TMI Blog1963 (1) TMI 48X X X X Extracts X X X X X X X X Extracts X X X X ..... pplications arose out of the several assessments made in respect of the aforesaid three funds for the assessment years 1953-54, 1954-55, 1955-56 and 1956-57, the relevant accounting years being the financial years ending 31st March, 1953, 1954, 1955 and 1956 respectively. The facts giving rise to certain questions of law which have been referred to us are, generally speaking, similar, and are identical in so far as they relate to each of the funds mentioned above with respect to the several years of assessment thereof and this is how a consolidated reference has been made by the Tribunal. The questions thus referred to us are as follows: (1) Whether the appeals preferred by the sole trustee to the Appellate Assistant Commissioner against the assessment orders as made by the Income-tax Officer for the assessment years 1953-54, 1954-55, 1955-56 and 1956-57 in respect of No. 1 and No. II Trust Funds were incompetent to him and, consequently, the appeals filed to the Tribunal from the Appellate Assistant Commissioner's resulting orders were incompetent? (2) Whether a trust was in existence at any time material to the assessment years 1953-54, 1954-55, 1955-56 and 1956-57 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ollows: 'Shriji' as the Dewan of Shri Parameshwarji shall be the temporal Head of the State and his person being sacred shall not be subject to any process of law. Clause (1) of article II defines Shri Parameshwarji as the Sovereign of Mewar whose sole representative was Shriji who as such shall exercise on His behalf all rights, authority and jurisdiction which appertains to or are incidental to such sovereignty except in so far as may be otherwise provided for by or under this Constitution or as may be otherwise directed by Shriji. To implement clause 15 referred to above, Maharana Bhupalsinghji as the ruler of the State issued an order No. 9165 dated the 23rd April, 1948, by which he directed the Accountant-General of the State to pay ₹ 2,25,000 out of the State treasury to his household (see annexure A ). By another order No. 9472 dated the 28th April, 1948 (annexure B ), Maharana Bhupalsinghji directed the Accountant-General to pay a further sum of ₹ 7,75,000 to his household, debiting the same to the State, for the creation of a Civil List Reserve Fund and Education Fund. It appears from annexure C , Order No. 2Y 1/3 dated the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... een found that the income arising from this fund was throughout shown as included in the income of the deceased for purposes of making assessment under the Income-tax Act. It may also be mentioned at this place that the recovery of the sum of ₹ 3,00,000 from the applicant being the successor of Maharana Bhupalsinghji was ordered to be waived by the Rajasthan Government in consultation with the Government of India: vide annexure E dated the 13th July, 1956. Thereafter on 22nd April, 1957, the applicant made three distinct declarations, namely, annexures D , E and F , with respect to the three funds, by which he declared that the various sums which were set apart for the several funds, together with accretions thereof, shall be held on trust and utilised for the education, marriage, maintenance and for the moral and material upliftment of his three children, and that the amount of the said funds shall belong equally to them. The income-tax authorities have found that these declarations do not and cannot have a direct bearing on the questions raised by this reference as they pertain to the period subsequent to the assessment years with which we are concerned. The questi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Appellate Assistant Commissioner agreed with the Income- tax Officer that no trust had at all been created by Maharana Bhupalsinghji with respect to No. II Trust Fund and, therefore, refused to interfere with the order of assessment made by the Income-tax Officer with respect to that fund and dismissed the appeals relating to it. He, however, found that trusts were validly created with respect to the remaining two funds; yet he rejected the applicant's contention that the individual shares of the three beneficiaries were determinate or known qua these two trusts, and so after giving notice for enhancement under the first proviso to section 31(3) he eventually held that the income of these two funds should be taxed in the hands of the applicant at the maximum rate of income-tax and in accordance with the first proviso under section 41(1) and directed the Income-tax Officer to modify the assessments for the four years under appeal accordingly. The applicant then went in appeal from the aforesaid orders to the Income-tax Appellate Tribunal, Bombay Bench B. It was contended before the Tribunal that a trust had been created with respect to No. 11 Fund also prior to the declarat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stions in the foregoing part of our judgment and need not repeat them here. As already stated, questions Nos. 2 and 3 have been referred at the instance of the applicant, while question No. 1 has been referred at the instance of the department. Now this first question relates to the competence of the appeals filed by the applicant before the Appellate Assistant Commissioner against the orders of the Income-tax Officer with respect to No. 1 Trust Fund and No. 11 Trust Fund for the several years of assessment, that is, 1953-54, 1954-55, 1955-56 and 1956-57, and the consequent incompetence of the appeals filed to the Tribunal against the orders of the Appellate Assistant Commissioner relative to them. As it has transpired, the Tribunal has referred this question to us for answer without itself deciding it when the point was admittedly raised before it on behalf of the department. The first question which, therefore, strikes us in this connection is whether in view of the failure of the Income-tax Appellate Tribunal to decide this question, the present reference is proper and valid. Consequently, we called upon learned counsel for both parties to satisfy us on the point that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Co. v. Commissioner of Income-tax [1957] 31 I.T.R. 82. It was there held, relying on an earlier decision of the same court that, no matter, whoever may be a party who asks for a reference, once it is decided to be made by the Tribunal, all questions of law which arise out of the order of the Tribunal can be referred to the High Court for its determination, and that such questions may be suggested not only by the party which wants a reference but by the party which is content with the decision of the Tribunal. It was further held that once the decision of the Tribunal is assailed and is required to be brought before the High Court, there is no reason why the party that loses should be given the sole or exclusive right of suggesting questions of law that arise from the order of the Tribunal, but it should be equally open to the winning party to point out to the Tribunal that certain other questions of law also arise from its order and that these may well be considered by the High Court. The ratio underlying this view has been stated by Chagla C.J. as follows: It is obvious that there may be cases where a winning party would be seriously prejudiced if it was pre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re was disagreement between the High Courts in our country, namely, whether it is competent to the Tribunal or the High Court to decide a question of law which was not either raised before the Tribunal or decided by it where it arises on the facts found by it. Their Lordships held, disagreeing with the view expressed in Madanlal Dharnidharka v. Commissioner of Income-tax [1948] 16 I.T.R. 227 and approving that adopted in Abboy Chetty Co. v. Commissioner of Income-tax [1947] 15 I.T.R. 442 on a balance of all the relevant considerations that they were unable to construe the words any question of law arising out of such order as meaning any question of law arising out of the findings in the order of the Tribunal, but they properly mean a question of law which must have been raised before the Tribunal and considered by it. Then their Lordships summed up the law in the following four propositions: (1) When a question is raised before the Tribunal and is dealt with by it, it is clearly one arising out of its order. (2) When a question of law is raised before the Tribunal but the Tribunal fails to deal with it, it must be deemed to have been dealt with by it, and is, therefore, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unal to make one, and the jurisdiction of the court to decide it are all co-extensive and, therefore, a question of law which the applicant cannot require the Tribunal to refer and one which the Tribunal is not competent to refer to the court, cannot be entertained by the court under section 66(5). In view of the above considerations, we are unable to construe the words, any question of law arising out of such order , as meaning any question of law arising out of the findings in the order of the Tribunal. That being so, it seems to us to follow that a Tribunal cannot legitimately ask for advice on a question which it was called upon to consider but which it deliberately refused to decide although it had an opportunity of deciding it. This appears to us to be a legitimate extension of the view contained in the observation of the Supreme Court which we would, with respect, repeat here [1961] 42 I.T.R. 589, 609: How can it be said that the Tribunal should seek for advice on a question which it was not called upon to consider and in respect of which it had no opportunity of deciding whether the decision of the court should be sought? If we may adopt the phrase ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the question referred to it. Turning then to paragraph 14, we find that one of the points mentioned thereunder is that the departmental representative had raised a contention before the Tribunal that since there were no assessments made upon the sole trustee in regard to No. 1 and No. II Trust Funds, appeals filed by the sole trustee to the Appellate Assistant Commissioner were not competent, and consequently the appeals filed from orders passed by the Appellate Assistant Commissioner to the Tribunal were incompetent. Then certain points raised on behalf of the assessee have been mentioned. We cannot help thinking that the attitude adopted by the Tribunal that it will be still open to it to decide the question of the maintainability of the appeals, assuming of course that we may decline to answer this question ourselves as not properly or fairly arising out of the order of the Tribunal--after we have decided the other points raised in the reference--seems to us to be in the nature of putting the cart before the horse. Again, suppose that we decide to decline to answer the first question but answer the other questions referred to us, then it would be open to the Tribunal to d ..... X X X X Extracts X X X X X X X X Extracts X X X X
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