This is an application under section 66 (2) of the Income-tax Act praying for a mandamus directing the Income-tax Department to state a point of law for the opinion of this court.
A preliminary objection has been raised on behalf of the respondent to the effect that four applications should have been made, because the point of law arises in four distinct matters, three of them relating to assessment of income-tax and one to excess profits tax. There is some force in this objection, but in view of our decision on the merits of the case it is scarcely necessary to deal with this matter in greater detail.
On merits the facts briefly are that the respondent assessee is a joint Hindu family firm whose main business was purchase and sale of cloth. It appears that they were also doing some other activities from which income was being derived, e.g., money lending and speculation in bullion. In 1939 this family purchased two plots near its own residential house and constructed buildings upon them. Later on four more plots were purchased and then a few more. The total number of plots purchased was 21, and some of these plots were sold after 1946 at considerable profit. The total profits according to the assessee is stated to be Rs. 72,830. The income-tax authorities included this income for the purposes of assessment of income-tax. The contention raised on behalf of the assessee was that this was not income, because dealing in property was not their ordinary business and these plots had not been purchased with a view to selling them as part of business for the purposes of making profits but merely for the purpose of making an investment, because at that time conditions in the country were disturbed and foreign invasions were anticipated. This contention was upheld and the Income-tax Appellate Tribunal finally held that the amount which constituted the profits from these plots could not be included for the purposes of determining the income-tax due from the assessee. The income-tax department applied to the Tribunal for the statement of the following question of law :
'Whether there was material on which the Tribunal could find the purchases and sales of plots of land by the assessee were in the nature of investments (of a non-trading nature) and realisations thereof, and not ventures in the nature of trade ?'
The Tribunal held that this was not a question of law and rejected the application of the department. Upon this the present petition was made to this court under section 66 (2) of the Income-tax Act.
It has not been contended that there is no material on record upon which a finding one way or the other could have been arrived at. In this case the Income-tax Appellate Tribunal considered all the evidence in the case and took into consideration the circumstances attending these transactions. It finally came to the conclusion that upon this material it could not be held that these transactions were in the nature of property business. A positive finding was given to the effect that the purchase of these plots constituted investments made by the assessee family.
The question whether there is or there is not material to sustain the finding is generally considered to be a question of law, but all the reported cases show that the question of law arose when the High Court was of the opinion that there was really no evidence whatsoever upon which a positive finding holding the assessee liable in respect of certain transactions could be arrived at. Not a single ruling of the other kind or a converse case has been cited before us in which it was held that although there was some material before the income-tax authorities and upon a consideration of that material a negative finding in favour of the assessee was arrived at, the High Court could hold this to be a question of law in order to re-examine the whole case. The reason for this is that where the High Court takes the view that there is no evidence (and this can easily be determined from the record), then it will be a question of law that in the absence of such evidence no finding against the assessee could have been arrived at. But in the contrary case, where there is some material and the existence of such material is admitted on all sides, then the finding which is arrived at is a pure finding of fact depending upon the assessment of evidence produced before the income-tax authorities. In such a case even though the findings are wrong, it is not a case which can be examined on a mandamus issued to the department, as an erroneous finding of fact can never be considered to be a question of law. Where a finding has been arrived at, then it is clearly a question of fact.
In this view of the matter, the decisions which have been cited before us, Asu De v. Commissioner of Income-tax, Californian Copper Syndicate (Limited and Reduced) v. Harris and Behari Lal Jhandu Mal, In re, are not really in point. We accordingly find that no question of law arises in the present case and dismiss the application. In the circumstances of the case, however, we make no order as to costs.