Hardayal Hardy, J.
(1) This reference arises Out of an order made by the Income-Tax Appellate Tribunal, Delhi Bench on 27th September, 1960. The assessment year is 1951-52 for which She accounting year is the financial year ending on 31st March, 1951
(2) The respondent who will hereafter be described as the assessed is a company. The question referred to this Court is :--
'WHETHER on the facts and in the circumstances of the case, the loss that was to be carried forward from the assessment year 1950-51 to the assessment year in question was to be increased by Rs. 75,000.00?'
(3) The circumstances in which the case has been placed before the Full Bench arc as follows:-
In paragraph 6 of the statement of case submitted by the Tribunal it was stated : 'The department in the meanwhile went up in reference to the Hon'ble High Court on the question as to whether the afore said sum of Rs. 75,000.00 was a capital receipt or a revenue receipt to the assessed. The Hon'ble High Court by its judgment dated 15.3.1965 in l.T. Reference No. 33-D of 1960 decided the point against the assessed and held that the aforesaid sum of Rs. 75,000.00 was a revenue receipt to the assessed. The order passed by the Tribunal in the aforesaid l.T.A. No. 1324 of 1952-53 thus stood reversed.'
became necessary for the Tribunal to introduce the above paragraph in the statement of case because in Income-tax Reference No. 33- of 1960 relating to the assessment year 1949-50 in the case of the assessed and 1950-51 in the case of another company, a view contrary to that taken by the Tribunal Income-tax Appeal No. 1324 of 1952- 53 decided on 19.7.1954 was taken by the High Court of Punjab (Circuit Bench) at Delhi by its judgment dated the 15th March, 1965.
(4) In the assessment order for the assessment year 1951-52, the Incomelax Officer allowed a sum of Rs. 120,847.00 to be deducted as un-absorbed loss brought forward from the previous ..years. On appeal the Appellate Assistant Commissioner of Income-lax by his order dated 3.10.1958 was of the view that the loss to be deducted should have been Rs. 195,847.00 as per the Tribunal's decision dated 19.7.1954, in the matter of assessment year 1949-50 in Income-tax Appeal No. 1324 of 1952-53. In the aforesaid appeal the Tribunal had held that the sum of Rs. 75,000.00 included in the figure of Rs. 195,847.00 was a capital receipt. The Appellate Assistant Commissioner thereforee accepted the assessed's contention and held that a further sum of Rs. 75, 000.00 should be added to the un-absorbed loss and set of under Section 24(2) of the Indian Income-tax Act, 1922.
(5) Being aggrieved by that order the Income-tax Officer preferred an appeal to the Tribunal but in view of its decision in relation to the assessment year 1949-50 the Tribunal dismissed the appeal on 27.9.1960 holding that the order made by it was a consequential order depending on its decision dated 19.7.1954 passed in Income-tax Appeal No. 1324 of 1952-53.
(6) It transpired that against the Tribunal's decision in I.T.A. No. 1324 of 3952-53 relating to the assessment year 1949-50, the Income-tax Department moved the High Court of Punjab under Section 66(2) on the question as to whether the aforesaid sum of Rs. 75,000.00 was a capital receipt or a revenue receipt by the assessed. By its judgment dated 15.3.1965 the High Court decided the point against the assessed and held that the aforesaid sum of Rs. 75,000.00 was a revenue receipt. The order passed by the Tribunal in I.T.A. No. 1324 of 1952-53 thus stood reversed.
(7) On the above facts the Commissioner of Income-tax moved the Tribunal and asked for a statement of case being submitted to this Court on the question of law mentioned in the earlier part of this order. In the statement of case submitted by the Tribunal it was clearly stated : 'The parties agree that the facts as stated above are correct.'
(8) At the hearing of the reference, the assessed raised an objection to the statemenr appearing in paragraph 6 of the statement of case submitted by the Tribunal.
(9) It was urged that paragraph 6 of the statement of case should be ignored inasmuch as the Tribunal was not competent to include it in the statement of case. According to the learned counsel, such statement is to be based on the facts contained in the record on the date on which the appellate order was passed by the Tribunal. The appellate order giving rise to the present reference is dated 27.9.1960 while the judgemnt of the High Court of Punjab concerning the nature of the receipt of Rs. 75,000.00 in respect of an earlier assessment year was delivered or. 15.3.1965. Though the order of the Tribunal in the earlier assessment case was a part of the record when the appellate order leading to the present reference was passed, the judgment of the High Court was not a part of the record. According to Mr. Kirpal, learned counsel for the assessed, it was a subsequent event which must be ignored by the Tribunal in drawing up the statement of case.
(10) The contention on behalf of the Revenue on the other hand was that we are bound by the facts found and stated by the Tribunal in the order of reference. The statement of case was drawn by the Tribunal and it was agreed by the parties that the facts as stated in the said statement were correct. The matters recited in paragraph 6 of the H statement thereforee formed part of the statement of case and all that we were required to do was to give our opinion on the question referred to us in the light of such facts.
(11) Another contention urged on behalf of the Revenue was that in civil proceedings an appeal is a continuation of the suit and that the same principle should apply to a proceeding under the Income-tax Act.
(12) When the reference came before a Division Bench consisting of myself and my brother v.S. Deshpande J. we felt that the question should be considered by a Full Bench and that is how the question is now before us.
(13) At the very commencement of his argument, Mr. G.C. Sharma. learned counsel for the Revenue, submitted that when parties agree to a particular statement of case, the statement becomes final and this court while exercising its advisory jurisdiction has no power to vary or amend the stateement. This court is not the forum for amending or varying the statement of case. In support of his argument, reference was made to Commissioner of Income-tax, West Bengal v. Calcutta Agency Limited : : 19ITR191(SC) . Their lordships of the Supreme Court observed in that case that the statement of case prepared by the Income-tax Tribunal and submitted to the High Court for its opinion having been perused by the parties and they having no suggestion to make in respect of the same. should be taken as settled with the knowledge and approval of the parties. The jurisdiction of the High Court in the matter of income-tax reference is an advisory jurisdiction and under the Act the decision of the Tribunal on facts is final. unless it can be successfully assailed on the ground that there was no evidence for the conclusions on facts recorded by the Tribunal. The statement of case under the rules framed under the Income-tax Act is prepared with the knowledge of the parties concerned and they have full opportunity to apply for addition or deletion from the statement of that case. If the statement is approved by them, then it is an agreed statement of facts on which the High Court is to pronounce its judgment. It is thereforee clear that it is the duty of the High Court to start with that statement of case as the final statement of facts.
(14) The above observation was re-aflirmed by a larger Bench of the same Court in Kshetra Mohan-Sannyasi Charan Sadhukhan v. Commissioner ofExcise : 24ITR488(SC) where ii was said that the statement of case drawn by the Appellate Tribunal is binding on the assessed and he is not entitled to go behind the facts found by the Tribunal in the statement of case.
(15) Mr. Sharma, counsel for the Revenue also referred to another decision of the Supreme Court in Commissioner of Income-tux v. Canara Bank Limited : 63ITR328(SC) where at page 331 of the report one of the points mentioned against the Revenue was that both the original statement of case dated May 15, 1957 and the supplementary statement of the case dated August 14, 1959 were agreed statements and as such the findings of the Appllate Tribunal could not be challenged and the Revenue could not go behind the two statements of the case and challenge the finding of facts contained therein.
(16) Mr. Kirpal on behalf of the assessed however contended that what was to be seen was as to what were the material and pieces of evidence which were before the Tribunal when it heard the appeal and not the materials and pieces of evidence which came to the notice of the Tribunal after the appellate order was passed. Basing himself on a decision of Bombay High Court (Chagla C.J. and Tendolkar J.) in Industrial Development and Investments Co. Ltd. v. Commissioner of Excise Profits Tax. Bombay : 31ITR688(Bom) , Mr. Kirpal argued that where the Income-tax Appellate Tribunal is directed by the High Court to state a case the Tribunal may refer to materials and pieces of evidence to which it had not referred in its appellate order, if such materials and evidence were before the Tribunal when it heard the appeal . It cannot however support its order by requisitioning to its aid materials and evidence which were not before the Tribunal when it heard the appeal, but which were discovered by investigation after the appellate order was passed. If it refers ta such material or evidence, it is the duly of the High Court to ignore them.
(17) Another case cited by Mr. Kirpal is a decision of Calcutta High Court in Amarendra Lal Khan v. Commissioner of Agricultural Income-tax, W.Benal : 36ITR288(Cal) where Chakravartti C.J. sitting w ith Guha J. observed that the Tribunal ought to know that the findings offacts made by it, if properly made, are final; that those findings arc to be made in the appellate order; that only the facts so found are to be set out in the statement of case and submitted to the Court: that findings as made at the appellate stage cannot be added to or varied at the stage of making a reference, except that clerical errors may be corrected or some necessary clarification supplied; and that the opinion of the High Court can be sought only on the basis of the facts found by the appellate order and only on questions of law arising out of them.
(18) The decision in Industrial 'Development and Investments Co. Ltd. was approved by the Supreme Court in New Jehangir Vakil Mills Limited v. Commissioner of Income-tax, Bombay North, Kutch and Saurashtra : 37ITR11(SC) and it was said that a statement of the case is not intended for the purpose of buttressing up the order of the Tribunal or fuirther fortifying it by requisitioning to its aid material and evidence which were not before the Tribunal and are discovered by investigation after the order was passed in appeal.
(19) The same view was taken in two other cases of the Supreme Court, In Petlad Turkey Red Dye Works Co. Ltd. v. Commissioner of Income- tax, Bombay North : 48ITR92(SC) , it was said that the jurisdiction of the High Court under Section 66 of the Income-tax Act. 1922 is purely advisory and is confined to giving an opinion on a question aris- ing out of the appellate order. It has no jurisdiction to raise another question or to answer a different question. In order to answer the question raised in the statement of the case the High Court may ask for a supplemental statement, but that statement is also to be confined to the facts already on the record. The supplemental statement of the case may contain such alterations or additions as the High Court may direct but the statement must necessarily be based on the facts which are already on the record. The High Court has no power to ask for additional evidence to be taken.
(20) Likewise in Keshav Mills Co. Ltd. v. Commissioner of Income- tax, Bombay North, Ahmedabad : 56ITR365(SC) the same view was taken.
(21) On the basis of these authorities, it was contended by Mr. KLirpal that the additional fact with regard to the decision of the High Court of Punjab in I.T.R. No. 33-D of 1960 which was delivered i'n 15.3.1965 could not be taken into account when the appeal itself was dismissed by the Appellate Tribunal on 27.9.1960. It is true that this decision was rendered before the statement of case was drawn lip by the Tribunal on 24.2.1967 but since the Tribunal's order in appeal was made on 27.9.1960 this fact could not be included in the statement of case and should thereforee be ignored by us notwithstanding the 1'aci that the statement of case was agreed to by the parties and it was stated 5 hat the facts stated therein were correct.
(22) We have examined the rules regulating the procedure of the Appel- tate Tribunal. The relevant rules are called the Appellate Tribunal Rules, 1946. Rules 43 to 45 do not lay down any procedure as to how the statement of case is to be drawn. There is no provision in ihe rules for calling the parties to see the approved statement of case and to make suggestions nor is there any provision for any agreement between the parties. A convention has however developed that before a statement of case is drawn a draft statement of the case is prepared, and notices are issued to the parlies to peruse the same and to make suggestions. After the statement is perused by the parties and the suggestions have been considered by the Tribunal a statement of case is drawn up which is communicated to the assessed and the Commissioner. This convention appears to have received the approval of the Supreme Court and as such there can be no doubt that the statement is final so far as the parties are concerned. The finality however in relation to the facts found by the Tribunal at the stage of appeal and thereforee the Tribunal was fully justified in following its decision by 'n matters relating to assessments in subsequent years. But against its judgment dated 19.7.1954 the department had moved the Tribunal under Section 66(1) of the fncoine-lax Act, 1922 to refer certain questions of law to the High Court. The application was rejected by the Tribunal and the department went up to the High Court of Punjab under Section 66(2) of the income-tax Act and obtained an order from the Court to refer two questions of law.
(23) One of the questions decided by the High Court related to the Suit, of Rs. 75,000.00 which the assessed had received and the dispute was whether it was a trading receipt or partook of the nature of a capital receipt. This application could not be disposed of by the High Court till 15th March 1965. Meanwhile assessments subsequent to the assessment year 1949-50 had to be made. We do not know the date on which the assessment for the year 1950-51 was made but we were told that the assessment was made several years before the order of the High Court in Income tax Reference No. 33-D of 1960 in relation to the assessment year 1949-50 was made. In between there could be no rectification of the order made in respect of the assessment year 1950- 51 and even the period for re-assessment under Section 34 had also expired. But when the order of the High Court was made in respect of the assessment year 1949-50 the order of the Tribunal was reversed and it was held that the sum of Rs. 75,000.00 was a revenue receipt. So far as the assessment year 1950-51 is concerned the Department was perhaps remediless. But when the order of the Tribunal in respect of the assessment year 1949-50 was reversed by the High Court of Punjab the amount of Rs. 75,000.00 had to be added to the total income of the year, 1949-50.
(24) The order of High Court of Punjab was no doubt made on 15.3.1965 but with respect to the assessment year 1949-50 where the Tribunal had deleted the inclusion of Rs. 75,000.00 from the total income of the year 1949-50 and as such the loss that was carried forward from the assessment years 1949-50 to 1950-51 had necessarily to be increased by that amount. When the order of the Tribunal was set aside by the High Court and meanwhile the statement of case relating to 1951-52 had not been finalised the Tribunal could very well take notice of the judgment of the High Court holding that the aforesaid sum of Rs. 75,000.00 was a revenue receipt by the assessed.
(25) Assuming without admitting that Mr. Kirpal is right and the Tribunal could not incorporate that fact in the statement of case, but is there anything in law or practice which can stop the counsel for the Revenue from citing the High Court's decision as a precedent? It will be for us to consider whether the decision can be usefully employed in deciding the question referred to us.
(26) Mr. Kirpal contended that in Dhirajlal Girharilal v. Commissioner of Income tax, Bombay City : 78ITR657(Bom) one of the questions before a Division Bench of Bombay High Court was whether the Tribunal was right in referring to its decision in two of the assessed's appeals for the years 1947-48 and 1948-49 when dealing with the assessment years 1945-46 and 1946-47. It was held that the reference was entirely irrelevant and should not have been brought into the statement of case specially when the subsequent order had not been made on the date on which the Tribunal passed the order under reference. The statement of case should have been confined to matters arising out of the order under reference and nothing more. On the first flush the decision appears to support the argument of Mr. Kirpal but a close examination of the judgment shows that while dealing with the assessments for the years 1945-46 and 1946-47 there was obviously no justification for the Tribunal to refer to its decision in subsequent appeals relating to the assessment years 1947-48 and 1948-49 . The question in the present case is in regard to a decision of the High Court of the Punjab for an earlier year. The case has thereforee no bearing on the facts before us.
(27) Mr. Kirpal next referred to a decision of the Supreme Court in Commissioner of Income-tax, West Bengal Ii v. Saial Behari Lal Singha : 76ITR702(SC) . What had happened in that case was that three questions were referred to the High Court of Calcutta under Section 66(1) of the Incometax Act, 1922. The first two questions were referred at the instance of the assessed and the third question at the instance of the Commissioner. The High Court recorded answers on all the questions in the negative following their earlier judgments in Income-tax Reference No. 131 of 1961 and 3 of 1964 and observing that it was agreed between the parties that answers be given in the negative on all the questions subject to the final decision in appeals filed against the orders made in the Income-tax Reference Nos. 131 of 1961 and 3 of 1964 pending in that court. Their Lordships of the Supreme Court said intealia, that even with the consent of the parties, the learned Judges of the High Court could not dispose of the reference in the manner they had done. They had to record their answers and their reasons in support of the answers. Those answers were in so far as the High Court was concerned, final. They could not stand modified by reason of any judgment in other cases decided by that Court. Mr. Kirpal lastly argued that under sub-sec.(2) of Section 24 where any assessed sustains a loss of profits or gains in any year, being a previous year not earlier than the previous year for assessment for the year ending on 31st day of March 1940, in any business, profession or vocation, and the loss cannot be wholly set offunder sub-section, so much of the loss as is not set off or the whole loss where the assessed had no other head of income, shall be carried forward to the following year. In the present case, it was urged that if the loss could not be set off for the year 1950-51, it could not be carried forward to the year 1951-52 for it is only the unabsorbed loss for the previous year that alone can be carried forward. We do not agree with the learned counsel for the assessed. The requirement of sub-section(2) of Section 24 is that the loss of profits or gains should pertain to any year which is a previous year not earlier than the previous year for the assessment ending on 31st day of March 1940 which alone has to be carried forward and if the loss cannot be wholly set off under sub-section (1) the loss which is not set off or the whole loss where the assessed had no other income, has to be carried forward to the following year. While computing the loss that has to be carried forward to the assessment year 1951-52, the loss must be for a previous year which is not earlier than the previous year ending on the 31st day of March 1940. That loss has to be carried forward if it has not wholly been set off during the year 1950-51. If the figure of the loss had to be increased by Rs. 75.000.00 as a result of the decision of the High Court in Incometax Reference No. 33-D of 1960 and was not set off in the year 1950- 5] it had to be carried forward to the assessment year 1951-52. The loss obviously relates to the assessment year 1949-50 and if it had not been set offwant of final decision by the High Court, it had to be carried forward to the next assessment year so long as the business of the assessed was being continued.
(28) The result is that there is no merit in the arguments advanced on behalf of the assessed. The reference is thereforee answered in favor of the Revenue, but there will be no order as to Costs.