Shyama Devi Sanganeria vs Commissioner of Income Tax

M. Ramakrishna, C.J.—In this reference case, the Petitioner/Assessee being aggrieved by the view taken by the Income Tax Appellate Tribunal in its order made on 26th August, 1997 in RA No. 43 (Gau) of 1997 in respect of Shrimati Shyama Devi Sanganeria v. Commissioner of Income Tax, NE Region, Shillong, has made this petition challenging the correctness and the legality of the conclusion arrived at by the appellate Tribunal in the course of its order.

The brief facts for the purpose of adjudicating this reference case are as follows:

The asseesee/Petitioner in regard to his liability to pay Income tax, sought deduction of "the sum of money payable towards electricity charges attributable towards services, as claimed within composite rent receipt during the year of assessment 1991-92. The petition u/s 154 of the Income Tax Act, 1961, hereinafter referred to as the Act, 1961, filed by the Assessee was also rejected by the assessing officer. Thereafter the matter went up before the Income Tax Appellate Authority. The appellate authority in reversal of the view taken by the Revenue, has arrived at a conclusion that the claim made by the Assessee is required to be taken into consideration for the purpose of deduction. Then the matter went upto the Income Tax Appellate Tribunal. The learned Members of the appellate Tribunal considering both the orders of the assessing authority as well as the appellate authority, have arrived at a conclusion as follows:

Having heard the rival parties and on careful consideration of the facts of the case and the findings and reasonings made by the Tribunal at para 7 of its appellate order, the matter was decided by the Tribunal on the basis of facts. The proposed questions cannot, therefore, be said to be questions of law arising out of the order of the Tribunal and referrable to the Hon''ble High Court for esteemed opinion.

(emphasis supplied)

It is this order that is called in question in this petition u/s 256(2) of the Act, 1961, for the grounds taken in the petition.

We have heard the learned Counsel on both the sides.

Dr. A.K. Saraf, learned Counsel for the Petitioner, who having taken us through the order of the appellate Tribunal, the grounds of the petition and the provisions of the law, urged the following two points:

(1) That the view taken by the appellate Tribunal is not sustainable in law since this view is contrary to the provisions of Sections 23 and 24 of the Act, 1961.

(2) The interpretation out forward by the Tribunal stating that the findings and the reasonings made by the appellate authority at para 7 in the course of its order, was based upon facts and that on the basis of facts, the question was decided, therefore, the proposed question cannot be said to be questions of law ; this finding by interpreting the provisions of law is contrary to the view taken by the Supreme Court in the case of SREE MEENAKSHI MILLS LIMITED Vs. COMMISSIONER OF Income Tax, MADRAS.,

Dr. Saraf also pointed out that even though it is stated in the course of the order made by the Tribunal mat the conclusion was reached at on the basis of the facts, nonetheless, it is a mixed question of facts and the law and, therefore, this Court may reconsider the entire facts and circumstances of the case in the light of the view taken by the Madras High Court in the case of The Commissioner of Wealth Tax, Madras Vs. Sri Venkatesa Mills Ltd., Udumalpet,

Contrary to these submissions of Dr. Saraf, the learned Counsel for the Petitioner, Mr. G.K. Joshi, learned Counsel for the Revenue, however, maintained that the conclusion arrived at by the Tribunal being clearly based upon facts of the case, there is no question of law arisen as proposed by the writ Petitioner for being referred to this Court for its opinion.

Let us examine as to whether the considerations made by the appellate Tribunal in the light of the relevant provisions of the law in relation to the deductions to be made in favour of the Assessee and that the conclusion can be said to be arrived at solely based upon facts and it does not give rise to questions of law, or not?

With a view to examine this aspect of the matter, we have gone through the provisions of Sections 23 and 24 of the Act, 1961. To reiterate, whether the claim seeking for deduction of certain sum of money payable towards electricity charge could be said to be a claim traceable to Section 23 or Section 24 of the Act, 1961?

By a careful consideration of these two Sections, we are clearly of the view that the claim as put forward by the Assessee cannot be traceable to either of these Sections.

Reliance has been placed by Dr. A.K. Saraf, learned Counsel for the Petitioner, on the ruling of the Supreme Court in Meenakshi Mills'' (supra) case stating that the observation made in this case by the Supreme Court is in favour of the Petitioner. Let us now examine the proposition of law as laid down in the Meenakshi Mills'' (supra) case.

The Supreme Court in Meenakshi Mills'' (supra) case, was called upon to examine a reference made u/s 66 of the Income Tax Act (Act XI of 1922) in regard to the findings of fact, referring to the question arising before the Supreme Court in that case as to the guiding principles to examine mixed question of law and fact. It is seen therefrom that the Supreme Court considering one of the clauses in that case, held:

A finding on a question of fact is open to attack u/s 66(1) as erroneous in law when there is no evidence to support it or if it is perverse.

Again, it further held:

When the finding is one of fact, the fact that it is itself an inference from other basic facts will not alter its character as one of fact.

Section 66 of Act XI of 1922 is identical with Section 256(2) of the Act, 1961, and, therefore, there is no difficulty to understand the propositions of law.

The proposition that an inference from facts is one of law is therefore correct in its application to mixed questions of law and fact, but not to pure questions of fact. In the case of pure questions of fact an inference from the facts is as much a question of fact as the evidence of the facts. The observations contained in some English Courts that what inference is to be drawn from the proved facts is a question of law refers to this distinction. The law as laid down by the Supreme Court interpreting the provisions of Sections 3, 42(I) read with Section 66 of Act XI of 1922, arising out of peculiar circumstances and the facts prevalent in that case, was as follows:

Findings on questions of pure fact arrived at by the Tribunal are not to be disturbed by the High Court on a reference unless it appears that there was no evidence before the Tribunal upon which they, as reasonable men, could come to the conclusion to which they have come, and this is so, even though the High Court would on the evidence have come to a conclusion entirely different from that of the Tribunal. In other words, such a finding can be reviewed only on the ground that there is no evidence to support it or that it is perverse.

In the instant case, the disputed question arising from the facts and circumstances is, whether a certain sum of money said to be payable as electricity charges, could be taken into consideration along with the rent derived from the property for the purpose of seeking deduction under Sections 23 and 24 of the Act, 1961. The appellate Tribunal has clearly held that regard being had to the findings and the reasonings made by both the authorities, the matter was decided by the Tribunal on the basis of facts. Therefore, according to them, the proposed question cannot therefore be said to be a question of law arising out of an order of the Tribunal and referable to the High Court for its opinion. Considering this aspect of the matter, we are clearly of the view that the conclusion reached by the appellate Tribunal being just and proper, we do not think it to be a case referable to this Court.

Referring to the second of the argument advanced by Dr. Saraf, learned Counsel for the Petitioner], it is seen that in the case of Commissioner of Wealth Tax, Madras v. Sri Venkatesa Mills Ltd. (supra), dealing with the liability to pay wealth tax under the Wealth Tax Act, referring to the view taken by the appellate Tribunal to refer the case to the High Court, the Madras High Court held:

On the facts and circumstances of the case, the question involved was a question of law, viz., the proper interpretation of Section 5(I) (xxi) of the Wealth Tax Act.

and therefore, directed the appellate Tribunal to refer the case to the High Court. Therefore, the facts and circumstances of the case in which the above conclusion was arrived at by the High Court of Madras, is entirely different from the facts and circumstances of this case. Therefore, mis decision is of no assistance to the Petitioner.

One more aspect of the matter which we have got to consider is that, according to Dr. Saraf in dealing with an application u/s 256(2) of the Act, 1961 a question arise where the High Court is called upon to decide whether the question sought to be referred and to be ultimately decided in favour of the Assessee, or not, the High Court has only to consider whether a question of law which may be supported by reasonable argument arise out of the order of the Tribunal.

The argument of Dr. Saraf deriving inference from the judgment is that the High Court need not go to the question u/s 256(2) of the Act, 1961 where the High Court is called upon to decide whether it is a question sought to be referred which may ultimately be decided in favour of the Assessee or not. Therefore, in the instant case, his submission is that we need not go into the question of liability of the Assessee. There is no doubt about it that u/s 256(2) of the Act, 1961, this Court has to render its opinion on the real question either on fact or on question of law referred to it and it is not our business to go into the question of liability of the Assessee while deciding whether the question sought to be decided be ultimately decided in favour of the Assessee, or not. Therefore, we need not trouble ourselves with the above question.

In view of the foregoing, we are of the opinion that the conclusion reached by the appellate Tribunal being just and proper, we need not ask the competent authority to refer the question of law, as proposed by Dr. A.K. Saraf.

Ordered accordingly.