The appellant applied to the High Court for a certificate of fitness to appeal to this Court under section 66A 2 of the Act but without success.
79,131.
His companytention with regard to the termination of his business was also upheld by the Tribunal and the Tribunal held that the business came to an end on June 30, 1944, and number on December 31, 1944.
By its judgment and order dated March 4, 1953, the High Court answered the first two questions in the negative and held rightly in our view that the third question did number arise.
On July 1, 1944, when the firm of the assessee and his brother came into existence the position was that there were outstandings to the extent of Rs.
Its year of account ended on April 30, 1943.
When the assessee appealed to the Tribunal from the decision of the Appellate Assistant Commissioner, his companytention regarding the sum of Rs.
Appeal by special leave from the judgment and order dated the 14th March, 1953, of the Bombay High Court in Income Tax Reference No.
1,15,559.
He did so presumably under the proviso to s. 13 and R. 33 of the Indian Income tax Rules, 1922.
For the assessment year 1944 45 the respondent was assessed under the Act as a number resident companypany.
The companytention of the assessee was that as this amount was realised after he ceased to do business, it was a capital receipt which was number subject to tax.
The appellant thereupon applied for and obtained from this Court special leave to appeal under Art.
The difference in gross profit is so wide that some explanation had to be called for from the appellants, especially in view of the fact that the appellants do number maintain what should be called an Indian trading and profit and loss account on the same lines as the World trading and profit and loss account.
Between July 1, and December 31, 1944, the assessee recovered Rs.
His further companytention was that as he kept his accounts on cash basis, this amount companyld number be included in his accounts of the business done from January 1 to June 30, 1944, inasmuch as this amount was number realised during that period but was realised during a period subsequent to the period for which accounts were kept.
86,650.
He was, however, of the view that the assessees method of accounting, viz.,
The assessee appealed to the Appellate Assistant Commissioner.
The respondent preferred an appeal to the Income tax Appellate Tribunal against this order of the Appellate Assistant Commissioner and companytended inter alia that the Appellate Assistant Commissioner had numberjurisdiction to discard the respondents method of accounting and re companyputing the respondents Indian business profits in the manner he had purported to do and that in any event for the reasons mentioned by the respondent the margin of net world profits companyld number be applied to the Indian business.
86,650.
The Head Office and branches outside India invoice publications to the Indian branches number at companyt but at a valuation which is 25 of the marked price for sterling publications and 30 of the marked price for currency publications For the purposes of companyputing the profits of its Indian branches, the respondent takes the said valuation as the companyt of the publications.
In the case of World profit and loss account I find that the gross profit earned was pound 231,070 on total sales of pound 628,000 working out to over 37 per cent.
By its order dated April 29, 1950, the Tribunal remanded the case to the Appellate Assistant Commissioner with a direction that be should allow the respondent to prove the actual companyt of the goods invoiced to and sold in India.
K. DAS J. This is an appeal by special leave from the judgment and order of the High Court of Judicature at Bombay, dated March 4, 1953, in Income tax Reference No.
Thereafter, the Commissioner of Income tax, Bombay City, appellant before us, asked the Tribunal to submit certain questions of law to the High Court of Bombay.
Relying upon that judgment, the respondent raised two companytentions before the Tribunal and they were a that it was number companypetent to the Appellate Assistant Commissioner on appeal to reject the respondents method of accounting which had been accepted by the Income tax Officer and b that it was number companypetent to the Appellate Assistant Commissioner on appeal to companypute the Indian business profits of the respondent under r. 33 of the Indian Income Tax Rules, the Income tax Officer number having done so.
At the instance of the appellant, the Tribunal stated a case and referred the following questions of law to the High Court for its opinion under s. 66 1 of the Act Whether it is open to an Appellate Assistant Commissioner on appeal to reject the assessees books of account, which have been accepted by the Income tax Officer?
In submitting its return of income for the said assessment year 1944 45 and in the assessment proceedings before the Income tax Officer for that year, the respondent took the aforesaid invoice value as representing the companyt of the books produced by it.
3,592.
The said reference was heard by the High Court on March 4, 1953, and the High Court following its own decision in K. F. Vakeels case supra , answered the referred questions Nos.
The appellant then asked for and obtained special leave to appeal from the said judgment and order of the Bombay High Court.
1, 1 1,616.
2,02,209 was upheld by the Tribunal.
Therefore, the nett amount that he realised between July 1 and December 31, 1944, was Rs.
BHAGWATI J. This appeal with special leave from the judgment and order of the High Court of Judicature at Bombay raises an interesting question as to whether the power under the proviso to s. 13 of the Indian Income tax Act Act XI of 1922 hereinafter referred to as the Act of rejecting the method of accounting regularly employed by the assessee can be exercised by the Appellate Assistant Commissioner while hearing an appeal of the assessee under s. 31 of the Act, if the Income tax Officer had number done so in the first instance.
A. Palkhivala, J. B. Dadachanji, S. N. Andley Rameshwar Nath and P. L. Vohra, for the respondents 1957 October 16.
1, 1 1,616.
2,02,209 as alleged by the assessee.
power of dealing with an order passed by an Appellate Assistant Commissioner was plenary and had been expressed in s. 33 4 of the Act as widely as companyld be companyceived and 2 in an appeal under s. 33 the Tribunal was companypetent to decide facts as well as law and possessed authority to substitute its own order of assessment for the order under appeal.
29 of 1955.
He was of the view that inasmuch as the fixed percentage of the marked price adopted by the assessee companypany as the production companyt for its publications sold in India did number companyrectly represent the actual companyt of production, the method of accounting regularly employed is such that a true figure of income, profits and gains is number deducible therefrom.
When the matter went before the Appellate Assistant Commissioner, he took the view that the assessee companytinued to carry on the business till December 31, 1944 he also held that a sum of Rs.
By his assessment order dated March 24, 1945, the Income tax Officer accepted the method of accounting employed by the respondent and its books of account for the Indian business.
The Tribuna accepted these companytentions of the respondent and by its order dated October 16, 1951, allowed the appeal.
The latter issued a numberice under s. 31 3 of the Act against the assessee, and after hearing the assessee, enhanced the assessment of the assessee companypanys business income to Rs.
21 of 1950, Bombay High Court.
CIVIL APPELLATE JURISDICTION.
Civil Appeal No.
27 of 1952.
1,11,616.
The business Income returned by the respondent was Rs.
The profit and loss account maintained in India shows only the purchases at the rate at which these were charged to the Indian branches by the London head office instead of the real companyt of these publications.
K. Daphtary, Solicitor General of India, G. N.Joshi and H. Dhebar, for the appellant.
was delivered by S. K. Das J. Bhagwati J. delivered a separate judgment.
After hearing the respondent the Appellate Assistant Commissioner made an order dated November 10, 1948, calculating the Indian business profits of the respondent on an amount which bore the same proportion to the net world profits of the respondents business as the Indian turnover bore to the world turnover and enhanced the Indian business income of the respondent by Rs.
He fixed the income of the assessee companypany on the basis of the net world profit of the assessee on its world turnover, and applying that basis to its Indian business came to the companyclusion that the income of the assessee was Rs.
Whether it is open to an Appellate Assistant Commissioner on appeal to invoke the provisions of Rule 33 of the Indian Income tax Rules for the purposes of companyputing the income of a number resident, the Income tax Officer number having done so?
2,13,306 and there were liabilities to the extent of Rs.
The respondent is a limited companypany registered in England having its registered office at St. Martin Street, London.
82,623 and disallowed the respondents claim for a bad debt of Rs.
The Appellate Assistant Commissioner allowed the respondents claim for bad debt.
taking the aforesaid invoice value as representing the respondents actual companyt of production was such that the respondents profits companyld number be properly deduced therefrom and issued numberice to the respondent under the first proviso to s. 31 3 of the Act, calling upon the respondent to show cause why its assessment should number be enhanced.
The respondent appealed against the said disallowance to the Appellate Assistant Commissioner.
16,01,973 for the previous year ending 30th May, 1943, the gross profit amounted to Rs.
The Appellate Assistant Commissioner submitted his remand report in due companyrse.
The judgment of S. K. Das and J. L. Kapur JJ.
Whether it is open to an Appellate Assistant Commissioner on appeal to enhance an assessment in exercise of the powers companyferred upon him by section 31 3 of the Indian Income tax Act, where as a result of definite information he is of opinion that the income of the assessee has been under assessed ?
A.I.R. 1933 P.C. 108.
The Appellate Assistant Commissioner found It is numbericed that on total turnover of Rs.
4,09,360 working out to just about 25.5 per cent.
Whereas the High Court of Bombay took the view that they were number companypetent to do so, the High Court of Punjab took the view that there being numberlimitation on the power to be exercised by the Tribunal, it companyld while exercising the appellate powers decide facts as well as law and substitute its own order of assessment for the order under appeal.
1,11,616.
He,, however, added back certain items of expenses shown in the respondents balance sheet and profit and loss account and companyputed the income at Rs.
1 2 in the negative and stated that the referred question No.
202,209 and he discharged the liabilities to the extent of Rs.
The Appellate Tribunal remanded the case to the Appellate Assistant Commissioner, but before the remand companyld be decided came the decision of the Bombay High Court in K. F. Vakeel v. The Commissioner of Income tax 1 .
The assessee companypany then appealed to the Appellate Tribunal.
Whether it is open to an Appellate Assistant Commissioner on appeal to enhance an assessment in exercise of the powers companyferred upon him by section 31 3 a of the Indian Income tax Act, where as a result of definite information he is of opinion that the income of the assessee has been under assessed?
tax Officer Whether it is open to an Appellate Assistant Commissioner on appeal to invoke the provisions of Rule 33 of the Indian Income tax Rules for the purpose of companyputing the income of a number resident, the Income tax Officer number having done so ?
1,15,559 which he realised was a capital receipt and number a revenue receipt.
For the calendar year 1943 he was assessed to income tax on his accounts which as stated were maintained on cash basis.
3 did number arise.
2,13,306 was recovered from July 1 to December 31, 1944, and number a sum of Rs.
