TMI Blog1973 (4) TMI 6X X X X Extracts X X X X X X X X Extracts X X X X ..... ch order ? (2) If the answer to question No. 1 above be in the affirmative, whether, on the facts and in the circumstances of the case, the Tribunal exercised its discretion judicially in not allowing the applicant's petition for raising the additional grounds ? (3) Whether, on the facts and in the circumstances of the case, the Tribunal erred in dismissing the appeal summarily on the grounds stated in its appellate order dated September 3, 1964 ?" The High Court answered the first question in favour of the assessee and came to the conclusion that it was unnecessary to answer the remaining two questions. Mr. Manchanda, learned counsel for the revenue, did not seek to get any answer from us on questions Nos. 1 and 2. His arguments were confined to question No. 3. The material facts of the case as could be gathered from the case stated by the Tribunal are as follows : Herein we are concerned with the assessment of the assessee for the assessment year 1947-48, relevant accounting year being the financial year 1946-47. The assessee-company floated a subsidiary company named Messrs. Clive Row Investment (Holding) Co. Ltd. during the relevant previous year and transferred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... For that the learned Appellate Assistant Commissioner ignored the principle that in the cases of the present type the sum to be taken for the disposal of the stock-in-trade of the assessee is not what the assessee has chosen to treat as his receipt but what he would normally have received for it in the due course of trade." He did not plead that the order of the Appellate Assistant Commissioner was incorrect in law and, therefore, should be set aside. It appears that at the hearing the counsel for the assessee took the plea that, as the Income-tax Officer had not taken the ground that the order of the Appellate Assistant Commissioner was not in accordance with law and consequently it should be set aside, the Tribunal could not grant the relief asked for by the Income-tax Officer. At that stage, as seen from the records, the Income-tax Officer applied for amending his appeal memo, but that prayer was rejected by the Income-tax Appellate Tribunal. Ultimately, the Tribunal dismissed the appeal of the Income-tax Officer summarily on the ground that necessary pleas have not been taken. Thereafter, at the instance of the revenue, the questions, set out earlier were referred to the Hig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t out in the head-note are: a limited company sold certain goods showed in its stock-in-trade to its managing agency firm and to another firm in which one of its directors was interested. The sales in question were held to be bona fide sales. At the same time it was held that the goods were sold at a concessional rate. The Income-tax Officer sought to tax the assessee therein after computing the profits earned by that firm on the basis of the market price of the goods sold and not the actual price at which those goods were sold. The assessee challenged the said basis. The Tribunal upheld the contention of the assessee. It came to the conclusion that the assessee had, in reality, made no profits at all. The High Court agreed with the conclusion reached by the Tribunal. It opined that, in the absence of any evidence to show either that the sales were sham transactions or that the market prices were in fact paid by the purchasers, the mere fact that the goods were sold at a concessional rate to benefit the purchases at the expense of the company would not entitle the income-tax department to assess the difference between the market price and the price paid by the purchasers, as profit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... subsidiary to earn some profits, such a course is not impermissible under law. Mr. Manchanda contended that a person should not be allowed to adopt a device by which he gives up something through the right hand and receives the same through the left hand. According to him, there is no difference between the assessee and its subsidiary and, therefore, when the assessee tried to make profits through its subsidiary, we must presume that the profits were made by the assessee itself. In support of that contention he sought to place reliance on the decision of the House of Lords in Sharkey (Inspector of Taxes) v. Wernher. Therein, the assessee was a breeder of horses. She also had racing stables. She transferred some horses from her stud to the stables. In so doing she debited in her accounts only the cost of breeding the horses and not their market price. The question arose whether in computing her income the market price of those horses or merely the cost of breeding them should taken into consideration. The House of Lords upheld the contention the revenue by majority that in computing the profits of the assessee the market price of those horses should be taken into consideration. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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