Back
1981 Supreme(Gau) 88
GAUHATI HIGH COURT
K.Lahiri, T.C.Das, JJ.
Commissioner of Income-Tax, Shillong -Appellant
Versus
Basanta Kumar Agarwalla And others. -Respondent
Civil Rule Nos. 1(M) and 2(M) of 1981
Decided On : 19-08-1981
G.K.Talukdar, R.P.Agarwalla, D.K.Talukdar, R.L.Jain
A Tribunal is not obliged to refer a question of law to the High Court if the answer to the question is obvious or self-evident.
Headnote:
INCOME TAX - Reference to High Court - Question of law - Interpretation of Section 4 of the Indian Partnership Act, 1932 and Sections 2(23) and 64(1) (ii) of the Income Tax Act, 1961 - Tribunal's refusal to refer - Whether justified.
Fact of the Case:
The assessee, an individual, was a partner in a firm. The Tribunal held that the income of the assessee's minor sons from the firm could not be included in the computation of the assessee's total income in his individual assessment. The Revenue filed an application under Section 256(2) of the Income Tax Act, 1961, seeking a reference to the High Court on the question of whether the assessee was a partner in the firm and whether the share of profits arising in the hands of the minor sons of the assessee from the firm was rightly includable in the assessment of the assessee individual under section 64(1) (ii) of the Income Tax Act, 1961.
Finding of the Court:
The High Court held that the Tribunal was justified in refusing to refer the question of law. The Court held that the conclusion reached by the Tribunal on the interpretation of law was correct and there was no debate on the point as to the answer. The Court further held that the point of law decided by the Tribunal was not erroneous or required a second look.
Issues: Whether the Tribunal was justified in refusing to refer the question of law.
Ratio Decidendi: The High Court held that the Tribunal was justified in refusing to refer the question of law because: * The conclusion reached by the Tribunal on the interpretation of law was correct and there was no debate on the point as to the answer. * The point of law decided by the Tribunal was not erroneous or required a second look.
Final Decision: The High Court dismissed the Revenue's application for a reference.
We propose to dispose of the Rules by a common Order as they involve common questions of law and fact. These are applications U/s. 256 (2) of the Income Tax Act, for short "the Act", requiring the Income Tax Appellate Tribunal, Gauhati to refer the High Court the following purported question of law arising out of the orders of "the Tribunal".
"Whether on facts and in the circumstances of the Case and on a proper construction of Section 4 of the Indian Partnership Act, 1932, Sec. 2(23) and Sec. 64 of the Income tax Act, 1961, the assessee individual (...*1) was not the partner of the firm (...*2) and whether the share of profits arising in the hands of the minor sons of the assessee from the said firm is not rightly includable in the assessment of the assessee individual under section 64(1) (ii) of the Income Tax Act, 1961."
(We have omitted the name of the assessee *1 and the name of the partnership firm *2 as they are different in two different cases.)
2. The Tribunal has refused to refer the question on two grounds : First, the income of the minors could not be included in the computation of 'the total income" of the assessees in respect of their 'individual assessments". The learned Tribunal has held that income of the minors derived from the partnership firms in which the assessees as Kartas of their respective "HUF" were partners could not be included in the computation of the total income of the assessees in their individual assessments. The conclusions were reached on perusal of the provisions of Sec. 64(1) of "the Act". Secondly, the view taken by the learned Tribunal found support in some reported decisions of the High Court. The Tribunal reached a firm conclusion that "no question of law arises out of the order" in both the cases. On such refusal the Revenue has preferred this application under Section 256(2) of "the Act".
3. In our opinion, while considering an application under section 256(2) of "the Act" we must bear in mind that the Tribunal is the primary authority to refer a question of law arising out of its order. It is a high powered authority composed of Members having special experience and expertises. In fitness of its status, it always welcomes a decision because such a determination of the High Court on any question of law gives a stamp of finality and assists, aids and helps the Tribunal not only to decide the case in hand but also future cases of the same or similar nature. This apart the High Court exercising jurisdiction under section 256(2) ought to bear in mind that it does not exercise appellate power and jurisdiction while hearing a reference under section 259 and 260 of "the Act". Jurisdiction of the High Court is purely advisory. Apart from the assessee and the Revenue, the Tribunal is also a beneficiary of a firm decision of the High Court, on a question of law. As such, when one of the beneficiaries refuses to make a reference the High Court ought to be slow and circumspect to disturb the decision of 'the Tribunal'. However, if the Tribunal makes a patent error or fails to exercise jurisdiction vested in it by See. 256(1) of "the Act" the High Court must step in and exercise its power under section 256(2) of "the Act".
4. Bearing in mind the above principles let us proceed to consider the contentions. The common ground in both the applications is a general and vague statement that "question of law does arise out of the order" of the Tribunal and nothing more.
5. It has been urged by Mr. G. K. Talukdar, learned Standing Counsel for the Revenue that the cases involve interpretation of Section 4 of the Indian Partnership Act, 1932 and Sections 2(23) and 64(1) (ii) of "the Act".
Our attention has been drawn to Section 256(1) of "the Act” where it said that the Tribunal "shall" draw a interment of the Case and refer any question of law arising out of the order of the Tribunal''. (Emphasis added)
It has been urged that the language is mandatory and imperative. However, the learned Standin
