Sarjoo Prosad, C.J.
1. These are four applications under Section 66(2), Indian Income-tax Act. The Commercial Carrying Company (Assam) Ltd., are the petitioners in two of the cases, whereas the United Motor Transport Company Limited, Assam, are the petitioners in the other two. They are both said to be sister concerns and the points involved are common. The petitions relate to different years of assessment in the respective cases of each of the petitioners. In these applications, the petitioners have prayed that the Income-tax Appellate Tribunal be directed to show cause why it should not state a case on certain questions of law formulated in the petitions for obtaining the decisions of this Court on those questions. A notice f to show cause was issued on the Commissioner of Income-tax, Assam, and the matter has been heard afresh in the presence of the parties.
2. Mr. Iyengar on behalf of the Department has raised a preliminary objection. He contends that the applications under Section 66(1) Income-tax Act were presented to the Appellate Tribunal beyond the period of limitation prescribed by the law, and those applications being incompetent, these applications under Section 66(2) of the Act could not be entertained. The order of the Tribunal appears to have been passed on 5-3-50. A notice of the order under Sub-section (4) of Section 33, Indian Income-tax Act was served on the assessee on 5-7-1950. The applications for making a reference under Sub-section (1) of Section 66 were presented on 4-9-1950, but the fee of Rs. 100/- required under the section for each of the cases was not deposited until the 5-9-1950. Mr. Iyengar submits that the fees not having been deposited, there was no presentation of the applications in time as required by the law. According to him, although the applications themselves may have been filed in time on 4-9-50, yet there being delay in depositing the fees, there was no compliance with the requirements of the law. He contends that under Section 66 (1) (a) of the Act, Section 5, Limitation Act applies when an application to the High Court is made by an assessee either under Sub-section (2) or Sub-section (3) of that section, but there is no provision for the application of Section 5, Limitation Act to applications under Sub-section (1) of Section 66. In that view of the matter, he urges that the applications were evidently presented beyond the requisite period of limitation as prescribed in the Act, and there being no jurisdiction to extend the period of limitation, they must be taken to be barred, and liable to be rejected on that ground alone. The learned Advocate General on behalf of the assessee submits in the first place that 4-9-1950 was a Janmastami day which, according to him, was a Gazetted holiday, and, therefore, the fee of Rs. 100/- could not be deposited in the Treasury on the day in question. He submits in reply that even if the fee could be paid by cheque or cash or otherwise, there being no specific provision prescribing any particular mode of payment, the assessee could very well take advantage of the fact that the fee could not be deposited in Government treasury on account of a public holiday, and, therefore, it was open to him to deposit the fee on the next following day on which the Treasury was open, and in that view of the matter, no question of limitation arose in the ease. He further submits that the application itself having been presented in time on 4-9-1950, as required by the law, the mere fact that the fee was deposited a day later would not invalidate the presentation, and there was nothing under the law to prevent the officer or the Tribunal concerned to accept the payment of the fee even beyond that period. The Tribunal accepted the fee and seems to have raised no objection on the ground of limitation. In the circumstances, it was not open to the Department now to raise this objection here. There is undoubtedly a good deal of force in the contention of Mr. Lahiri and if It were necessary to decide the question, I would be inclined to accept his submission. Mr. Iyengar has, in support of his objection, referred to some decisions of the Allahabad High Court and a decision of the Madras High Court. It is not necessary, however, to refer to those decisions and examine their correctness or application in the present case, because of the view which I am inclined to take of these applications on their merits. For the present, therefore, I leave the question of limitation where it is and advert to the points on which the assessee has prayed for a statement of case by the Tribunal.
3. It appears that the petitioners claimed to have paid large sums of money to the Bengal Textile Agency Ltd. as premia for insurance of their cars, lorries and stores against the risks of enemy bombing. They accordingly claimed deduction under Section 10(2)(iv), Income-tax Act. The Department disallowed these deductions on various grounds. They were not satisfied that the payments in question represented genuine transactions and that in their opinion they were a mere device to transfer large sums of monies from the assessee companies to the Bengal Textile Agency Ltd., whose income was supposed to be exempt from tax, the main people in control of the two companies being the same.
4. In support of these applications, Mr. Lahiri has urged mainly four points which, according to him, are questions of law and arise for consideration:
(1) The first is--whether the Bengal Textile Agency Ltd., in the absence of any certificate of registration, could be held to be authorised to act as an insurer under the Indian Insurance Companies Act and could not undertake insurance business;
(2) Whether, in the absence of any formal contract of insurance in writing between the petitioners on the one hand and the Bengal Textile Agency Ltd., on the other, such a contract could be validly inferred to exist from the resolutions in the books of the two companies--one undertaking insurance and the other proposing such insurance;
(3) Whether there was evidence on which the Income Tax authorities could decide that the transactions were not bona fide; and
(4) Whether it was open to the Department to challenge the genuineness of these payments when the payments made to the Bengal Textile Agency Ltd., had already been taxed as revenue income in the hands of that company.
5. The first two questions are undoubtedly questions of law, but they depend upon the answer to the other questions; and the Tribunal has rightly conceded that these questions would only arise if it is held that the transactions were genuine. Mr. Lahiri, therefore, has very seriously urged that there was no evidence in the case on which the Income-tax authorities could decide that the transactions were not bona fide transactions. The grounds on which the Tribunal came to the above finding may be summed up as follows:
1. That the claim under this head was about Rs. 7 lacs during the years under assessment, yet nothing appears to have been paid to the Bengal Textile Agency Ltd., up to November, 1946. On that date, a sum of one lac of rupees is alone shown to have been paid for the first time. But there is nothing to show any further payment of the balance of six lacs of rupees even thereafter; this was incompatible with ordinary notions of business dealings.
2. That the main Directors were common in both the concerns, namely, the assessee company and the Bengal Textile Agency Ltd.:
3. That the amount of Rs. 1,00,000/- appears to have been debited to stores and block security charges accounts in a manner which did not disclose that it was on account of insurance premia although there was a separate hearing, in regard to the payment of insurance premia, in the books which snowed small payments only;
4. That it also appeared that there was no credit recorded in the books in favour of the Bengal Textile Agency Ltd. As a matter of fact, the name of this Company did not appear anywhere at all in the books of the assessee company in connection with these alleged insurance transactions;
5. The next important fact to which reference was made was that the Bengal Textile Agency Ltd., had obtained certificates from Government under Section 25 of the Indian Companies Act as a charitable institution and on that basis they claimed exemption from Income-tax in all their profits. The payment of these huge sums of money as claimed by the assessees in the name of this company, the income of which, it was believed, was free from the payment of income-tax, was merely a transfer of money with an ulterior purpose;
6. It was also pointed out that the book value of the motor vehicles on 31-12-1942 was in the neighbourhood of Rs. 1,16,000/-, for which an annual insurance premia of Rs. 2,28,000/- was being paid, out of all proportion to the value of the insured objects, the risks whereof were sought to be covered.
(8) In addition to the grounds set forth above, the Tribunal also held (8) that the Bengal Textile Agency Ltd., had no registration certificate authorising them to deal in insurance business, & that (9) there was no formal written contract of insurance between the parties as it ordinarily happens in such cases.
7. These last considerations, apart from their legal aspect, had also an important bearing on the factual probabilities of the claim to payment of insurance premia set up by the petitioners.
8. On these grounds the Department as also the Tribunal concurrently held that the alleged payments did not represent bona fide transactions. Some of the reasonings of the Tribunal have been attempted to be assailed by Mr. Lahiri. For instance, he has argued that the books were kept on the commercial basis and, therefore, even if no actual payments were made till November 1946 or thereafter, that would not very much matter. A mere debit entry without any actual payment was sufficient to incur liability. This may be so, but Mr. Iyengar rightly contends that, as pointed out by the Department, no company would undertake these risks during the bombing period without any actual payment & it was impossible to hold that in the circumstances, if the transactions were genuine, the insuring company would be satisfied merely with debit entries. Mr. Lahiri also contended that the price of cars, lorries, and taxis had gone up, much beyond their book values, during the war years, because of their scarcity; and, therefore, there was not much substance in the disproportion pointed out by the Tribunal between the book value of the goods insured, and the premium paid. Perhaps there is something in this argument of Mr. Lahiri, but then it is to be remembered that the disproportion pointed out by the Department is colossal. Anyhow, it is not for us to examine each of these reasonings of the Tribunal which are based upon their conclusions on facts as found by them upon the materials on record. It cannot be said that these conclusions are not supported by any material at all. That being so, the Tribunal had a right to come to the inference at which they have arrived, which again is an inference based on facts. There is no question of any error of law involved in coming to that finding of fact; and the contention, that there was no evidence to support the finding that the transactions were not bona fide, is without any substance. This being purely a question of fact, we cannot ask the Tribunal to state a case upon this point at all. That being so, the other two points also fall through.
9. The last point urged by Mr. Lahiri to regard to the alleged payments having been taxed as revenue income in the hands of the Bengal Textile Agency Ltd., did at first create a good deal of impression on my mind; but having examined the records carefully, I find that there is no sufficient material to support it. It was, therefore, not surprising that in dealing with this question, the Tribunal held that the question did not arise out of the Tribunal's order and could not be, there-lore, referred to this Court for consideration. Whether this payment was taxed because it was voluntarily shown as income by the Bengal Textile Agency Ltd., with a view to screen these assessees, or whether it was taxed at the instance of the Department in spite of the protests of the Bengal Textile Agency Ltd., it is difficult for us to say. It is only in the latter case that the question could be seriously urged before us on grounds of estoppel; but if the Bengal Textile Agency Ltd., of its own accord, showed this income in its return and claimed exemption from assessment on the ground that it was a company operating under Section 26, Indian Companies Act for charitable purposes, then the Department had no occasion to find out whether the amount of income shown by the assessee was or was not correct. The Department could justifiably act on the assumption that the amount of income as shown by the assessee was correct without doing anything further, and then only deal with the question whether the company was entitled to exemption from tax on the amount as claimed. Mr. Iyengar suggests that the appropriate taxing authorities will be always prepared to grant relief to the petitioners in case it is satisfactorily brought to their notice that there has been any case of double assessment. We have no reason to assume any-thing to the contrary. The point, therefore, which has been urged by the learned counsel, did not, truly speaking, arise in the case.
10. For the reasons stated above, I am satisfied that the Rules nisi obtained on these applications should be discharged; because, in my opinion, there is no question of law involved in these cases on which the Commissioner could be called upon to state a case.
11. The applications are, therefore, rejected and the Opposite Party is entitled to costs, which is a consolidated hearing fee of Rs. 200/- from each of the two sets of petitioners in respect of their respective applications.
12. I agree.
Ram Labhaya, J.
13. I agree.