{"id":239621,"date":"1967-12-05T00:00:00","date_gmt":"1967-12-04T18:30:00","guid":{"rendered":"https:\/\/www.legalindia.com\/judgments\/commissioner-of-income-tax-vs-jubilee-mills-ltd-bombay-on-5-december-1967"},"modified":"2017-05-16T19:00:25","modified_gmt":"2017-05-16T13:30:25","slug":"commissioner-of-income-tax-vs-jubilee-mills-ltd-bombay-on-5-december-1967","status":"publish","type":"post","link":"https:\/\/www.legalindia.com\/judgments\/commissioner-of-income-tax-vs-jubilee-mills-ltd-bombay-on-5-december-1967","title":{"rendered":"Commissioner Of Income-Tax, … vs Jubilee Mills Ltd. Bombay on 5 December, 1967"},"content":{"rendered":"
Supreme Court of India<\/div>\n
Commissioner Of Income-Tax, … vs Jubilee Mills Ltd. Bombay on 5 December, 1967<\/div>\n
Equivalent citations: 1968 AIR 883, \t\t 1968 SCR (2) 539<\/div>\n
Author: V Ramaswami<\/div>\n
Bench: Ramaswami, V.<\/div>\n
           PETITIONER:\nCOMMISSIONER OF INCOME-TAX, BOMBAY CITY IBOMBAY\n\n\tVs.\n\nRESPONDENT:\nJUBILEE MILLS LTD.  BOMBAY\n\nDATE OF JUDGMENT:\n05\/12\/1967\n\nBENCH:\nRAMASWAMI, V.\nBENCH:\nRAMASWAMI, V.\nSHAH, J.C.\nBHARGAVA, VISHISHTHA\n\nCITATION:\n 1968 AIR  883\t\t  1968 SCR  (2) 539\n\n\nACT:\nIncome Tax Act, 1922, s. 23-A-Company reconstructing capital\nto write off accumulated losses and reducing capital-Whether\nlosses\tprior  to reconstruction  relevant  for\t determining\nreasonableness\t of  company  not  declaring   dividend\t  in\nsubsequent year as prescribed by s. 23-A-S. 66(5) -Procedure\nto  be followed by Tribunal after High Court deciding  ques-\ntion against the view taken by Tribunal.\n\n\n\nHEADNOTE:\nThe  respondent\t company had suffered large  losses  in\t the\nyears  prior to 1930 and in that year it  reconstructed\t its\ncapital by adjusting a debit balance of Rs. 12,75,000 in the\nprofit\tand  loss account against the paid  up\tcapital\t and\nreducing  the face value of its shares.\t For the  accounting\nyear relative to the assessment year 1948-49, the respondent\nCompany\t declared  a dividend amounting only to\t Rs.  24,750\nalthough in terms of s. 23-A of the Income-tax Act, 1922, it\nwas  prima facie liable to declare a much  larger  dividend.\nThe  Income-tax\t Officer  therefore held  that\tthe  company\nshould\tbe  deemed  to\thave  declared\ta  dividend  of\t Rs.\n3,98,798.   The respondent's appeals against this  order  to\nthe  Appellate\tAssistant  Commissioner\t and  the  Appellate\nTribunal   were\t dismissed.   The  Tribunal   rejected\t the\nrespondent's  contention  that in view of  the\tpast  losses\nsuffered by the company, it was not reasonable to expect  it\nto  declare  a\tlarger dividend.  It  held  that  after\t the\nreconstruction\tof its capital the company emerged in a\t new\ncloak of reduced capital and for the purposes of determining\nthe applicability of s. 23-A the reconstructed capital alone\nhad to be taken into account and not the original capital, a\ngreat  portion\tof  which bad been  wiped  out\tby  debiting\nlosses.\t  The High Court, upon a reference, held  that\tthe,\nloss  of Rs. 12,75,000 incurred by the company prior to\t its\nreconstruction in 1930 could be taken into consideration for\nthe purposes of the applicability of s. 23-A.\nOn appeal to this Court,\nHELD:(i)  The view taken by the Appellate Tribunal  was\nerroneous in law and the High Court had rightly answered the\nquestion referred to it in favour of the respondent-company.\nThere  is nothing in the language or context of is.  23-A(1)\nof  the Act to suggest that the expression \"losses  incurred\nin  the earlier years\" should be construed go as to  exclude\nlosses incurred prior to the reconstruction ,and to  include\nonly unadjusted or carried forward losses still\t outstanding\nin  the\t books\tof the company.\t The  section  requires\t the\nIncome-tax  Officer to take into consideration\t\"the  losses\nincurred  by  the  company  in the  earlier  years\"  or\t the\n\"smallness  of profits made\".  It is  well-established\tthat\nthe profits which are to be considered under s. 23-A(1)\t are\nthe  commercial\t or  the  accounting  profits  and  not\t the\nassessable income or the assessable profits of the  company,\nbecause\t it  is\t the commercial\t or  the  actual  accounting\nprofits which are to form the source from which the dividend\nis  to\tbe  distributed and not\t the  assessable  income  or\nassessable  profits  which  may\t have  no  relation  to\t the\ncommercial  or\taccounting  profits and which  are  not\t the\nactual source out of which the dividend could be paid.\t[544\nG-H: 545 A-C]\n540\nC.I.T.\tWest  Bengal v. Gangadhar Banerjee, 57\tI.T.R.\t176,\nreferred to.\nIf a company which has got over its losses for some years by\nadjusting them against its capital and reducing its  capital\nmakes  a profit in the subsequent year it may  theoretically\nbe in a position to distribute the whole of its profits\t for\nthat  year but it cannot be said to have acted\tunreasonably\nif  it\tchose  not to do so and retained a  portion  of\t the\nprofits\t for  the purPose of building up a  capital  reserve\nwhich  in course of time would enable the company to  regain\nits original strength of capital.  It may be that even after\ntaking\tinto consideration losses prior to a  reconstruction\nit  is possible to come to the conclusion that\tthe  company\nwas  not justified-in not declaring a larger  dividend\tthan\nthat actually declared.\t But in the present case\nthe  Tribunal had misdirected itself in law in holding\tthat\nlosses\tincurred prior to the reconstruction are  irrelevant\nfor the purpose of application of\ns.   23-A in subsequent years. [545 E-G; 546 A-B]\n(ii)The\t High  Court having rightly answered  the  question\nreferred  to  it in favour of the assessee  meant  that\t the\nTribunal  must now, in conformity with the judgment  of\t the\nHigh  Court, act under a. 66(5) of the Act, that is to\tsay,\ndispose of the case after re-hearing the respondent  company\nand  the Commissioner in the light of the evidence and\tding\nto law. [547 B-D]\nIncome-tax  Appellate  Tribunal,  Bombay  and  Ors.  v.\t SC.\nCambatta & Co.\tLtd. 29 I.T.R. 118 and Esthuri Aswathiah  v.\nThe C.I.T. Mysore, C.A. No.<\/a> 631\/1966 dated 18-4-67, referred\nto.\n\n\n\nJUDGMENT:\n<\/pre>\n
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 525 of
\n1967.\n<\/p>\n
Appeal\tfrom the judgment and order dated May 3\/4,  1963  of
\nthe  Bombay  High Court in Income-tax Reference\t No.  40  of
\n1957.\n<\/p>\n
B.   Sen and R. N. Sachthey, for the appellant.
\nS.   P.\t Mehta, S., E. Dastoor and I. N.  Shroff,  for\tthe,
\nrespondent.\n<\/p>\n
The Judgment of the Court was delivered by
\nRamaswami,  J. This appeal is brought, by certificate,\tfrom
\nthe judgment of the Bombay High Court dated May 3\/4, 1963 in
\nIncome Tax Reference No. 40 of 1957.\n<\/p>\n
The respondent-company is a limited liability company with a
\npaid  up  capital of Rs. 15,25,000\/- as on  June  30,  1947.
\nPrior  to  1930 the respondent-company\thad  suffered  large
\nlosses and in 1930 a debit balance of Rs. 12,75,000\/- in the
\nprofit\tand  loss  account  of\tthe  respondent-company\t was
\nadjusted by reducing the paid up capital.  The face value of
\nthe  Ordinary shares was reduced from Rs. 100\/- to Rs.\t10\/-
\neach  and  of Preference shares from Rs. 100\/- to  Rs.\t25\/-
\neach after obtaining the sanction of the Bombay High  Court.
\nFor  the  assessment year 1948-49, for\twhich  the  relevant
\nprevious  year\twas  the  year\tended  June  30,  1947,\t the
\nrespondent-company  was\t assessed to a total income  of\t Rs.
\n7,47,639\/-.  On that amount tax was calculated at
\n541<\/span>
\nRs. 3,27,091\/- and the balance available for distribution by
\nway of dividends for the purpose of s. 23A of the Income-tax
\nAct,  1922  (hereinafter  referred to  as  the\t‘Act’)\twas,
\ntherefore, Rs. 4,20,548\/-.  Section 23A of the Act  requires
\na  company  in\twhich  the  public  are\t not   substantially
\ninterested  to\tdeclare in the absence\tof  certain  special
\ncircumstances a dividend which would not be less than 60% of
\nthe  said  balance.  The respondent  company  therefore\t was
\nprima  facie  liable to declare a dividend of at  least\t Rs.
\n2,52,358\/- in order to escape the penal consequences of non-
\ncompliance  with  the provisions of the said  section.\t The
\nactual dividend which was declared by the respondent-company
\nwas  only  Rs. 24,750\/-.  The Income-tax  Officer  with\t the
\nprevious approval of the Inspecting Assistant  Commissioner,
\ntherefore,  applied the provisions of s. 23A of the  Act  to
\nthe  respondent-company and held that the company should  be
\ndeemed\tto have declared a dividend of Rs. 3,95,798\/-.\t The
\nrespondent-company  appealed  to  the  Appellate   Assistant
\nCommissioner of Income-tax against the order of the  Income-
\ntax  Officer but the appeal was dismissed.  The\t respondent-
\ncompany\t thereafter filed a second appeal to the  Income-tax
\nAppellate  Tribunal.  By its order dated September  7,\t1955
\nthe Appellate Tribunal confirmed the order made under s. 23A
\nof  the\t Act  and dismissed the appeal.\t  It  was  contended
\nbefore\tthe Appellate Tribunal on behalf of the\t respondent-
\ncompany\t that in view of the past losses suffered by it\t the
\nnondeclaration\tof  a  dividend larger\tthan  that  actually
\ndeclared  was not unreasonable.\t It was argued that in\tview
\nof the past losses of Rs. 12,75,000\/- it was not  reasonable
\nto   expect  the  respondentcompany  to\t declare  a   larger
\ndividend.   The\t argument  of  the  respondent-company\t was
\nrejected by the Appellate Tribunal.  It stated as follows in
\nthe course of its order:\n<\/p>\n
“It  is\t true  that company incurred large  losses  in\tpast
\nyears.\t But it reconstructed its capital in 1930.  In\tthat
\nyear,  the debit balance in the profit and loss account\t had
\nbeen  set off against the paid-up capital  thereby  reducing
\nthe   paid-up\tcapital\t  of   the   company.\t After\t the
\nreconstruction,\t the  company  emerged in  a  new  cloak  of
\nreduced\t capital.   For\t the,  purpose\tof  determining\t the
\napplicability of provision of Section 23A, in our view,\t the
\nreconstructed capital alone has to be taken into account and
\nnot the original capital, a great portion of which had\tbeen
\nwiped  out  by\tdebiting losses.   Those  prior\t losses\t had
\nalready\t been wiped out by writing off against the  paid  up
\ncapital.  They cannot now be taken for consideration.”
\nAt  the\t instance of the  respondent-company  the  Appellate
\nTribunal  referred  the following questions of law  for\t the
\nopinion of the Bombay High Court:\n<\/p>\n
542<\/span><\/p>\n
“1.  Whether  on the facts and in the circumstances  of\t the
\ncase, the Income-tax Officer was competent to pass an  order
\nu\/s.  23(1) of the Act after having allowed a rebate of\t one
\nanna  per rupee in the assessment under the proviso  (a)  to
\nparagraph  (B)\tof  Part 1 of the  Second  Schedule  of\t the
\nFinance Act, 1948 ?\n<\/p>\n
2.If  the answer to question No. 1 is in the  affirmative
\nwhether\t on the facts and in the circumstances of the  case,
\nthe  assessee company is a company in which the\t public\t are
\nsubstantially interested for the purposes of sec. 23A of the
\nAct ? and\n<\/p>\n
3.Whether  the\tloss of Rs. 12,75,000\/- incurred  by  the
\ncompany prior to its reconstruction in 1930, could be  taken
\ninto consideration for purposes of the applicability of sec.
\n23A (1) of the Act?”\n<\/p>\n
By its judgment dated March 13, 1958 the High Court answered
\nthe  first  question in the affirmative,  holding  that\t the
\nIncome-tax  Officer was competent to pass an order under  s.
\n23A(1)\tand he was not precluded from doing so by reason  of
\nhis having granted rebate to the respondent-company.  On the
\nsecond\tquestion also the High Court gave its answer in\t the
\naffirmative,  holding  that  the  respondent-company  was  a
\ncompany in which the public was substantially interested for
\nthe purpose of s. 23A of the Act.  In view of the answer  to
\nthe  second  question the provisions of S. 23A\tof  the\t Act
\nwould  not be applicable to the respondent-company  and\t the
\nthird question became academic, and the High Court  declined
\nto  answer  it.\t  The Commissioner of  Income-Tax  took\t the
\nmatter\tin  appeal to this Court which reversed\t the  answer
\nwhich  the High Court had given to question No. 2  and\theld
\nthat the respondentcompany was a company in which the public
\nwere not substantially interested for the purpose of S.\t 23A
\nof  the Act.  In view of the decision of this Court  on\t the
\nsecond\tquestion it became necessary for the High  Court  to
\nconsider  the  third  question\tand  this  Court   therefore
\nremanded  the reference to the High Court for  consideration
\nof  the\t third question.  After the remand  the\t High  Court
\nheard the reference again and by its judgment dated May 3\/4,
\n1963  answered the third question in the affirmative and  in
\nfavour\tof the respondent-company.  It was held by the\tHigh
\nCourt  that  the  losses  prior\t to  reconstruction  of\t the
\nrespondent-company  in 1930 which were set off\tagainst\t the
\npaid-up\t capital could be taken into consideration  for\t the
\npurpose of application of S. 23A of the Act.
\nSection\t 23A of the Act before its amendment in 1955, in  so
\nfar as it is material, states as follows:\n<\/p>\n
“23A.\tPower  to  assess  individual  members\tof   certain
\ncompanies-\n<\/p>\n
(1)where the income-tax officer is satisfied that in respect
\nof  any previous year the profits and gains  distributed  as
\ndividends  by  any company upto the end of the\tsixth  month
\nafter  its accounts for that previous year are\tlaid  before
\nthe company in general meeting are less than sixty per\tcent
\nof  the\t assessable income of the company of  that  previous
\nyear, as reduced by the amount of the income-tax and  super-
\ntax  payable  by the company in respect thereof\t he,  shall,
\nunless he is satisfied that having regard to losses incurred
\nby  the company in earlier years or to the smallness of\t the
\nprofit made, the payment of a dividend or a larger  dividend
\nthan  that  declared would be unreasonable,  make  with\t the
\nprevious  approval of the Inspecting Assistant\tCommissioner
\nan  order in writing that the undistributed portion  of\t the
\nassessable  income of the company of that previous  year  as
\ncomputed  for income-tax purposes and reduced by the  amount
\nof  income-tax\tand  super-tax payable\tby  the\t company  in
\nrespect thereof shall be deemed to have been distributed  as
\ndividend  amongst  the shareholders as at the  date  of\t the
\ngeneral\t meeting aforesaid and thereupon  the  proportionate
\nshare  thereof of each shareholder shall be included in\t the
\ntotal  income  of  such\t shareholder  for  the\tpurpose\t  of
\nassessing his total income
\n543<\/span>
\nProvided  further that this sub-section shall not  apply  to
\nany company in which the public are substantially interested
\nor to a subsidiary company of such a company if the whole of
\nthe share capital of such subsidiary company is held by\t the
\nparent company or by the nominees thereof.
\nExplanation.-For the purpose of this sub-section, a  company
\nshall  be  deemed to be a company in which  the\t public\t are
\nsubstantially interested if shares of the company (not being
\nshares entitled to a fixed rate of dividend, whether with or
\nwithout a further right to participate in profits)  carrying
\nnot less than twenty-five per cent of the voting power\thave
\nbeen\tallotted    unconditionally    to,    or    acquired
\nunconditionally by, and are at the end of the previous\tyear
\nbeneficially held by the public (not including a company  to
\nwhich  the provisions of this subsection apply), and if\t any
\nsuch  shares have in the course of such previous  year\tbeen
\nthe subject
\n544<\/span>
\nof dealings in any stock exchange in the taxable territories
\nor  are in fact freely transferable by the holders to  other
\nmembers of the public.”\n<\/p>\n
when  it is found that the company in which the\t public\t are
\nnot substantially interested has declared a dividend of less
\nthan 60% of the assessable income of the company as  reduced
\nby  the\t amount of income-tax and super-tax payable  by\t the
\ncompany\t in  respect  thereof for any  previous\t year.\t The
\nsection,   however,   has   provided  that   even   if\t the
\napplicability  of  the section is attracted,  the  Incometax
\nOfficer has to consider whether, having regard to the losses
\nincurred by the company in earlier years or having regard to
\nthe   smallness\t  of  its  profits,  it\t would\t have\tbeen
\nunreasonable  for the company to declare a  dividend  larger
\nthan  which  it had actually declared., The  object  of\t the
\nsection is to collect super-tax from the shareholders  which
\nwould  be payable if the company had distributed its  income
\nby  way of dividends and to discourage avoidance of  tax  by
\nfailing to distribute its income.\n<\/p>\n
On behalf of the appellant Mr. B. Sen put forward the  argu-
\nment  that as a result of the reconstruction of the  capital
\nin  1930  a  new  chapter had opened  in  the  life  of\t the
\nrespondent-company and losses which it had suffered prior to
\nthe reconstruction of its capital were irrelevant and should
\nnot  be considered for the purpose of s. 23A of the  Act  so
\nfar as subsequent years are concerned.\tIt was said that for
\ndetermining the application of S. 23A of the Act it was\t the
\nreconstructed  capital\talone and not the  original  capital
\nthat  had  to be taken into account.  It was  pointed  on,,,
\nthat   though  the  reduction  of  the\tcapital\t  had\tbeen
\nnecessitated  by lcsses suffered, the reconstruction of\t the
\ncapital\t had resulted in wiping out the losses and  starting
\nthe  company  afresh with reduced  capital  as\tits  paid-up
\nshare  capital.\t  The argument was stressed that  where\t the
\ncompany\t adjusts  losses  against the  paid-up\tcapital\t and
\nreconstructs  its  capital, the financial  position  of\t the
\ncompany and its dividend distributing capacity in subsequent
\nyears  have to be judged only by the result of\tits  trading
\nafter  reconstruction  and  not with  reference\t to  earlier
\nlosses\twhich  have  disappeared  by  adjustment.   In\t our
\nopinion,  there is no warrant, for the argument put  forward
\non  behalf  of\tthe  appellant.\t There\tis  nothing  in\t the
\nlanguage or context of s. 23A(1) of the Act to suggest\tthat
\nthe expression “losses incurred in the earlier years” should
\nbe  construed so as to exclude losses incurred prior to\t the
\nreconstruction\tand  to include only unadjusted\t or  carried
\nforward\t losses\t still\toutstanding  in\t the  books  of\t the
\ncompany.,  In  our opinion, the losses which have  been\t ad-
\njusted\tin  the\t books\tof  the\t company  at  the  time\t  of
\nreconstruction\tdo not cease to be “losses incurred  by\t the
\ncompany\t in  the  earlier years” within the  meaning  of  S.
\n23A(1).\t The section requires
\n\t\t\t    545<\/span>
\nthe  Income-tax\t Officer  to take  into\t consideration\t“the
\nlosses incurred by the company in the earlier years” or “the
\nsmallness of profits made.” It is Well-established that\t the
\nprofits\t which are to be considered under s. 23A(j) are\t the
\ncommercial or the accounting profits and not the  assessable
\nincome or the assessable profits, of the company, because it
\nis the commercial or the actual accounting profits which are
\nto  form  the  source  from which  the\tdividend  is  to  be
\ndistributed  and  not the assessable  income  or  assessable
\nprofits\t which\tmay have no relation to\t the  commercial  or
\naccounting  profits and which are not the actual source\t out
\nof which the dividend could be paid.-See C.I.T., West Bengal
\nv.  Gangadhar Banerjee(1).  On a similar line  of  reasoning
\nthe  consideration of losses in the earlier years should  be
\nmade  in the setting and context of the inquiry whether\t the
\ncompany could be regarded as acting reasonably in  declaring
\na  smaller  dividend.  It is true that as a  result  of\t the
\nlosses\thaving\tbeen adjusted against the  paid-up,  capital
\nthey  no  longer  remain as  unadjusted\t losses\t or  carried
\nforward losses but it does not mean that they cease to\thave
\nany impact on the financial position of the company in\tsub-
\nsequent years.\tEven if the company resorts to the method of
\nwiping out the losses by adjusting them against its capital,
\nthe  procedure\tresults in crippling its  finances  and\t the
\ncompany\t in  future  years may\treasonably  take  steps\t for
\nimproving  its crippled financial position.  If therefore  a
\ncompany\t which\thas got over its losses for  some  years  by
\nadjusting them against its capital and reducing its  capital
\nmakes  a profit in the subsequent year it may  theoretically
\nbe in a position to distribute the whole of its profits\t for
\nthat  year but it cannot be said to have acted\tunreasonably
\nif  it\tchose  not to do so and retained a  portion  of\t the
\nprofits\t for  the purpose of building up a  capital  reserve
\nwhich  in course of time would enable the company to  regain
\nits original strength of capital which had been crippled  by
\nthe adjustment of losses at the time of reconstruction.\t  We
\nare  therefore unable to accept the argument put forward  on
\nbehalf of the appellant on this aspect of the case.  In\t our
\nopinion, the Appellate Tribunal misdirected itself in law in
\nholding that the losses incurred prior to the reconstruction
\nof the respondent-company are irrelevant for the purpose  of
\napplication of s. 23A of the Act in subsequent years.  As we
\nhave  already  said,  the  losses  incurred  prior  to\t the
\nreconstruction\thaving been adjusted are no longer shown  in
\nthe  books of the company.  It does not, however, mean\tthat
\nthe  losses  cease  to have their effect  on  the  financial
\nposition  of  the company in subsequent\t years.\t  It  cannot
\ntherefore be said that the losses prior to reconstruction do
\nnot fall within the ambit of the expression “losses incurred
\nby  the\t company in earlier years” for the  purpose  of\t the
\napplication of s. 23A of the Act.  Such losses are  relevant
\nto  be considered even though they may not be  surviving  in
\nthe books of
\n(1) 57 I.T.R. 176.\n<\/p>\n
L2S up CI\/68-4
\n546<\/span>
\nthe company as unadjusted or carried forward losses.  It may
\nbe that even after taking such losses into consideration  it
\nis  possible to come to the conclusion that the company\t was
\nnot  justified in not declaring a larger dividend than\tthat
\nactually  declared.  But what the Tribunal has done in\tthis
\ncase is that it has refused to take such losses into account
\nat  all\t because  it  has  taken  the  view  that  by  their
\nadjustment against the capital the losses do not survive for
\nconsideration  for the purpose of the application of s.\t 23A
\nof  the\t Act.  The view taken by the Appellate\tTribunal  is
\nerroneous  in law and we are of opinion that the High  Court
\nhas  rightly answered the third question in the\t affirmative
\nand in favour of the respondent-company.\n<\/p>\n
But it is necessary to give certain effective directions, so
\nthat a mere order of dismissal of this appeal may not result
\nin  injustice.\t Section  66(5)\t of  the  Act  requires\t the
\nTribunal  on  receiving a COPY of the judgment of  the\tHigh
\nCourt to pass such orders as are necessary to dispose of the
\ncase  conformably  to such judgment.   The  section  clearly
\nimposes\t an obligation upon the Tribunal to dispose  of\t the
\nappeal in the light of and conformably with the judgment  of
\nthe  High Court.  If the High Court agrees with the view  of
\nthe  Tribunal,\tthe appeal may be disposed of  by  a  formal
\norder.\tBut if the High Court disagrees with the Tribunal on
\na  question of law, the Appellate Tribunal must\t modify\t its
\norder  in the light of the order of the High Court.  If\t for
\nexample\t the  High Court has held that the judgment  of\t the
\nTribunal is vitiated, because it is based on no evidence  or
\nbecause the judgment proceeds upon a misconstruction of\t the
\nstatute,  the  Appellate Tribunal would be under a  duty  to
\ndispose of the case conformably with the opinion of the High
\nCourt  and  on\tthe merits of the dispute,  and\t rehear\t the
\nappeal after giving notice to the parties and redetermine it
\nin  accordance with law.  In Income-tax Appellate  Tribunal,
\nBombay\tand  Ors. v.  S. C. Cambatta and Co.   Ltd.,(1)\t the
\nBombay High Court explained the procedure to be followed  as
\nunder :\n<\/p>\n
when a reference, is made to the High Court either under  s.
\n66(1)  or  section  66(2)  the\tdecision  of  the  Appellate
\nTribunal cannot be looked upon as final; in other words, the
\nappeal is not finally disposed of.  It is only when the High
\nCourt\tdecides\t  the,\t case,\t exercises   its advisory
\njurisdiction,  and  gives  directions  to  the\tTribunal  on
\nquestions  of law, and the Tribunal reconsiders\t the  matter
\nand  decides  it,  that\t the  appeal  is  finally  ‘disposed
\nof………. it is clear that what the Appellate Tribunal is
\ndoing after the High Court has heard the case is to exercise
\nits appellate powers under section
\n(1)  29T.T.R.118
\n\t\t\t    547<\/span>\n<\/p>\n
33………. The shape that the appeal would ultimately take
\nand   -the  decision  that  the\t Appellate  Tribunal   would
\nultimately give would entirely depend upon the view taken by
\nthe High Court.”‘
\nThis  passage  was  quoted with approval by  this  Court  in
\nEsthuri Aswathiah v. The C.I.T., Mysore<\/a>(1).  In the  present
\ncase,  the High Court has held, and we agree with  the\tHigh
\nCourt,\tthat  the  judgment of\tthe  Appellate\tTribunal  is
\nvitiated  in  law because it has proceeded on  an  erroneous
\ninterpretation\tof the statute.\t The High Court\t accordingly
\nanswered the third question in the affirmative and in favour
\nof  the respondent-company.  We must make it clear that\t the
\nanswer\tof  the High Court to this question means  that\t the
\nAppellate Tribunal must now, in conformity with the judgment
\nof the High Court, act under s. 66(5) of the Act, that is to
\nsay,  dispose  of the case after rehearing  the\t respondent-
\ncompany\t and the Commissioner in the light of  the  evidence
\nand according to law.\n<\/p>\n
Subject\t to  this direction, the appeal\t is  dismissed\twith
\ncosts.\n<\/p>\n
R.K.P.S.\t\t\t\t\t      Appeal\ndismissed.\n<\/pre>\n
(1) Civil Appeal No. 631 of 1966, decided on April 18, 1967.\n<\/p>\n
548<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"
Supreme Court of India Commissioner Of Income-Tax, … vs Jubilee Mills Ltd. Bombay on 5 December, 1967 Equivalent citations: 1968 AIR 883, 1968 SCR (2) 539 Author: V Ramaswami Bench: Ramaswami, V. PETITIONER: COMMISSIONER OF INCOME-TAX, BOMBAY CITY IBOMBAY Vs. RESPONDENT: JUBILEE MILLS LTD. BOMBAY DATE OF JUDGMENT: 05\/12\/1967 BENCH: RAMASWAMI, V. BENCH: RAMASWAMI, V. […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_lmt_disableupdate":"","_lmt_disable":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[30],"tags":[],"class_list":["post-239621","post","type-post","status-publish","format-standard","hentry","category-supreme-court-of-india"],"yoast_head":"\nCommissioner Of Income-Tax, ... vs Jubilee Mills Ltd. 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