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Additional Commissioner of Income-tax, Mysore Vs. M.S. Caro - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtMumbai High Court
Decided On
Case NumberIncome-tax Reference No. 113 of 1974
Judge
Reported in(1984)38CTR(Bom)185; [1985]151ITR39(Bom); [1983]15TAXMAN530(Bom)
Acts Income Tax Act, 1961 - Sections 256(2)
AppellantAdditional Commissioner of Income-tax, Mysore
RespondentM.S. Caro
Excerpt:
direct taxation - taxation concession - section 256 (2) of income tax act, 1961 - taxation concession as per taxation concession order was demanded by assessee-firm - concession refused on ground that no business carried on by assessee-firm before appointed day mentioned in order - reconsideration of facts demanded by revenue - court refused to reconsider facts on ground that facts cannot be reconsidered at stage of hearing of reference - facts found by tribunal that business was carried by assessee-firm before appointed day mentioned in order upheld - taxation concession granted. - .....taxation concession as envisaged in para. 9 of the dadra and nagar haveli and goa, daman and diu (taxation concessions) order, 1964, for the assessment year 1964-65 ?'2. the reference arises out of the assessment made for the assessment year 1964-65. the assessee is a partnership of four persons doing business in wholesale and retail sale of cloth and surgical goods. a deed of partnership was entered into on march 31, 1964. it recited that the business of the partnership firm had been running from april 1, 1963, and the deed was deemed to have come into operation from that day. relying upon the deed of partnership and a deed of partition made on july 22, 1962, the assessee claimed that it was entitled to the concession provided for under the dadra and nagar haveli and goa, daman and diu.....
Judgment:

Bharucha, J.

1. This reference under s. 256(1) of the I.T. Act, 1961, is made at the instance of the Additional Commissioner of Income-tax, Mysore, Bangalore, and poses this questions :

'Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the assessee-firm was carrying on business before the appointed day and, hence, was entitled to the taxation concession as envisaged in para. 9 of the Dadra and Nagar Haveli and Goa, Daman and Diu (Taxation Concessions) Order, 1964, for the assessment year 1964-65 ?'

2. The reference arises out of the assessment made for the assessment year 1964-65. The assessee is a partnership of four persons doing business in wholesale and retail sale of cloth and surgical goods. A deed of partnership was entered into on March 31, 1964. It recited that the business of the partnership firm had been running from April 1, 1963, and the deed was deemed to have come into operation from that day. Relying upon the deed of partnership and a deed of partition made on July 22, 1962, the assessee claimed that it was entitled to the concession provided for under the Dadra and Nagar Haveli and Goa, Daman and Diu (Taxation Concessions) Order, 1964. The ITO did not permit the concession. The assessee preferred and appeal. Upon the basis of the material placed before him, the AAC held that the assessee had proved that the same entity had been carrying on business prior and after the appointed day under the Taxation Concessions Order and was entitled to the concession thereunder. The Revenue appealed to the Tribunal, which agreed with finding of the AAC and confirmed it. Upon the application of the Revenue, this reference is made.

3. Mr. Joshi, learned counsel for the Revenue, contended, first, that there was no material before the Tribunal which justified its conclusion that the assessee was carrying on business before the appointed day under the Taxation Concessions Order. It appears to us that the frame of the question which we are required to answer precludes us from going into the facts. The question proceeds upon the basis that the Revenue had accepted the findings of the Tribunal on facts and requires the court only to opine whether, upon those facts, the assessee was entitled to the concession under the Taxation Concessions Order. We, therefore, decline to examine the evidence.

4. Mr. Joshi then submitted that the question should be reframed so that we would be enabled to decide whether the Tribunal was justified in holding that the assessee had carried on business before the appointed day. He drew out attention to the judgment of this court in CIT v. Karandikar : [1981]129ITR609(Bom) . This was a case in which the Tribunal had rejected the application for a reference, the Revenue had applied to the court under s. 256(2) and the court had reframed the question. There is a very substantial difference between the reframing of a question at the stage of an application under s. 256(2) and at the time of the hearing of the reference. In the present case, were we to reframe the question, we would have to send the matter back to the Tribunal to alter the statement of case after permitting the assessee to bring on record such documents as it had sought to produce but which were object to on behalf of the Revenue. Having regard to this and to the lapse of so many years, we decline to reframe the question.

5. Our attention was drawn to the argument of the Revenue before the Tribunal that under the local laws in existence prior to the appointed day, the concept of a partnership was unknown, that the Partnership Act had been extended to Goa only with the effect from March 15, 1964, and that it would, therefore, be wrong to hold that a partnership could have existed in Goa prior to the appointed day. The Taxation Concessions Order conferred concessions, inter alia, upon assessees who had carried on business in Goa prior to the day appointed thereunder, i.e., December 20, 1961. If it could be established that two or more persons doing business in Goa prior to the appointed day had agreed to share the profits of that business and it was carried on by all or any of them acting for all, it could be said that they were carrying on business in partnership. If it could be established that such partnership had continued to carry on business in Goa after the appointed day, it would be entitled to the concessions granted by the Taxation Concessions Order.

6. We are, therefore, of the view that the Tribunal was right, upon the facts that if found, in extending the concessions under the Taxation Concessions Order to the assessee and we answer the question posed in the affirmative, i.e., in favour of the assessee.

7. The Revenue shall pay to the assessee the costs of the reference.


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