The Tribunal has the power to pass such orders as are necessary to dispose of a case conformably to the judgment of the High Court, and this includes the power to direct the ITO to revise the assessment in respect of a particular issue, even if the High Court had not specifically directed the Tribunal to do so.

Headnote:
INCOME TAX - Assessment - Reference to High Court - Tribunal's power to pass orders - Scope - Section 66(5) of the Income-tax Act, 1922.
Fact of the Case:

The assessee, a non-resident company, was assessed to income tax for the assessment year 1942-43. The Income-tax Officer (ITO) brought to tax certain sales proceeds on the basis of accrual under Section 4(1)(c) of the Income-tax Act, 1922, and also certain receipts in British India under Section 4(1)(a) of the Act. The assessee appealed to the Appellate Assistant Commissioner (AAC) and the Tribunal, both of whom upheld the ITO's order. The assessee then filed a reference to the High Court, which answered the questions referred to it in the negative, holding that the sales proceeds were not taxable under Section 4(1)(c). The Tribunal, on remand, directed the ITO to revise the assessment in respect of the sales proceeds, considering whether Section 4(1)(a) was applicable to a part of the proceeds received in British India.
Finding of the Court:

The High Court held that the Tribunal had jurisdiction to pass the order directing the ITO to revise the assessment, as it was necessary to dispose of the case conformably to the High Court's judgment. The Court also held that the Tribunal was not circumventing the Supreme Court's judgment, which had held that a direction given by the High Court in regard to the sum of Rs. 5,80,069/- was "uncalled for". The Court further held that the Tribunal was not considering a new case put forward by the Department, as the Department's case had always been that the sum of Rs. 5,80,069/- was received in British India and was, therefore, taxable under Section 4(1)(a).
Issues: 1. Whether the Tribunal had jurisdiction to pass the order directing the ITO to revise the assessment in respect of the sales proceeds, considering whether Section 4(1)(a) was applicable to a part of the proceeds received in British India? 2. Whether the Tribunal was circumventing the Supreme Court's judgment, which had held that a direction given by the High Court in regard to the sum of Rs. 5,80,069/- was "uncalled for"? 3. Whether the Tribunal was considering a new case put forward by the Department?
Ratio Decidendi: 1. Section 66(5) of the Income-tax Act, 1922, empowers the Tribunal to pass such orders as are necessary to dispose of the case conformably to the judgment of the High Court. 2. The Tribunal's order was not an attempt to circumvent the Supreme Court's judgment, as the Supreme Court had only held that the High Court's direction in regard to the sum of Rs. 5,80,069/- was "uncalled for", and not that the Tribunal could not consider the issue of whether the sum was taxable under Section 4(1)(a). 3. The Tribunal was not considering a new case put forward by the Department, as the Department's case had always been that the sum of Rs. 5,80,069/- was received in British India and was, therefore, taxable under Section 4(1)(a).
Final Decision: The High Court dismissed the assessee's petition, holding that the Tribunal had acted within jurisdiction in making the order directing the ITO to revise the assessment.

Judgment

1. The assessment proceedings out of which this petition for a writ arises have had a chequered career, and what is sought to be challenged on this petition now is an order made by the Appellate Tribunal under Section 66 (5) of the Income-tax Act after the High Court had answered certain questions referred to it.

2. The assessment year with which we are concerned is the year 1942-43 and the accounting, year was the calendar year 1941. The assesses company carried on business in the Holkar State at Indore and was assessed in the status of a non-resident company. During the accounting year it had sales of cloth amounting to Rs. 50,33,183/- and the company itself supplied to the Income-tax Officer an analysis of these sales which the Income-tax Officer by his order accepted. It is essential to set out that analysis in order to understand the contentions of the parties that arise for determination of this writ petition:

It will be noticed that in this table the total sales under items V and VII are Rs. 6,02,911/- and Rs. 4,21,873 respectively. Both these items were subjected to tax by the Income-tax Officer on the basis that the income accrued in British India and, therefore, Section 4 (1)(c) was attracted. Indeed, these two items were included in the first seven items in the statement given above, the total of which is Rs. 12,74,751/- and these entire sales were held to be taxable under Section 4 (1)(c) on the basis of accrual. The I.T.O. also brought to tax the two amounts of Rs. 9,57,687/- and Rs. 1,37,470/- appearing in the third and fourth columns of the statement under item VIII as receipts in British India under Section 4 (1)(a). Against this order of the Income-tax Officer, there was an appeal to the A.A.C. The appeal was unsuccessful. There was a further appeal to the Tribunal. That again was unsuccessful and out of the order of the Tribunal the two following questions were referred to this Court on the 25th of November, 1950:

(1) Whether the profits on the sale of goods to the Government of India accrued or arose in British India?

(2) Whether the profits on the sale of goods through the companys paid employees in British India accrued or arose in British India?

It will be noticed at once that these two questions relate to the two amounts of Rs. 4,21,873/-and Rs. 6,02,911/- respectively. The reference was heard by the Chief Justice and myself on the 29th August, 1951 and by our judgment we held that the sales of Rs. 4,21,873/- took place at Indore and the sale proceeds were received at Indore, but the statement of the case did not enable us to determine where the contracts were accepted. We then pointed out the importance of knowing the place where the contracts were entered into and referred the matter back to the Tribunal to dispose of the matter on the basis of our judgment. With regard to the sum of Rs. 6,02,911/- we held that the Tribunal had omitted to take into account various documents and we directed the Tribunal to take them into account and to decide the matter themselves. In the course of the judgment of the Division Bench delivered by the learned Chief Justice, it was also pointed out that the I.T.O. had found that a sum of Rs. 5,80,069/- out of the sum of Rs. 6,02,911/- had been actually received in British India and this fact appeared to have been completely overlooked by the Tribunal. We, therefore, directed the Tribunal that they should take this fact into account upon remand. Against this judgment of the Division Bench, there was an appeal to the Supreme Court and their Lordships of the Supreme Court were pleased to hold that this Court was in error in requiring the Tribunal to dispose of the matter themselves instead of asking for a supplemental statement of the case; they also held that the direction that this Court had given in regard to the sum of Rs. 5,80,069/- was "uncalled for". Thereafter a supplemental statement was submitted by the Tribunal to this Court and the reference was heard again by

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Judicial Analysis