TMI Blog1973 (9) TMI 22X X X X Extracts X X X X X X X X Extracts X X X X ..... . Talukdar, the learned standing counsel for the department, made a preliminary submission that these applications did not lie, in view of the fact that an alternative remedy was open to the petitioner, which the petitioner did not exhaust. The learned standing counsel further submitted that the Income-tax Act is a self-contained Act and that the remedies available thereunder should first be availed of before the petitioner could seek relief under article 226 of the Constitution of India. The learned standing counsel invited our attention to Champalal Binani v. Commissioner of Income-tax [1970] 76 ITR 692 (SC), where their Lordships have held : "........the Income-tax Act provides a complete and self-contained machinery for obtaining relief against improper action taken by the departmental authorities, and normally the party feeling himself aggrieved by such action cannot be permitted to refuse to have recourse to that machinery and to approach the High Court directly against the action. ......Where the party feeling aggrieved by an order of an authority under the Income-tax Act has an adequate alternative remedy which he may resort to against the improper action of the authority ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m its investments with any other co-operative society ; (iv) in respect of any income derived from the letting of godowns or warehouses for storage, processing or facilitating the marketing of commodities; (v) in repect of any interest on securities chargeable under section 18 or any income from property chargeable under section 22, where the total income of the co-operative society does not exceed twenty thousand rupees and the society is not a housing society or an urban consumers' society or a society carrying on transport business or a society engaged in the performance of any manufacturing operations with the aid of power : Provided that nothing contained in this section shall apply to a co-operative society carrying on insurance business in respect of the profits and gains of that business computed in accordance with section 44. Explanation.--For the purposes of this section, " an urban consumers' co-operative society " means a society for the benefit of the consumers within the limits of a municipal corporation, municipality, municipal committee, notified area committee, town area or cantonment." The petitioner's case, in brief, is that the securities in question a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion that the securities are part of the petitioner's circulating capital. In that case, their Lordships of the Supreme Court held : " Interest received from Government securities held by a co-operative society as its stock-in-trade qualifies for exemption under Notification No. F.D. (C. R.) R. Dis. No. 291-I.T./25 dated August 25, 1925, issued under section 60 of the Indian Income-tax Act, 1922." Their Lordships further held : " In Bihar State Co-operative Bank's case [1960] 39 ITR 114 (SC), the appellant-society carried on business of general banking and received interest on short-term deposits made by it with the Imperial Bank of India. The claim of the appellant-society for exemption from income-tax under the notification was rejected by the Tribunal. The High Court of Patna on a reference held that only the income derived from the business of the co-operative society fell within the exemption and that the exemption was not available in regard to income derived from investment of fluid assets with third parties. This court held that since the appellant-society was a bank and one of its objects was to carry on general business of banking its normal business was to deal in mon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nts may not necessarily be part of the circulating capital of a bank. A bank may conceivably have certain securities which are its circulating capital and some which are not. For example, where the funds, of a bank are lying idle and are not beng utilised by it for its banking purposes as was the case in Commissioner of Income-tax v. Canara Bank[1967] 63 ITR 328 (SC), such funds will not be part of its trading assets. In other words, any investment by a banking concern would not necessarily represent its trading assets. There may well be cases where certain funds are idle or not utilised by the bank, in which case such funds will not be trading assets. However, the proposition enunciated and relied on by the Commissioner that unless the petitioner was a dealer in securities and had been regularly buying and selling securities, it would not be entitled to the exemption under section 81, was manifestly wrong, in view of the decisions cited above. In the instant case, the petitioner had invested part of its funds under bye-law 4(b) of its rules. This reads as under : To buy and sell, for legitimate investment of the surplus funds, securities of the Government of India or the Gover ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder which a writ in the nature of certiorari can issue had been clearly laid down by their Lordships in Syed Yakoob v. K. S. Radhakrishnan, AIR 1964 SC 477, 480. In that judgment their Lordships held : " It is, of course, not easy to define or adequately describe what an error of law apparent on the face of the record means. What can be corrected by a writ has to be an error of law, but it must be such an error of law as can be regarded as one which is apparent on the face of the record. Where it is manifest or clear that the conclusion of law recorded by an inferior court or tribunal is based on an obvious misinterpretation of the relevant statutory provision, or sometimes in ignorance of it, or may be, even in disregard of it, or is expressly founded on reasons which are wrong in law, the said conclusion can be corrected by a writ of certiorari. In all these cases, the impugned conclusion should be so plainly inconsistent with the relevant statutory provision that no difficulty is experienced by the High Court in holding that the said error of law is apparent on the face of the record. It may also be that, in some cases, the impugned error of law may not be obvious or patent o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , in other words, what the statutory language means. It follows that the inference can only be regarded as an inference of fact if it is assumed that the Tribunal which makes it is rightly directed in law what the characteristics are and that, I think, is the assumption that is made. It is a question of law what is murder : a jury finding as a fact that murder has been committed has been directed on the law and acts under that direction. The Commissioners making an inference of fact that a transaction : or is not an adventure in the nature of trade are assumed to be similarly directed, and their finding thus becomes an inference of fact." In Halsbury's Laws of England third edition, volume 20, at page 696, the distinction between questions of law and questions of fact has been gone into. It has been stated therein : " The question whether or not there was any evidence for the Commissioners to support their determination of a fact is a question of law, and, where the only true and reasonable conclusion from the evidence contradicts the determination of the commissioners, the court must intervene to review their decision. Moreover where it appears to an appellate court that no pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a dealer in securities or not. The Commissioner never approached the problem in the way he should have, that is to say, whether the investments were really part of the petitioner's trading assets or not. On the contrary, we find that the Commissioner accepted the contention of the petitioner that the securities represented his trading assets, but nevertheless he found that since the petitioner was not a dealer in securities, it was not entitled to the exemption under section 81 of the Act. The learned standing counsel for the department has submitted that although the test applied by the Commissioner, namely, that the petitioner must be a dealer in Government securities in order to come within the scope of section 81 of the Act, may be wrong, the Commissioner was not incorrect in coming to the conclusion he did, inasmuch as there was nothing before the Commissioner to indicate or to support the petitioner's contention that the petitioner's investments in the Government securities were in their entirety trading assets. Accordingly, the learned standing counsel submits that even if the aforesaid test applied by the Commissioner was wrong, the matter should go back on remand to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... so, it is quite clear that his case is that the petitioner in the course of its banking business, purchased Government securities out of its circulating capital, as means of safe deposit to be withdrawn, when needed, for meeting its commitments to its constituents and depositors with the approval of the board of directors. It also appears from paragraph 15 of the application that " the petitioner has, from time to time, invested its circulating funds in Government or such other securities in accordance with its aims and objects with liberty to withdraw and encash the same for legitimate disbursement or use thereof to meet depositors' demands. The amount laid out in the purchase of Government securities and other securities cannot ipso facto be deemed to be surplus within the meaning of the eye of law or idle moneys so as to take it out of the banking business ". In the affidavit-in-opposition filed on behalf of the respondents, the position taken, however, was that ' the investments of surplus and idle funds in securities by the petitioner were merely by way of an investment of idle funds and not by way of dealing in securities as an integral part of the business of the petitione ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... law apparent on the face of the record is disclosed and a writ is issued, the usual course to adopt is to correct the error and send the case back to the special Tribunal for its decision in accordance with law. It would, we think, be inappropriate for the High Court exercising its writ jurisdiction to consider the evidence for itself and reach its own conclusions in matters which have been left by the legislature to the decisions of specially constituted Tribunals." The jurisdiction of this court in exercising its powers under article 226 of the Constitution thus extends to the quashing of an error of law on the face of the record ; it is not an appellate jurisdiction in that this court cannot make its own finding and pass an order. This court cannot vary the inferior Tribunal's order nor can it substitute its own order. We can only quash the order to the extent it is erroneous in law and, if necessary, indicate to the Tribunal the correct legal principles by which it must guide, itself. In the instant case, however, it is not necessary for us to remand this matter to the Commissioner, because there is nothing to reconsider, determine and substitute, in the light of the law set ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
