Narmada Devi v. Commissioner of Income-tax, Patna
[Citation -2020-LL-1106-56]

Citation 2020-LL-1106-56
Appellant Name Narmada Devi
Respondent Name Commissioner of Income-tax, Patna
Court HIGH COURT OF PATNA
Relevant Act Income-tax
Date of Order 06/11/2020
Assessment Year 1976-77
Judgment View Judgment
Keyword Tags benefits of partnership • question of law • share of income • tax liability • share income
Bot Summary: Whether the amended provision which had come into effect from 1.10.75 will apply to an income which had accrued on 10.8.75 for the assessment Patna High Court TAX No.28 of 1986 dt.06-11-2020 2/6 to be made for the assessment year 1976-77 Both the questions can be answered together, for primarily it is the second question which arises for consideration. Section 66(4) must be read with Section 66(1) and Section 66(2), and so read, it did not empower the High Court to raise a new question of law which did not arise out of the Tribunal's order or direct the Tribunal to investigate new and further facts necessary to determine the new question which had not been referred to it under Section 66(1) or Section 66(2) of the Act and direct the Tribunal to submit, supplementary statement of case. The High Court and the Supreme Court in an appeal against the judgment of the High Court given in a reference under Section 66 of the Act, are not constituted courts of appeal against the order of the Tribunal. The point is no longer res integra having been settled in C.P. Sarathy Mudaliar v. CIT C.P. Sarathy Mudaliar v. CIT, 62 ITR 576 wherein this Court has taken the view that setting aside the order of the Tribunal in exercise of the reference jurisdiction of the High Court is inappropriate. The finding of the Tribunal is contained in para 3 of its order where it observed The Supreme Court has already settled that although the subject of charge is the income of the previous year, the law to be applied is that inforce in the assessment year and any amendment which is in force at the beginning of the relevant assessment year must govern irrespective of the fact that the amendment is made after the income under the assessment is earned. In view of the doubt having arising with respect to the Patna High Court TAX No.28 of 1986 dt.06-11-2020 5/6 observations made by a co-ordinate Bench of this Court in Badri Prasad ors. The said Bench, considering the law laid down by the Constitution Bench of the Apex Court in Kesoram Industries and Cotton Mills Ltd. vs. Wealth Tax Commissioner, Calcutta, AIR 1966 SC 1370, as also the observations made by yet another Constitution Bench of the Hon ble Apex Court in Karimtharuvi Tea Estate Ltd Versus State of Kerala, AIR 1966 SC 1385, has observed in paragraph 19 as under:- 19.


IN HIGH COURT OF JUDICATURE AT PATNA TAX CASES No.28 of 1986 Smt. Narmada Devi, C/o M/s. Pradeep & Co. Arrah ... ... Petitioner/s Versus Commissioner of Income-tax, Bihar, Patna. ... ... Respondent/s Appearance : For Petitioner/s : Mr. D. V. Pathy, Advocate For Respondent/s : Mr. Rishi Raj Sinha, Advocate Ms. Shilpi Keshri, Advocate CORAM: HONOURABLE CHIEF JUSTICE and HONOURABLE MR. JUSTICE S. KUMAR ORAL JUDGMENT (Per: HONOURABLE CHIEF JUSTICE) Date : 06-11-2020 Income Tax Appellate Tribunal, Patna Bench, Patna has made instant Reference under Section 256 (1) of Income Tax Act,1961 on following substantial questions of law:- 1. Whether on facts and in circumstances of case, Appellate Tribunal was correct in law in upholding inclusion of share income of minor from firm M/s. Om Prakash & Co. which had closed its accounting year on 10.8.75 in assessment of assessee for assessment year 1976-77? 2. Whether amended provision which had come into effect from 1.10.75 will apply to income which had accrued on 10.8.75 for assessment Patna High Court TAX No.28 of 1986 dt.06-11-2020 2/6 to be made for assessment year 1976-77? Both questions can be answered together, for primarily it is second question which arises for consideration. In Keshav Mills Co. Ltd. v. CIT, (1965) 2 SCR 908 (7 Judge bench), Court held as under: 14. Section 66(4) must be read with Section 66(1) and Section 66(2), and so read, it did not empower High Court to raise new question of law which did not arise out of Tribunal's order or direct Tribunal to investigate new and further facts necessary to determine new question which had not been referred to it under Section 66(1) or Section 66(2) of Act and direct Tribunal to submit, supplementary statement of case. It is for Tribunal to decide questions of fact, and High Court in reference under Section 66 of Act cannot go behind Tribunal's findings of fact. High Court can only lay down law applicable to facts found by Tribunal. High Court and Supreme Court in appeal against judgment of High Court given in reference under Section 66 of Act, are not constituted courts of appeal against order of Tribunal. These courts only exercise advisory jurisdiction in such references. [Rameshwar Prasad Bagla v. Patna High Court TAX No.28 of 1986 dt.06-11-2020 3/6 CIT, (1973) 3 SCC 575] In Premier Breweries Ltd. v. CIT, (2015) 11 SCC 695 : 2015 SCC OnLine SC 196 at page 698, Court observed: 9. second issue raised is jurisdiction of High Court to set aside order of Tribunal in exercise of its reference jurisdiction. point is no longer res integra having been settled in C.P. Sarathy Mudaliar v. CIT [C.P. Sarathy Mudaliar v. CIT, (1966) 62 ITR 576 (SC)] wherein this Court has taken view that setting aside order of Tribunal in exercise of reference jurisdiction of High Court is inappropriate. This Court had observed that while hearing reference under Income Tax Act, High Court exercises advisory jurisdiction and does not sit in appeal over judgment of Tribunal. It has been further held that High Court has no power to set aside order of Tribunal even if it is of view that conclusion recorded by Tribunal is not correct. (Emphasis supplied) facts recorded in reference and contentions of parties leading to framing to questions of law and reference made are reproduced as under:- 3. assessee is mother of Dlip Kumar who being minor admitted to benefits of partnership in firm M/s. Om Prakash & Co. received share of income. In first assessment made, share income of minor was not included in total income of assessee. Subsequently, ITO caused assessment to be re-opened u/s 147 Patna High Court TAX No.28 of 1986 dt.06-11-2020 4/6 and included share income of master Dilip Kumar Rs.32,031/- in assessment of assess. ITO acted under effect of provisions of Section 64(1) (iii) as amended by Taxation Laws Amendment Act, 1975. This provision contained in Section 64 which made inclusion of share income of minor in assessment of assessee was made effective from 01.10.1975. According to assessee, amendment having come into effect only on 01.10.1975 could not effect share of income appertaining to minor when this became due on close of accounting year followed by firm on 10.08.75. He, therefore, resisted inclusion but ITO over ruled him on ground that any provision which was effective on first day of assessment year, that is, of 1st of April was to apply notwithstanding date of accrual within accounting year. disputed amendment was in effect from 1st of April, 1976, corresponding to assessment year 1976-77 share of minor was includible in income of assessee. His order forms annexure and part of statement of case. 4. His order had been confirmed by A.A.C. which has been annexed as annexure B and constitutes part of statement of case. 5. Appellate Tribunal also in appeal brought at instance of assessee upheld findings of lower authorities and dismissed appeal of assessee. finding of Tribunal is contained in para 3 of its order where it observed Supreme Court has already settled that although subject of charge is income of previous year, law to be applied is that inforce in assessment year and any amendment which is in force at beginning of relevant assessment year must govern irrespective of fact that amendment is made after income under assessment is earned. copy of order of Tribunal is annexed as Annexure C and forms part of statement of case. In view of doubt having arising with respect to Patna High Court TAX No.28 of 1986 dt.06-11-2020 5/6 observations made by co-ordinate Bench of this Court in Badri Prasad & ors. vs. Commissioner of Income Tax (1990) Volume 185 ITR 307, matter was referred to Larger Bench (three-Judge Bench). said Bench, considering law laid down by Constitution Bench of Apex Court in Kesoram Industries and Cotton Mills Ltd. vs. Wealth Tax Commissioner (Central), Calcutta, AIR 1966 SC 1370, as also observations made by yet another Constitution Bench of Hon ble Apex Court in Karimtharuvi Tea Estate Ltd Versus State of Kerala, AIR 1966 SC 1385, has observed in paragraph 19 as under:- 19. Amending Act introduced new Section 64(1) (iii) in Income Tax Act with effect from 1.4.1976. tax liability under said provision could therefore be charged on assessee, in assessment which was to be made for that accounting year i.e. 1976-77, which would be done in assessment year 1977-78. Amending Act introducing new tax liability which came into force with effect from 1.4.1976 could not be given retrospectivity and be made applicable to previous accounting year i.e. 1975-76 corresponding to assessment year i.e. 1976-77. Thus, in view of observations made by three-judge Patna High Court TAX No.28 of 1986 dt.06-11-2020 6/6 Bench of this Court in its judgment dated 01.08.2019, relevant portion whereof stands extracted hereinabove, Appellate Tribunal was not correct, in law, in upholding inclusion of share income of minor from firm M/s. Om Prakash & Co. for it accrued on 10.08.1975, in assessment year 1976- 77, and amendment which came into effect only on 1.10.1975 was to apply only prospectively and not retrospectively. Reference is, accordingly, answered in negative. (Sanjay Karol, CJ) (S. Kumar, J) K.C.Jha/- AFR/NAFR CAV DATE Uploading Date Transmission Date Narmada Devi v. Commissioner of Income-tax, Patna
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