TMI Blog1979 (12) TMI 23X X X X Extracts X X X X X X X X Extracts X X X X ..... d for the assessment year 1963-64 ?" The assessee is a co-operative society engaged in the business of banking. We are concerned with the assessment year 1963-64, the relevant previous year ending on 30th June, 1962. The total income of the assessee was computed as under: Rs. Rs. 1. Interest on securities 21,967 Less : Property loss 6,073 ------------- 15,894 2. Business income 14,96,678 3. Other sources 29,260 ------------------ Rs. 15,41,832 ------------------ Under the head " Other sources" was included a sum of Rs. 19, being the interest from the Salem-Erode Electricity Distribution Company. The assessee had made a deposit with the said company from time to time as required by it in connection with th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t part of the trading asset or circulating capital of the assessee and that it was to be made by every consumer of electrical energy. In the submission of the department, the deposit had nothing to do with the business of the assessee in banking. The Tribunal rejected these contentions and agreed with the AAC that the sum of Rs. 19 was income from " business ". The result was that the department's appeal was dismissed. The question arising out of the order of the Tribunal has been referred to this court. In its order, in dealing with the dispute as regards the assessability of Rs. 19 either under the head " Business " or under the head " Other sources ", the Tribunal pointed out thus: " Before us it is made clear by both sides that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 2 of the Finance Act, 1963, provides for the charge of income-tax at the rates specified in Pt. I of the First Schedule to that Act. In the cases to which Paras. A, B, C and E of that Part applied and with reference to the cases falling under Paras. A, B, C and E of Pt. I, the tax has to be increased by a surcharge for purposes of the Union. In cases falling under Para. E, there is to be a special surcharge. The surcharges are to be calculated in the manner provided in the Schedule. Paragraph C prescribes the rate of income-tax at 25 per cent. on the total income in every case in which the income-tax is to be charged at the maximum rate. In the case of a co-operative society, it is not in dispute that income-tax has to be charged at the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... then in the submission of the learned counsel, the balance of the income would be a " residual income " and this income would be processed in the manner required by Para. C. It is this aspect which was submitted to be a new contention sought to be put forward by the revenue at this stage and which was objected to by the learned counsel for the assessee. The Supreme Court has elaborately considered the question of the nature of the contention that may be open to be put forward in a reference to the High Court. In CIT v. Scindia Steam Navigation Co. Ltd. [1961] 42 ITR 589 (SC), the Supreme Court has pointed out in relation to s. 66(1) of the Indian I.T. Act, 1922, which is in words identical with s. 256 of the I.T. Act, 1961, as follows (p. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amined the identical provision of the Finance Act, 1963, and has come to the conclusion that even where some income was exempt, the exemption was liable to be withdrawn by the Finance Act and that the efficacy of that exemption given under the I.T. Act may be reduced by the imposition of a new charge. At the time when the Tribunal passed its order, this decision of the Supreme Court was not available, though the Supreme Court had rendered its decision on July 28, 1975, and the Tribunal came to pass its order on October 30, 1975. However, the relevance of the interpretation placed by the Supreme Court with reference to the identical provisions of the Finance Act cannot now be open to question. As the matter before the Tribunal arose only wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Tribunal. Whether the sum of Rs. 19 is assessable under the head " Business " is not by itself the main issue. The learned counsel for the assessee relied on the decision of this court in T A. Devaki Ammal v. CED [1978] 111 TR 403 (Mad) in support of his submission that the counsel for the revenue could not be permitted to urge this point before us. In that case, the reference was on the question whether the Appellate Tribunal was justified in law in upholding the assessment of the value of the life interest in the property of the deceased. One of the contentions which was sought to be taken was that the case fell within the scope of section 7 and the other contention was that this court had also to consider whether the valuation of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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