pillani, Bombay, which in its turn passed them on to Cotton Agents Ltd. The story which these entries tell is that the transactions were originally between Jwaladutt Kishanprasad and Cotton Agents Ltd., then from March 1, 1943, they were between Jwaladutt Kishanprasad and Cotton Agents Ltd., through J. R. Pillani, Bombay, and on March 11, 1943, Cotton Agents Ltd., and J. R. Pillani, Bombay, were eliminated and J. R. Pillani, Gwalior, was brought on the scene. These are facts from which the Tribunal could reasonably find that the transactions took place as stated by Pillani. It was argued for the appellant that Gaurishanker Narandas, the accountant of Jwaladutt Kishanprasad, did not support the version given by Pillani. That is not quite correct. He stated at first that the dealings in question were entered in the accounts with the names left blank, but that later on the name of J. R. Pillani, Gwalior, was entere....
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....their dealings and the ankdas produced by them at a late stage were found to have been freshly written up. When Durgaprasad Mandalia, the manager of the appellant, was asked as to what securities he held as cover in respect of the huge transactions he entered into with men of such means, he answered that they were men of character. Sagarmal Dingliwala, the manager of J.R. Pillani, Gwalior, at the relevant period, was asked the same question, and he replied that "this business was of Jiyajeerao Cotton Mills, Ltd." The appellant had, in fact, genuine transactions with Cotton Agents Ltd., Gwalior, on a large scale, and when Durgaprasad Mandalia was asked why he did not put these transactions through them, he had no answer to give. And he was likewise unable to explain why he did not directly deal with J.R. Pillani, Gwalior. It was suggested by the learned Solicitor-General that if the object of the appellant in setting up contracts in Gwalior was to throw a veil over its contracts with Jwaladutt Kishanprasad, that could not effectively be achieved by putting them in the name of J. R. Pillani, Gwalior, which was a branch of the firm, as the veil would have been too thin to conceal the ....
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....ersion of the appellant. Mr. Kolah also contended that the evidence of Birlas would have been material in deciding whether they settled the contracts at Bombay as contended for by the Department and that though the order of remand stated that their evidence should be taken, that had not been done and that was a serious irregularity. The portion of the order of remand relevant for the present purpose is as follows : " The managing director of the assessee company or rather the person responsible for ordering these transactions on behalf of the assessee company should also be similarly examined. " Now, the obvious intention behind this order, read as a whole, was that persons connected with the several links in the chain of contracts and series of payments concerned in these transactions should be examined with a view to elucidate the true position, and the managing director was mentioned as the person who was likely to have entered into these transactions. Durgaprasad Mandalia was the manager of the appellant company, and he gave evidence that he put the present transactions through the brokers, and that has been considered. If Birlas wanted themselves to give evidence, there ....