judgement:
Appeal No. 9 of 1952.
Appeal from the Judgment and Order dated 2nd January, 1950, of the High Court of Judicature at Madras (Satyanarayana Rao and Viswanatha Sastri JJ.) in Case Referred No. 68 of 1946.
M. C. Setalvad, Attorney General for India, (P. A. Mehta, with him) for the appellant.
K. section Krishnaswami Aiyangar (M. Subbaraya Aiyar, with him) for the respondents.
December 22.
The Judgment of the Court was delivered by MAHAJAN J.
This is an appeal from,the judgment of the High Court of Judicature at 'Madras in a reference made by the Income tax Appellate Tribunal under section 66 (1) of the Indian Income tax Act, XI of 1922.
488 For several years prior to 1939 40 the respondents, .who are.
brothers, had been carrying on in partnership the business of " The Hindu," a daily newspaper of Madras.
The profits of this business had been charged to income tax in the hands of the respondents under the Indian Income tax Act of 1918.
The firm 's year of account was a period of twelve months ending with 30th June each year.
In respect of the profits of the year of account ending 30th June, 1938, assessment was made in the year 1939 40 and the firm was charged to income tax for that assessment year.
On 1st March, 1940, the respondents transferred their business as a going concern to a private limited company called " Kasturi and Co. Ltd." For the assessment year 1940 41 the respondents claimed that the firm was not liable to pay any income tax on the income of its business from the end of the accounting year ending 30th June, 1938, to 29th February, 1940, the date on which the limited company succeeded to the business of the firm (i.e., for a period of 20 months) under section 25 (4) of the Act, as it had been assessed under the Indian Incometax Act, 1918.
The Income tax Officer disallowed the claim and held that since the assessment pertained to the year 1940 41 the previous year with reference to that assessment would be the year ending 30th June, 1939, and the period for which exemption could be claimed under section 25(4) of the Act was the interval from the end of that previous year, i.e., 1st July, 1939, upto to the date of succession, i.e., 29th February, 1940, i.e, a period of eight months.
This order was confirmed on appeal by the Appellate Assistant Commissioner.
On further appeal the Tribunal held that on a proper construction of section 25(4) of the Act, tax was not payable by the firm in respect of the profits and accounts of the business for the whole of the period from 1st July, 1938, to 29th February, 1940, (a period of 20 months).
At the instance of the Commissioner of Income tax (the appellant) the Tribunal stated a case to the High Court and referred to it the following question for its opinion: 489 " Whether on the facts of this case, the Appellate Tribunal was right in holding that the period the profits of which were entitled to exemption from the payment of tax under section 25(4).
of the Indian .Income tax Act, 1939, was the period commencing from 1st July, 1938, and ending.
With 29th February, 1940.
" The reference was heard by Satyanarayana Rao and Viswanatha Sastri JJ.
and they delivered divergent opinions on the question referred.
Satyanarayana Rao J. agreed with the conclusion of the Tribunal and answered the question in the affirmative, while Viswanatha Sastri J. answered the question in the negative, with the result that under the provisions of the law the Tribunal 's order was confirmed, it being in accordance with the opinion delivered by the senior Judge.
Leave to appeal to this Court was granted and this appeal is before us on a certificate given by the High Court.
The principal question to decide in this appeal is whether on a true construction of section 25(4) of the Act, and on the facts stated the period the profits of which were entitled to exemption from the payment of tax is the period between 1st July, 1939, to 29th February, 1940, (a period of eight months) or the period commencing from 1st July, 1938, and ending with 29th February, 1940 (a period of 20 months).
To decide this question it is necessary to set out the relevant provisions of the Act.
Section 2(11), which defines " previous year " in so far as it is relevant for purposes of this appeal is : " (11) (a) the twelve months ending on the 31st day of March next preceding the year for which the assessment is to be made, or, if the accounts of the assessee have been made up to a date within the said twelve months in respect of a year ending on any date other than the said 31st day of March, then at the option of the assessee the year ending on the day, to which his accounts have so been made up." 490 Section 3 of the Act provides: Where any Central Act enacts that income tax shall be charged for any year at any rate or rates, tax at that rate or those rates shall be charged for that year in accordance with, and subject to the provisions of, this Act in respect of the total income of the previous year of every individual, Hindu undivided family, company and local authority, and of every firm and other association of persons or the partners of the firm or the members of the association individually.
" This is the charging section.
Section 25 of the Act makes different provisions to cover some special cases.
The parts of the section relevant to this appeal pro vide as follows: (1)Where any business, profession or vocation to which sub section (3) is not applicable, is discontinued in any year, an assessment may be made in that year on the basis of the income, profits or gains of the period between the end of the previous year and the date of such discontinuance in addition to the assessment, if any, made on the basis of the income, profits or gains of the previous year.
(3) Where any business, profession or vocation on which tax was at any time charged under the provisions of the Indian Income tax Act, 1918 (VII of 1918), is discontinued, then, unless there has been a succession by virtue of which the provisions of sub section (4) have been rendered applicable no tax shall be payable in respect of the income, profits and gains of the period between the end of the previous year and the date of such discontinuance, and the assessee may further claim that the income, profits and gains of the previous year shall be deemed to have been the income, profits and gains of the said period.
Where any such claim is made, an assessment shall be made on the basis of the income, profits and gains of the said period, and if an amount of tax has already been paid in respect of the income, profits and gains of the previous year exceeding the amount payable on 491 the basis of such assessment, a refund shall be given of the difference.
(4) Where the person who was at the commencement of the Indian Income tax (Amendment) Act, 1939 (VII of 1939), carrying on any business, profession or vocation on which tax was at any times charged under the provisions of the Indian Incometax Act, 1918, is succeeded in such capacity by another person, the change not being merely a change in the constitution of a partnership, no tax shall be payable by the first mentioned person in respect of the income, profits and gains of the period between the end of the previous year and the date of such succession, and such person may further claim that the income, profits and gains of the previous year shall be deemed to have been the income, profits and gains of the said period.
Where any such claim is made, an assessment shall be made on the basis of the income, profits and gains of the said period, and, if an amount of tax has already been paid in respect of the income, profits and gains of the previous year exceeding the amount payable on the basis of such assessment, a refund shall be given of the difference.
(6) Where an assessment is to be made under subsection (1), sub section (3), or sub section (4) the Income tax Officer may serve on the person whose income, profits and gains are to be assessed, or, in the case of a firm, on any person who was a member of such firm at the time of its discontinuance, or, in the case of a company, on the principal officer thereof, a notice containing all or any of the requirements which may be included in a notice under sub section (2) of section 22, and the provisions of this Act shall, so far as may be, apply accordingly as if the notice were a notice issued under that sub section.
" For a proper construction of section 25 it is also necessary to set out the history and object of this enactment.
Under the Act of 1918 income tax was levied on the income of the current year, i.e., the year of 492 assessment but as the income of that year could not be known till after the expiry of the year, the assessment was made on the basis of the income of the " previous year" but after the close of the assessment year an ,adjustment used to be made on the basis of the income of the assessment year.
The Act of 1922 introduced a change in this respect.
Under section 3 of the Act, 'the income of the previous year is made the subject of the charge and tax is levied on the income of the previous year though it is a tax for the assessment year.
On the passing of the Act of 1922, the previous system of assessment was kept alive for one year.
The result was that for the year 1922 23, there were two assessments, one under the Act of 1922 on the income of 1921 22 and another under the old system byway of assessment on the income of the same year 1921 22.
In other words, the income of the year 1921 22 was assessed twice, once under the Act of 1918, and again under the Act of 1922.
To remove this anomaly and in order to make the number of assessments tally with the number of years during which the business existed, section 25(3) of the Act of 1922 was enacted exempting from tax the profits for the period between the end of the previous year and the date of discontinuance in the case of a business whose profits had been assessed to tax under the Act of 1918.
There was no provision in section 25 as enacted in 1922 for giving any relief in cases of succession to a business which was taxed under the Act of 1918.
In 1939 a provision was made to extend similar relief to cases of succession and with this object section 26(2) of the Act was amended and section 25(4) was added by the amending Act of 1939.
The result of the amendment of section 26(2) and the insertion of section 25(4) is that upon a transfer of business the transferor, i.e., the person who was succeeded in the business, would get the same relief as if the business had been discontinued by him.
The scheme of the Act is that by the charging section, i.e., section 3, income tax is levied for a financial year at the rate prescribed by the annual Finance Act 493 on the total income of the previous year of every in dividual, etc.
Each previous year 's income is the, subject of separate assessment in the relative assessment year.
Though the year of assessment is the financial year, the previous year of an assessee need not necessarily be the previous financial year, for this expression is to be understood as defined by section# 2(11) (a) of the Act.
The respondents were duly assessed to tax for the year of assessment, i.e. the financial year 1939 40, on the income of the previous year ending on 30th June, 1938.
Their income of the accounting year ending 30th June, 1939, would in the ordinary course be liable to assessment in the financial year 1940 41, and the profits of the year ending 30th June, 1940, would be assessable in the financial year 1941 42.
Succession took place in the accounting year 1939 40.
Under sub section (2) of section 26, as it stood before its amendment in 1939, the person succeeding to a business was liable to tax for the year of succession, as if he had been carrying on business throughout that year and had received the profits of the whole of that year.
Thus Kasturi and Company Limited would have been liable to be assessed on the profits earned during the year ending 30th June, 1940, irrespective of the fact that actually they would have only received profits in that year for a period of four months.
After the amendment in 1939 sub section (2) of section 26 provides that the person succeeded and the person succeeding " each be assessed in respect of his actual share, if any, of the income, profits and gains of that year.
" Thus the profits of the year in which the succession occurs are to be apportioned between the predecessor and the successor according to the actual share of each in the year 's profits, the predecessor and the successor are each liable to tax at the rate applicable to each and the profits of each have to be computed separately in accordance with the provisions of section 10 and other sections and each has to be granted the deductions and allowances appropriate to his case, and 494 assessment on each has to be separate and distinct.
If the business was charged under the Indian Incometax Act, 1918, and the person succeeded is exempt from tax under section 25 (4) he would not charged in respect of the profits of the period from the end of the previous year up to the date of succession, while the person succeeding would be liable under sub section (2) of section 26 in respect of the profits earned by him after the date of succession.
The proviso to sub section (2) lays down two exceptions to the general rule that the successor is not liable to tax in respect of the profits of the period prior to the date of succession.
In two cages, namely, (1) when the predecessor cannot be found, or (2) when the tax assessed on the predecessor cannot be recovered from him, the successor is liable to pay the tax in respect of the profits of the year in which the succession took place up to the date of succession as well and further for the profits earned during the year preceding that year.
In this case if either of those contingencies arose, Kasturi and Company Limited would have been liable to pay tax on profits of the whole accounting year ending 30th June, 1939, as well as of the whole of the accounting year ending 30th June, 1940, and end of the preceding year in this context would be 30th June, 1939.
It is a question whether in this situation they would be entitled to the relief provided in section 25(4).
On behalf of the Commissioner of Income tax, Madras, the learned Attorney General contended that Satyanarayana Rao J. was in error in granting exemption to the firm from tax in respect of the profits earned during a period of 20 months and that under section 25, sub section (4), the only relief permissible was in respect of profits earned during the period of 8 months from 1st July, 1939, to 1st March, 1940.
It was said that the profits of the year of succession were liable to assessment in the usual course in the financial year 1941 42 and the Income tax Officer had no power to make an accelerated assessment in order to give relief to the persons succeeded in the business 495 and that being so, it was not right to hold that the expression " previous year" in section 25, sub section (4), was co related to the assessment year 1939 40, i.e the year in which,the succession took place or to the assessment year 1941 42 in which in the ordinary course assessment for those profits would have been made but that on a true construction of this sub section and having regard to the history of its enactment and the object for which it was inserted in section 25, the assessee firm was entitled to exemption from the payment of tax, only for the period between 1st July, 1939, and 29th February, 1940, and to no more.
It seems to us that there is force in this contention, Section 25 (4) was inserted in the Act of 1922 in the year 1939 at the same time as section 26(2) was amended.
On a plain reading of these two sections together, it is quite clear that the Income tax Officer is not empowered to make an accelerated assessment in the year in which succession occurs on the ' profits of that year, and prematurely assess the person succeeding to a business so that he may able to give ' relief to the person succeeded.
The exemption provided for its section 25 (4) and the apportionment mentioned in section 26 (2) have to be made in the assessment year in which the profits of the year of succession fall to be assessed under sections of the Act, and in this situation the end of the 'previous year in this case can, in no circumstance, be the end of the accounting year beginning 1st of July, 1937, and ending 30th of June, 1938, because the income, profits and gains of the accounting year of succession (i.e., year beginning 1st July, 1939, and ending 30th June, 1940) which have to be apportioned between the predecessor and successor of the business under section 26(2) and for which the successor becomes liable in case the predecessor commits a default, could only be assessed in the assessment year 1941 42.
The income, ' profits and gains of the accounting year beginning 1st July, 1938, and ending 30th June, 1939, for which the predecessor alone is liable in the first instance to 496 tax fall for assessment in the assessment year 1940 41.
The successor in business, in case of default by the predecessor, is also liable to pay the tax on the profits of that year as well.
What subjection (4) of section 25 provides is that when the profits of the year of succession fall to be assessed, the predecessor of a business can claim exemption from liability to pay tax on the profit earned from the end of the previous year to the date of succession, the "Previous year" here meaning the completed accounting year immediately preceding the date of succession (in this case year ending 30th June, 1939).
He can further claim that the profits earned between 1st July, 1939, to 29th February, 1940, be deemed the profits of the accounting year 1st July, 1938, to 30th June, 1939, and if on those profits in assessment year 1940 41 tax in excess of what is chargeable on the profits of this broken period has been paid, be given refund for the excess.
Truly speaking, the firm was entitled to the relief provided for in section 25(4) in the assessment year 1941 42 but the Income tax Officer was prepared to give him that in the assessment year 1940 41,and on that score the assessee can have no grievance.
Satyanarayana Rao J. held that the words " previous year " in sub . section (1) of section 25 refer to the year of account relevant to the year of assessment in which the discontinuance occurs, that the section authorises the Income tax Officer to make a cumulative assessment in respect of the profits of the period between the end of the last accounting year of which the profits have been assessed before the date of discontinuance and that date, that " sub section (3) of section 25 is an exception to the general rule contained in sub section (1) of that section, and that, though the language employed in sub section (3) does not correspond to the language employed in sub section (1) indicating that in this Sub section also the assessment year should be taken to be the year in which the discontinuance occurs, all the same there is no reason 497 to depart and to place a different interpretation on the expression 'previous year ' in this sub section$ from the one placed on sub section (1).
" On the same line of reasoning the learned Judge gave the same meaning to the expression " previous year " in subsection (4) of section 25 and as a result held that the firm was 'entitled to exemption from tax for profits earned between the 1st July, 1938, and 29th February, 1940, a period of 20 months.
Mr. Krishnaswami Aiyangar appearing for the respondents, was not prepared to support the whole of the reasoning of Satyanarayana Rao J. but he contended strenuously that the conclusion reached by the learned Judge was the only one that could be reached on a true construction of the phraseology employed in the various sub sections of section 25.
In short, his argument was that sub section (1) of section 25 confers an option on the Income tax Officer, in case of discontinuance of a business which was not assessed under the Act of 1918, to make an accelerated assessment in the year of discontinuance itself on the income, profits and gains earned up to the period of discontinuance and not assessed before in any preceding assessment year; that the expression " previous year" in the context of this sub sec tion means the end of the accounting year the profits of which have been last assessed to tax, which in this case means the year ending 30 th June, 1938.
It was further contended that any other meaning given to these words would create a hiatus and would lead to the result that on the date of discontinuance the Income tax Officer would be entitled to assess the profits of the broken period without being entitled to assess the profits of a whole previous year that had expired, the profits of which in the usual course could not be assessed in the year of discontinuance and that such a construction would defeat the very purpose of the power given by the sub section.
On a parity of reasoning it was suggested that the words "between the end of the previous year and the date of such discontinuance" in subsections (3) and (4) 498 should be given the same meaning as in sub section (1), and that the assessee should be given exemption in respect of profits earned between the 1st July, 1938, and 29th February, 1940.
It was said that the two terminals fixed for the purposes of assessment under section 25(1) were the terminals fixed for exemption from tax in section 25(3) and (4) and it would be wrong to hold that the assessment under section 25(1) could be made for a period different from that for which relief could be given under section 25 (3) and (4).
It was urged that the scope of the charge authorised by section 25 (1) was co extensive with the extent of the relief provided for in subsections (3) and (4).
Before proceeding further it is convenient to make a few observations regarding the proposition stated by Satyanarayaua Rao J. that section 25 (1) provides for cumulative assessment in cases of discontinuance of business.
The words of the section do not justify this conclusion.
They do not empower the Incometax Officer to make a cumulative assessment in respect of profits earned in two different accounting periods or entitle him to merge the profits of two years into one total sum and apply to them the rate of one of the financial years.
All that the section authorises the Income tax Officer to do is that it gives him an option to make a premature assessment on the profits earned up to the date of discontinuance in the year of discontinuance itself instead of in the usual financial year.
This assessment he is entitled to make in addition to the normal assessment for the financial year of discontinuance.
Mr. Aiyangar very rightly conceded that the construction placed on subsection(1) of section 25 by the learned Judge in this respect was not right.
As regards the main contention of Mr. Aiyangar based on the analogy of the language employed in sub section (1) of section 25, we are of the opinion that this contention is based on a fallacy and cannot be sustained.
As above pointed out, sub section (1) of section 25 merely empowers the Income tax Officer, 499 if he so chooses to do, to make an accelerated assessment in case of discontinuance of business at the time of discontinuance to save loss of revenue by the disappearance of an assessee.
In other words, the subsection imposes a liability of premature assessment on the assessee.
It confers no benefit on him.
Sub sections (3) and (4) of section 25 have a different end in ' view and are not in pari materia with sub section (1).
They are in the nature of substantive provisions intended to give relief from tax charged in certain cases.
The mere circumstance of their being grouped together with sub section (1) in section 25 cannot lead to the conclusion that the provisions therein contained are of the same nature and character as the provi sions contained in sub section (1).
Satyanarayana Rao J. was clearly in error when he held these two subsections were in the nature of exceptions to the rule laid down in sub section(1).
The truth of the matter is that it is sub section(1) itself which is an exception to the general rule laid down in the charging section of the Act, namely, section 3.
The object of sub sections (3) and (4) is to provide relief to a business for the double assessment suffered by it in the financial year 1922 23 and it is entitled to this relief in the year of assessment in which the income and profits of the accounting period in which discontinuance or succession takes place fall to be assessed.
The Income tax Officer is not authorised to accelerate the relief by making a premature assessment on these profits.
Not only is the language of these two sub sections different from the language of sub section (1), but they deal with two different categories of assessees.
Sub 'section (1) deals with a category of assessees who were never subjected to double tax, while sub sections (3) and (4) deal with that class who suffered assessment under the Act of 191.8 and paid double tax.
The liability for premature assessment imposed under section 25 (1) on the former class of assessees has feed imposed on considerations entirely different from those on which provision has been made for exemption to tax in sub sections 65 500 (3) and (4) for the other class.
In, these circumstances, such relief cannot be said to be co extensive with the liability imposed.
Moreover, the provisions of the Income tax Act in respect to exemptions and deductions cannot be construed on the 'analogy of the provisions contained in the charging sections of the Act even if the language of these provisions is similar.
Mr. Aiyangar 's contention that sub section (1) crystallizes the rights of the assessee on the date of discontinuance and that not only does it relieve him from being taxed after the date of discontinuance, but that it entitles him to further relief provided for in sub section (3) does not seem to be well founded.
Sub section (1) of section 25 confers no right of any kind on an assessee which can crystallize on the date of discontinuance and which cannot be varied subsequently to his disadvantage.
On the other hand, as already said it imposes a premature burden on the assessee which but for this sub section he could not be called upon to bear till the appropriate year of assessment was reached.
The learned Attorney General was not prepared to accept the construction placed on Sub section (1) of section 25 by Mr. Aiyangar and contended that sub section did not authorise the Income tax Officer to make an assessment in the year of discontinuance on the profits of an accounting year which had come to a close before the date of discontinuance, and that those profits had to be assessed in the usual way in the appropriate financial year, and that authority given to make an accelerated assessment only related to the broken period beginning with the end of the completed accounting year immediately preceding the date of discontinuance and ending with the date of discontinuance.
In our opinion, it is not necessary for the purposes of deciding this case to finally express an opinion as to the true meaning of the words " between the end of the previous year to the date of discontinuance " used in section 25 (1) of the Act.
After a careful consideration of the different provisions of the Act relevant to this enquiry, we have 501 reached the conclusion that the expression "end of the previous year " in sub sections (3) and (4) of section 25 in the context of those sub sections means the end of an accounting year (a period of full 12 months) expiring immediately preceding the date of discontinuance or succession, (in this case 30th.
June, 1939).
We are satisfied that Viswanatha Sastri J.".
was right when he held that having regard to the object of the legislature in enacting sub sections (3) and (4) of section 25 and having regard to the plain language of these sub sections, the assessee 's contentions could not be upheld.
We are, however, unable to subscribe to the conclusion reached by the learned Judge that the expression " previous year " in subsections (3) and (4) of section 25 was co related to the year of assessment 1940 41.
The profits of the year of discontinuance could not, according to the scheme of the Act, be taxed till the financial year 1941 42 and the previous year co related to that assessment year would be the accounting year ending 30th June, 1940.
It is obvious that the 'end of the accounting year falling after the date of discontinuance could not appositely be said to be the end of the previous year preceding that date.
The expression ((previous year" substantially means an accounting year comprised of a full period of twelve months and usually corresponding to a financial year preceding the financial year of assessment.
It also means an accounting year comprised of a full period of twelve months adopted by the assessee for maintaining his accounts but different from the financial year and preceding a financial year.
For purposes of the charging sections of the Act unless otherwise provided for it is co related to a year of assessment immediately following it, but it is not necessarily wedded to an assessment year in all cases and it cannot be said that the expression "previous year" has no meaning unless it is used in relation to a financial year.
In a certain context it may well mean a completed accounting year immediately preceding the happening of a contingency.
The construction we have placed on 502 this expression in sub sections (3) and (4) of section 25 is in accord with the substance of the definition given in section 2 (1 1) of the Act.
Any other construction of the section is bound to lead to a number of anomalies, the most glaring being that in case of persons whose year of account is the financial year, exemption from tax under section 25 (3) or (4) could never be given for a period of more than twelve months, while in case of persons who adopt different accounting year, exemption would become available for a period extending up to 24 months.
Such could never have been the intention of the framers of the Act.
That the "previous year" in the context of section 25(3) and (4) means a completed accounting year immediately preceding the discontinuance or succession is borne out by the provisions as regards nonliability for tax for the broken period and the 'claim to be made by the assessee that the income, profits and gains of the previous year shall be deemed to have been the income, profits or gains of the broken period.
The intention of the legislature being to give relief against double assessment for the year 1922 23, the assessee in the case of discontinuance or succession would be entitled to claim exemption from payment of tax for the broken period and also claim that the income, profits or gains of the previous year, i.e.) the year preceding the broken period, should be treated as the income, profits or gains of the broken period.
Reference was made in the judgment of the Appellate Tribunal to the views of the Select Committee when clause (1) of section 25 was considered at the time of the draft Bill No. XXVI of 1921 in support of its conclusion, but it was rightly held by the High Court that it was not a permissible consideration in interpreting a statute and Mr. Aiyangar did not seriously press this matter before us.
He, however, drew our attention to the directions contained in the Income tax Manual in force for a number of years and contended that the department itself placed on sub sections (3) and (4) of section 25 the same construction as was 503 placed on them by the senior Judge in the High Court and that was the true construction of these two sub sections.
This argument, in our opinion, has no ' validity.
The department changed its view subsequently and amended the manual.
The interpretation placed by the department on these sub sections cannot be considered to be a proper guide in a matter like this when the construction of a statute is involved.
The result is that we allow the appeal and hold that the answer given by the senior Judge to the question referred was wrong and that the answer given by Viswanatha Sastri J. was the correct one.
In the circumstances of this case we would make no order as to costs throughout.
Appeal allowed.
Agent for the respondent : M. section K. Aiyangar.

summary/full:
Two brothers who had been carrying on in partnership a business, which had been assessed to income tax under the Indian Income tax Act of 1918 and the accounting year of which was a period of 12 months ending on the 30th June each year, transferred the business to a limited company on the 1st March, 1940, and claimed in the assessment for the year 1940 41 that under section 25 (4) of the Income tax Act, 1922, they were not liable to pay income tax on the income of their business from 1st July, 1938, up to 29th February, 1940, a period of 20 months.
The Income tax authorities were of the view that exemption could be claimed only 487 for the period from 1st July, 1939, to 29th February, 1940, a period of 8 months: Held, that the expression "end of the previous year" in sub sections (3) and (4) of section 25 in the context of those sub sections means the end of the accounting year (a period of full 12 months) expiring immediately preceding the date of discontinuance or succession and the assessee firm was entitled to claim exemption from tax only in respect of the period from the 1st July, 1939, to the 29th 'February,1940, On a true construction of sections 25 and 26, the Income tax Officer is not empowered to make an accelerated assessment in the year in which succession occurs on the profits of that year and prematurely assess the successor so that he , may be able to give relief to the person succeeded.
The exemption provided for in section 25 (4) and the apportionment mentioned in section 26 (2) have to be made in the assessment year in which the profits of the year of succession fall to be assessed under section 3 of the Act.
For the purposes of the charging sections of the Act the ex pression "previous year" is co related to a year of assessment immediately following it, but it is not necessarily wedded to an assessment year in all cases and it cannot be said that the expression "previous year" has no meaning unless it is used in relation to a financial year.
In a certain context it may well mean a completed accounting year immediately preceding the happening of a contingency.


judgement:
Appeal No. 278 of 1959.
Appeal by special leave from the judgment and order dated April 2, 1957, of the Punjab High Court, in Civil Revision No. 239 of 1956.
C. K. Daphtary, Solicitor General of India, section N. Andley, Rameshwar Nath and P. L. Vohra, for the appellant.
section T. Desai and Naunit Lal, for the respondents.
May 2.
The Judgment of the Court was delivered by GAJENDRAGADKAR, J.
The appellant Dr. Gopal Das Varma owns a double storeyed house known as 28, Barakhamba Road, New Delhi.
The ground floor of this house consists of a block of offices and the first floor consists of four flats; three of these are in the occupation of the appellant while the fourth has been let out to respondent 1, Dr. Bhardwaj.
Dr. Bhardwaj is an ear, nose, throat specialist, and in one of the four rooms of the flat be and his wife, respondent 2, reside, while the, three other rooms are used by him for the purpose of his profession.
Respondent 1 ap.
pears to have taken the premises on lease as early as 1934 although he executed an agreement of tenancy in favour of the appellant on November 8, 1935.
This agreement shows that the appellant agreed to let out his flat to respondent 1 on a rent of Rs. 90 per month payable in advance.
The tenancy was to commence from October 1, 1935, and was intended to continue up to _September 30, 1936.
Parties agreed that the said 680 tenancy could be renewed on terms to be settled later.
In fact the tenancy has been renewed from year to year and the flat is still in possession of respondent 1.
In October 1953 the appellant sued the two respondents for ejectment on two grounds.
He alleged that he required the premises in question for occupation as residence for himself and for the members of his family and that respondent 1 had recently built a suitable residence for himself in Golf Link Area, New Delhi.
The first plea was made under section 13(1)(e) of the Delhi and Ajmer Rent Control Act, 1952 (Act XXXVIII of 1952) (hereafter called the Act), while the second was raised by reference to section 13(1)(h) of the Act.
According to the appellant, since both the requirements of the Act were satisfied he was entitled to obtain a decree for ejectment against the respondents.
The claim thus made by the appellant was denied by the respondents.
Respondent 2 pleaded that she was not the tenant of the appellant and she alleged that it was she and not respondent 1 who had built the house in Golf Link Area.
Respondent 1 admitted that he was a tenant under the appellant.
He, however, contended that the appellant did not require the premises bona fide for his personal use, and he urged that he was using the premises for carrying on his medical profession and as such the appellant was not entitled to eject him.
He supported his wife in her plea that the house built in Golf Link Area belonged to her and not to him.
On these pleadings the learned trial judge framed appropriate issues.
He found that respondent 1 alone was the tenant of the appellant and that the premises in question had been let to respondent 1 for residential purpose.
According to the trial judge the premises in suit had been constructed for residential purposes and the flat in question was let out to respondent exclusively for that very purpose.
The trial judge further held that the fact that a portion of the premises was used by respondent 1 for his profession or business would not make the tenancy one for nonresidential purposes.
In that view he rejected the 681 argument raised by respondent 1 on the explanation to section 13(1)(e) of the Act.
The trial judge also held that it was respondent 1 who had built a house in Golf Link Area and since the said house was suitable for his residence the requirements of section 13(1)(h) were satisfied.
On the question about the bona fide requirements of personal residence pleaded by the appellant under section 13(1)(e) the trial court made a finding against him.
Even so, as a result of his conclusion under section 13(1)(h) the trial judge passed a decree for ejectment in favour of the appellant.
Both the respondents challenged this decree by preferring an appeal before the Senior Sub Judge at Delhi.
The appellate Court held that on the facts proved in the case it cannot be inferred that the premises in suit were built for residential purposes alone, and that evidence did not show that the premises in question had been lot to respondent 1 for residence alone.
The appellate judge examined the conduct of the parties and held that it was proved beyond any shadow of doubt that respondent 1 was using the premises both for his residence and his professional work since the inception of the tenancy without any objection on behalf of the appellant, and so in his opinion the premises could not be said to have been let for residence alone.
He also found that under the proviso to section 13(1)(e) it cannot be said that the premises were used incidentally for profession without the consent of the appellant; in that view section 13(1)(e) did not apply to the case.
Since the appellant had failed to prove that the premises were residential premises within the meaning of section 13(1)(e) and (h) the appellate Court held that respondent 1 could not be ejected.
In the result the appeal preferred by the respondents was allowed and the decree for ejectment passed by the.
trial Court against them was set aside.
The appellant then took the dispute before the High Court of Punjab by his revisional application.
The High Court has in substance agreed with the view taken by the appellate Court, confirmed its main findings and has dismissed the revisional application.
The High Court has observed that in its opinion the 682 appellate judge was fully justified in holding that the premises were let out to the tenant for the purpose of residence and for the purpose of his work as a member of the medical profession.
It has made an alternative finding that even if it was assumed that the premises were let out to respondent 1 for the purpose of residence the plea of bona fide requirement made by the appellant was not proved and the argument based upon section 13(1)(h) was not available to the appellant because the Golf Link building which respondent 1 had acquired cannot be said to be suitable for the conduct of business if the neighborhood or the locality in which it is situated is not suitable for that purpose.
In the result the High Court dismissed the appellant 's revisional application It is against this decision that the appellant has come to this Court by special leave.
It is relevant to refer to the material provisions of the Act before dealing with the points raised for the appellant by the learned Solicitor General in the present appeal.
The Act applies to premises which are defined by section 2(g) as meaning, inter alia, any building or part of a building which is, or is intended to be, let separately for use as a residence or for commercial use or for any other purpose.
Section 13(1) provides that notwithstanding anything to the contrary contained in any other law or any contract, no decree or order for the recovery of possession of any promises shall be passed by any Court in favour of the landlord against any tenant including tenant whose tenancy is terminated.
This provision is, however, subject to the exceptions provided under the several clauses of the proviso.
We are concerned with two of these.
Section 13(1)(c) allows a decree for ejectment to be passed if the Court is satisfied that the premises let for residential purposes are required bona fide by the landlord who is the owner of such premises for occupation as a residence for himself or his family and that he has no other suitable accommodation.
The explanation to this clause provides that for the purpose of this clause residential premises include any premises which having been let for use as a residence are, without the 683 consent of the landlord, used incidentally for commercial or other purposes; and section 13(1)(h) provides for ejectment in a case where the Court is satisfied that the tenant has whether before or after the commencement of this Act built, acquired vacant possession of, or has been allotted, a suitable residence.
It is with these three provisions that we are concerned in the present appeal.
It would be noticed that as soon as it is found that the premises in question have been used by respondent 1 incidentally for professional purposes and it is further established that this use is made with the consent of the landlord then the case goes outside the purview of section 13(1)(e) altogether.
In the present case it has been found by the appellate Court and the High Court that right from the commencement of the tenancy a substantial part of the premises is used by respondent 1 for his professional purpose, and they have also found that this has been done obviously with the consent of the landlord.
It is unnecessary to refer to the evidence on which this finding is based.
Even the trial Court was apparently inclined to take the same view about this evidence but it did not fully appreciate the effect of the explanation; otherwise it would have realised that the professional use of a substantial part of the premises with the consent of the appellant clearly takes the case outside section 13(1)(e).
In other words, where premises are let for residential purposes and it is shown that they are used by the tenant incidentally for commercial, professional or other purposes with the consent of the landlord the landlord would not be entitled to eject the tenant even if he proves that he needs the premises bona fide for his personal use because the premises have by their user ceased to be premises let for residential purposes alone.
This position cannot be seriously disputed.
Faced with this difficulty the learned Solicitor General attempted to argue that the very finding made by the Courts below about the nature of the tenancy takes the premises outside the purview of section 2(g) of the Act.
The argument is that the premises cannot 684 then be said to have been let for use as a residence or for a commercial use and so they ceased to be premises under the Act.
It is suggested that any other use which is specified by section 2(g) would not include a combination of residence with commercial or professional purposes.
The other use there referred to may be use for charity or something of that kind which is different from use as residence or commercial use.
In our opinion this argument is not well founded.
The three kinds of user to which the definition refers are residence, commerce and any other purpose which necessarily must include residence and commerce combined.
It may also include other purposes as suggested by the learned Solicitor General.
As soon as it is shown that the premises have been let both for the use of residence and for commercial purposes it does not follow that the premises cease to be premises under section 2(g); they continue to be premises under the last clause of section 2(g).
This position is wholly consistent with the division of the premises made with reference to their user in paragraphs 3, 4 and 5 of Part A in the Second Schedule to the Act.
Therefore, in our opinion, the argument urged by the learned Solicitor General on the construction of section 2(g) cannot be sustained.
It will be recalled that the present suit has been filed by the appellant himself praying for the respondent 's ejectment under the provisions of the Act, and so the argument that the Act does not apply to the premises in question can be justly characterised as an argument of desperation.
Then it is contended that even if the appellant may not be entitled to claim ejectment under section 13(1)(e) he would be justified in claiming a decree for ejectment against the respondent independently under section 13(1)(h).
It is urged that as soon as it is shown that respondent 1 has acquired a suitable residence he can be ejected even though section 13(1)(e) may not apply to his tenancy.
In our opinion, even this argument is fallacious.
Section 13(1)(h) applies to tenancies which are created for essential purposes, and it provides that in the case of such tenancies even if the landlord may not be able to prove his case under section 13(1)(e) he would nevertheless be entitled to eject the tenant once it is shown 685 that the tenant has acquired another suitable residence.
The requirement is that the tenant must have suitable residence.
Both words of the requirement are significant; what he has acquired must be residence, that is to say the premises which can be used for residence and the said premises must be suitable for that purpose.
If the promises from which ejectment is sought are used not only for residence but ' also for profession how could section 13(1)(h) come into operation? One of the purposes for which the tenancy is acquired is professional use, and that cannot be satisfied by the acquisition of premises which are suitable for residence alone, and it is the suitability for residence alone, which is postulated by section 13(1)(h).
Therefore, in our opinion, it would be unreasonable to hold that tenancy which has been created or used both for residence and profession can be successfully terminated merely by showing that the tenant has acquired a suitable residence.
That is the view taken by the High Court and we see no reason to differ from the conclusion of the High Court.
The last argument urged by the learned Solicitor General is that respondent 1 should not be allowed to approbate and reprobate as he has done in the present case.
This argument is based on the conduct of the respondent at the previous stages of the dispute.
It is true that in 1941 and onwards respondent 1 has successfully urged that the tenancy was for residence, and in consequence has secured the extension of tenancy under cl.
11A of the New Delhi House Rent Control Order, 1939, issued under r. 81(2)(bb) of the Defence of India Rules.
The statements made by respondent 1 in that behalf indicate that he exercised his option of obtaining extension of the lease on the ground that the premises were let out to him for residence.
The argument is that since by the said representations he had actually obtained an advantage he cannot be permitted now to contend that the lease is not only for residence.
On the other hand the conduct of the appellant himself is also inconsistent with the stand taken by 87 686 him in the present proceedings.
In 1942 when he demanded an increased rent from respondent 1 he made out a case which is inconsistent with his present story that the premises were let out to respondent 1 only for residence.
The case then made out by him appears to be that the tenancy fell under paragraph 4 of Part A in the Second Schedule to the Act, and that would mean that the premises had not been let only for residence.
Indeed the conduct of both the parties has been actuated solely by considerations of expediency and self interest in this case, and so it would prima facie be idle for the appellant to contend that respondent 1 should not be allowed to approbate and reprobate.
But, apart from this fact, it is obvious that the appellant cannot be allowed to raise this contention for the first time before this Court.
The plea sought to be raised can be decided only after relevant evidence is adduced by the parties, and since this plea has not been raised by the appellant at the proper stage respondent 1 has had no opportunity to meet the plea and that itself precludes the appellant from contending that though the lease may not be one for residence alone respondent 1 should not be permitted to urge that it is not for residence but for residence and profession, It is the settled, practice of this Court that new pleas of this kind which need further evidence are not allowed to be raised in appeals under article 136 of the Constitution.
The result is the appeal fails, but in the circumstances of this case we direct that the parties bear their own costs throughout.
Appeal dismissed.

dataset_name: IN-Abs

summary/full:
The respondent as a tenant of tile appellant was occupying a portion of the premises in question for residence and the other major portion for his professional work as an ear, nose, throat specialist.
The appellant sued for the ejectment of the respondent on the grounds that (i) he required the premises for his own residence and that (ii) the respondent had built a suitable residence for himself in another locality.
The first plea was based on the ground mentioned in section 133(1)(e) and the second plea on section 13(1)(h) of the Delhi and Ajmer Rent Control Act, 1952.
The trial court decreed the suit but the appellate court and the High Court dismissed it on the finding that from the beginning of the tenancy a substantial part of the premises was used by the respondent for his professional work obviously with the consent of the appellant.
Held, that premises let for residential purposes but used by 679 the tenant with the consent of the landlord incidentally for commercial, professional or other purposes cease to be premises let for a residential purpose alone and as such the landlord would not be entitled to eject the tenant under section 13(1)(e) of the Act.
Nor can such a tenant be ejected independently under section 13(1)(h) because a tenancy created or used both for residence and profession cannot be terminated merely by showing that the tenant had acquired a suitable residence.
Premises let both for residence and commercial purposes do not cease to be premises under section 2(g) and continue to be so under the last clause of section 2(g).


judgement:
Appeal No. 457/58.
Appeal from the Judgment and order dated September 12, 1956, of the Punjab High Court in Letters Patent Appeal No. 38 of 1955.
N. C. Chatterjee and Naunit Lal, for the appellants.
Nanak Chand, for the respondents Nos. 4 to 9. 1961.
May 4.
The Judgment of the Court was delivered by MUDHOLKAR, J.
In this appeal under article 133 (1) (c) of the Constitution the question which arises for consideration is whether after July 22, 1952 the Custodian of ' Evacuee Property in the State of Punjab of the Custodian General hearing an appeal from an order made by the Custodian after July 22, 1952 has the power to cancel an allotment of rural evacuee property on a quasi permanent basis except upon the grounds set out in r. 14 (6) of the Administration of Evacuee Property Rules, 1950 as amended by notification No. section R. 0. 1290 dated July 22, 1952.
The circumstances under which this question arises may now be briefly stated.
The appellants and their father Nand Singh were displaced persons from West Pakistan and got allotment of some land in the village Raikot, District Ludhiana on a temporary basis.
Later, each of the appellants 1 to 3 was allotted 8 1/3 standard acres of land on a quasi permanent basis while Nail(] Singh, their father who was entitled to 41 standard acres and 7 units and to whom land to that extent had been temporarily allotted in the 740 village Raikot was allotted the same acreage of land in the village Hambran which is situate at a distance of 25 or 30 miles from Raikot.
Nand Singh made an application for revising the order under which this was done but he died in the year 1951, during the pendency of that application.
The appellants as his legal representatives continued the application.
That application was rejected and revision application made against the order passed thereunder was also rejected on the ground that after July 22, 1952 the Additional Custodian was not competent to cancel an allotment made in favour of any person except upon the grounds set out in r. 14 (6) of the Evacuee Property Rules.
Respondents 4 to 9 owned lands in Chak No. 127, G. B. Jaranwala, District Lyallpur and are also displaced persons.
They were, therefore, allotted certain lands in the village Karodian as quasi permanent allottees.
Subsequently some revenue papers were received from Pakistan from which it appeared that they were entitled to urban allotment.
They, therefore, brought this matter before the Deputy Commissioner exercising the powers of Deputy Custodian.
Thereupon he cancelled the allotment in their favour sometime in the year 1952 and proposed to the Additional Custodian, who was also acting as Director of Relief and Rehabilitation, for the allotment of the lands which were originally allotted to the respondents to others.
Appellant No. 2, Gopal Singh, on behalf of his father Nand Singh applied to the Director of Relief and Rehabilitation that the allotment in the name of his father Nand Singh might be shifted from the village Hambran ' to the village Karodian.
Additional Custodian not only allowed the Application of Gopal Singh and shifted the allotment of Nand Singh to the village Karodian but he also shifted the entire allotment of the appellants Nos. 1 to 3 from the village Raikot to the village Karodian with 741 the result that the lands allotted to the family were consolidated in the same village.
The appellants thereupon obtained possession of the Karodian lands.
Respondents 4 to 9 were allotted urban lands, which according to the appellants are more valuable and are of a superior quality.
They did not prefer an application for review of the order of cancellation of their earlier allotment or of the order passed by the Additional Custodian allotting their lands to the appellants.
Six months later, however, respondents 4 to 9 preferred an application before the Additional Custodian stating therein that the land abandoned by them in West Pakistan was rural and that their allotment should be shifted back to the village Karodian.
To this application they did not make the appellants parties.
The Additional Custodian held that he could not cancel the allotment in favour of the appellants in view of r. 14(6) of the Evacuee Property Rules already referred to.
He, however, recommended the case to the Custodian General of India by his memo, dated October 14, 1953, for taking appropriate action.
The Deputy Custodian General who heard the case sent it back to the Additional Custodian observing therein that if the respondents 4 to 9 are restored to their original lands the persons to whom those lands had been allotted will have to be shifted elsewhere and this process may involve "an interminable chain of cancellation of allotments.
" He also observed that if the Additional Custodian could not cancel the allotment because of the coming into force of the amended r. 14 (6), the Custodian General also would be incompetent to cancel it.
Thereafter the Additional Custodian heard the application of the respondents 4 to 9 on merits and dismissed it.
Against his order dismissing the application respondents 4 to 9 preferred a revision application before the Custodian General.
Curiously enough the Deputy Custodian General, 742 who heard it, this time granted the application and set aside the allotment in favour of the appellants.
The appellants thereafter moved the High Court of Punjab under article 226 of the Constitution.
The matter went up before a single Judge of the High Court who dismissed the petition observing as follows : "If the order of cancellation against the present opposite parties was made after the 22nd July, 1952, the order was inoperative in view of Rule 14 (6) and if it be said that the order of allotment was after the date then Rule 14 (6) is not bar to the cancellation of the order.
In either case I am of the opinion that there is no error in the order of the Custodian General sufficient for the purpose of quashing his order .
" The appellants thereupon preferred an appeal under the Letters Patent which was also dismissed by a Division Bench of the High Court.
The substance of the reasoning of the learned Judges is that the allotment in favour of respondents 4 to 9 was wrongly cancelled and it was the duty of the Custodian to restore to 'them the lands from which they were ousted.
They also said that the provisions of r. 14 (6) (lid not preclude the Deputy Custodian General from exercising the powers conferred upon him by section 27 of the or prevented him from cancelling the allotment made after July 22, 1952.
The view taken by the Division Bench to the effect that r. 14 (6) did not stand in the way of the Custodian General of the Custodian from restoring the lands to the respondents the allotment with respect to which was wrongly cancelled by the Custodian cannot be sustained.
No doubt it is one of the highest duties of all courts to take care that the act of the court does not do injury to suitors; but the court must have power to rectify the wrong.
743 Such power may either inhere in the Court or may be expressly conferred by statute.
The law does not confer any express power on the Custodian to make restitution.
But we will assume that be had inherent power to do so.
Just as power can be conferred expressly by statute it can also be taken away or restricted and where it is taken away or restricted then, whether the power was statutory in its origin or was inherent in the court, it will be either wholly unexercisable or exercisable only subject to the conditions laid down in the statute, as the case may be.
Here we have the notification dated July 22, 1952 which substituted the present sub r. 6 of r. 14 for the original sub r. 6.
The amended sub rule has placed a limitation on the powers of the Custodian to cancel allotment of rural evacuee property on a quasi permanent basis.
The result is that an allotment of such land can be cancelled only in the circumstances specified in that sub rule.
Therefore, subsequent to July 22, 1952 the Custodian of Evacuee Property would have the power to cancel an allotment only upon a ground which falls within the exceptions enumerated in sub r. 6.
Making of restitution is not within the exceptions and, therefore, it will have to, be said that the inherent power of the Custodian to cancel an allotment for making restitution has been abrogated by the amended sub rule.
The other argument of the Division Bench is to the effect that the powers of the Custodian General under section 27 are untouched by sub r. 6 of r. 14 and that despite the making of this rule the Custodian General was not prevented from cancelling an allotment made after July 22, 1952.
Now section 27 of the Act provides that the Custodian General may call for the record of any proceeding in which 4 District Judge or a Custodian has passed an order for the purpose of satisfying himself as to the legality or propriety of any such order and may pass such order in relation thereto as he thinks At.
The 744 District Judge or the Custodian can in any matter before him do only that which the act or the rules made thereunder permit or require him to do.
If he fails to do what he is required to do or if he does something which he is not permitted to do or if he commits an error in doing an act which he is permitted to do, the Custodian General has the power to order that to be done which the law requires the Custodian or the District Judge to do or to quash that which has illegally been done or to rectify the error which the Custodian or the District Judge has committed.
He has no power to do something which the Custodian or District Judge could not have done or was prohibited from doing.
Clearly, therefore, the High Court was in error in holding that the limitations placed by the present sub r. 6 of r. 14 did not affect the power of the Custodian General.
The learned single Judge as well as the Division Bench have taken the view that where an allotment is made in favour of a displaced person subsequent to July 22, 1952, the provisions of sub r.
6 of r. 14 did not preclude the Custodian from cancelling that allotment.
This view is sought to be supported by Mr. Nanak Chand on behalf of respondents 4 to 9 on, what he says, the language of sub r. 6 of r. 14.
He says that according to this sub rule what the Custodian is precluded from doing is to cancel an allotment which had already been made, that is, made before the coming into force of the sub rule except upon certain grounds and does not place any further restrictions.
We do not find any justification for placing such a restricted interpretation upon the plain language of the Sub rule.
Learned counsel then referred to the second proviso to the sub rule and contended that it supported the interpretation which he was placing.
The proviso reads thus : "Provided that where an allotment is cancelled or varied under clause (ii) the allottee 745 shall be entitled to retain such portion of the land to which he would have been entitled under the scheme of quasi permanent allotment of land: Provided further that nothing in this subrule shall apply to any application for revision, made under section 26 or section 27 of the Act, within the prescribed time, against an order passed by a lower authority on or before 22nd July, 1952.
" How this proviso supports the argument of the learned counsel is difficult to appreciate.
The proviso was not originally there when sub r. 6 was amended on July 22, 1952.
It is possible that a doubt was entertained after the making of this subrule on the question whether the Custodian General or the Custodian before whom a revision application had been made against an order passed before July 22, 1952, could make an order cancelling the allotment.
Apparently to remove the doubt such as may have existed this proviso had been added.
Then learned counsel contended that this subrule can not take away the wide powers conferred upon the Custodian by section 10 of the Act.
No doubt section 10 confers wide powers on the Custodian but the opening words of the section show that the powers conferred thereby are subject to the provisions of ruler, made under the Act and section 56 (2) (i) enables the Central Government to make rules to provide for "circumstances in which leases and allotments may be cancelled or terminated or the terms of any lease, or agreement varied.
" We, have, therefore, no doubt that the High Court was in error in holding that sub r. 6 of ' r. 14 was not a bar to the, exercise by the Custodian General of the power to cancel an allotment after July 22, 1952.
Having failed on the point which alone finds a place in the statement of the cases of both the 746 parties, Mr. Nanak Chand raised a contention that the allotment in favour of the appellants was itself bad because the cancellation of the allotment in favour of the respondents 4 to 9 was in contravention of r. 14 (6) and that, therefore, the appellants were not entitled to the relief from the High Court under article 226 of the Constitution and accordingly are not entitled to any relief in this Court.
Since the respondents have not relied upon this ground in the statement of their case we are not prepared to consider it.
There may be more than one answer to the point urged by the respondents and had they specifically raised it in their statement of case, the appellants would have been in a position to give an appropriate answer.
Accordingly we allow the appeal with costs and quash the orders of the High Court as well as of the Deputy Custodian General.
There is one more matter to which we must refer.
It is this.
During the hearing of the appeal learned counsel for the appellant brought to our notice the fact that on the records of the proceedings before the Deputy Custodian General there was a slip of paper from which it would appear that Deputy Custodian General had been approached by the then Speaker of the Punjab Assembly apparently on behalf of the respondents.
We, therefore, asked for a report from the High Court.
That report has come and it exonerates both the ex Deputy Custodian General as well as the ex Speaker.
We are not satisfied with the report.
However, considering the fact that the matter has become quite stale and we have allowed the appeal we do not propose to examine the matter further.
Appeal allowed.

summary/full:
Respondents Nos. 4 to 9 who were displaced persons from Pakistan, were allotted certain rural lands in village Karodian on a quasi permanent basis.
On information being received from Pakistan that they were entitled to urban allotment their allotment in village Karodian was cancelled and they were allotted urban land.
The land thus vacated in village Karodian was allotted to the appellants.
On July 22, 1952, r. 14(6) of the Administration of Evacuee Property Rules was amended and the power of the custodian to cancel quasi permanent allotments of rural evacuee property was taken away except in certain enumerated circumstances.
Thereafter respondents Nos. 4 to 9 applied to the Custodian for shifting back their allotment to village Karodian on the ground that they were really ' entitled to allotment of rural property.
The Custodian dismissed the application holding that r. 14(6) did not permit the cancellation of the allotment of the appellants.
Respondents Nos. 4 to 9 filed a revision application before the Custodian General who allowed the application and cancelled the allotment of the appellants.
The appellants contended that the Custodian General had no power to cancel their allotment.
The respondents replied that the wide powers of the Custodian General under s.27 of , were not affected by the restrictions imposed by the amended r. 14 (6) on the power of the Custodian to cancel allotments.
Held, that the Custodian General had no power to cancel an allotment of rural property made on a quasi permanent basis in a revision application against an order of the Custodian made after July 22, 1952.
The power of the Custodian under section 10 of the Act to cancel allotments was subject to the rules.
The amended r. 14(6) restricted the power of the Custodian to cancel such an allotment to the circumstances mentioned therein and the present case did not fall within any of those excep 739 tions.
Amended r. 14(6) could not be resorted to for cancellation of allotments made before July, 22, 1952.
The power of the Custodian General under section 27 of the Act was to see whether the order passed by the Custodian was legal and proper ; he had no power to do something which the Custodian could not have done or which he was prohibited from doing.


judgement:
Appeals Nos.
347 to 350 of 1960.
Appeals by special leave from the judgment and order dated January 18, 1953, of the Incometax Appellate Tribunal, Calcutta Bench, in Incometax , Appeals Nos. 7062 7064 and C.P.T.A. No. 548 of 1951 52.
N.C. Chatterjee, A. V. Viswanatha Sastri and D.N. Mukherjee, for the appellants.
K.N. Rajagopal Sastri, and D. Gupta, for respondent.
July 17.
The Judgment of the Court.
was delivered by HIDAYATULLAH, J. These appeals with special leave, were filed by one Kanhaiyalal Lohia, who died during the pendency of the appeals, and who 841 is now represented by the executors appointed under his will.
By these appeals, which are consolidated, the appellants question an order dated January 8, 1953, of the Income tax Appellate Tribunal (Calcutta Bench) in appeals filed by the Department against the order of the Appellate Assistant Commissioner.
The Tribunal reversed the order of the Appellate Assistant Commissioner and restored that of the Income tax Officer.
Kanbaiyalal Lohia made petitions under section 66 (1) to the Tribunal, setting out a number of questions of which the following was I referred to the High Court : "Whether in the cirumstances of this case where the Income tax Officer, District III (2), separately assessed the business run in the name of Brijlal Nandkishore as belonging to a partnership firm consisting of Brijlal and Nandkishore, the Income tax Officer, Non Companies E. P. T., District can assess the income from the same business in the hands of the assessee ?" This question was answered against him.
Kanhaiyalal Lohia also applied under section 66 (2) to the High Court of Calcutta for reference of the other questions, but failed.
No appeal has been filed by him against the order of the High Court refusing to direct the tribunal to state a case or against the decision on the question referred, and the present appeals have been filed against the decision of the Tribunal.
At the hearing of these appeals, we asked counsel for the appellants how, in view of the recent decisions of this Court in Chandi Prasad Chokhani vs State of Bihar (1) and Indian Aluminium Co. Ltd. vs Commissioner of Income tax (2), these appeals were maintainable, if the two decisions of the High Court had become final.
Mr. A. V. Viswanatha Sastri relied upon the decisions in (1) ; (2) Civil Appeal No. 176 of 1959 decided on April 24, 1961.
842 Dhakeswari Cotton Mills Ltd. vs Commissioner of Income tax West Bengal (1) and Sardar Baldev Singh vs Commissioner of Income tax Delhi and Ajmer (2), and pointed out that in those cases, appeals were entertained from the Tribunal 's order, though he conceded with his usual frankness that special circumstances must exist.
He contended that this was a case in which such circumstances existed.
We shall deal with the appeals from that point of view, because unless special circumstances exist, the appeals must be regarded as not competent, in view of our recent rulings above mentioned.
Kanhaiyalal Lohia, who was a prosperous dealer in jute, had his head office in Calcutta.
He had no issue, and his family consisted of his wife,, his brother, Brijlal Lohia and Brijlal 's son, Nandkishore Lohia.
The properties of Kanhaiyalal Lohia were self acquired, and he was always assessed as an individual.
He maintained accounts according to the Ramaswami year.
In his return for the account year, April 14, 1943 to April 1, 1944 corresponding to the assessment year, 1944 45), he indicated that he had closed down in the middle of 1943 his purchasing centres in East Bengal, which stood in the name of Nandkishore, and that, he had gifted to his brother Rs. 5,1 1, 1. 01 on July.
12, 1943, and to his nephew, Rs. 2,50,000 on September 30, 1943.
He showed income of his East Bengal business only up to the closure of that business.
Brijlal and Nandkishore entered into partnership between themselves, and started a business under the name and style of "Brijlal Nandkishore.
" They took over the purchasing centres in East Bengal.
They opened accounts in banks in the name of "Brijlal Nandkishore", and became members of the Baled Jute Association, and the Jute ,Baler,sAssociation, and traded in their own names.
A deed of partnership between them was also executed on August 5, 1953.
The business of Kanhaiyalal Lohia and of "Brijlal Nandkishore (1) ; (2) ; 843 was within the jurisdiction of the same Incometax Officer.
In the assessment of the partnership firm, notices were issued to the partnership both under section 22(2) and section 34, and the partner ship also applied for registration under section 26A of the Income tax Act,which was granted.
The partnership was also assessed for the years, 1945 46 and 1946 47.
The assessment of Kanhaiyalal Lohia was completed by the Income tax Officer, Non Companies Income Tax cum Excess Profits Tax District, and during the assessment for the year, 1945 46 a notice was issued under section 22(4) of the Income Tax Act on August 24, 1949, calling for accounts of the head office at Calcutta and also the branches including the business being carried on as "Brijlal Nandkishore", Kanhaiylal Lohia proved, the above facts, producing the books of account, bank statements, registration certificate of "Brijlal Nandkhore" and evidence showing the membership of "Brijlal Nandkishore" of the two Associations.
He also produced letters from four persons including one Sri A.L. Mazumdar who was questioned by the Income tax Officer without notice to ' Kanhaiyalal Lohia and whose statement was also recorded.
Kanhaiyalal Lohia objected to this procedure, but the Income tax Officer, it is alleged, paid no heed to his protests, and on.
March 31, 1950 the assessment was completed, and the income of the branches under the direct control of "Brijlal Nandkishore" was pooled with the income of Kanhaiyalal Lohia.
The Income tax Officer held that the gifts were not bonafide, and were colourable transactions.
He relied upon the statement of Sri A. L. Mazumdar, which was recorded when Kanhaiyalal Lohia was not present.
Against the assessment, Kanhaiyalal Lohia, appealed to the Appellate Assistant Commissioner before whom two more letters from leading businessmen were filed.
The Appellate Assistant Commissioner accepted the letters which were filed, and held that the gifts were proved and were bona fide and directed the exclusion 844 of the income of "Brijlal Nand kishore" from the assessment of Kanhaiyalal Lohia.
The order of the Appellate Assistant Commissioner was pronounced on December 27, 1951.
The Department appealed to the Appellate Income tax Tribunal, Calcutta Bench.
The Tribunal disagreed with the Appellate Assistant Commissioner, all held on January 8, 1953, that the gifts were not proved by the assessee by unimpeachable evidence, and that the income of "Brijilal Nandkishore" was rightly included in the assessment.
As stated already,.
applications under section 66 (1) and section 66 (2) were made to the Tribunal and the High Court respectively.
The Tribunal referred one question, but declinedto refer the.
other quest ions.
The High Court then moved under section 66 (2) but without success.
The High Court agreed with the Tribunal and answered the question which was referred, against Kanhaiyalal Lohia.
Before the High Court, Kanhaiyalal 's counsel, Dr. Pal, admitted that he.
could not persuade the Court to answer the referred question against the, Department, and it appears that it was conceded by the Department before the High Court that the assessment of "Brijlal Nandkishore" would be cancelled.
Kanhaiyalal Lohia then filed the present appeals against the order of the Tribunal dated January 8, 1953.
This Court has pointed out in Chandi Prasad, Chokhani vs State of Bihar(1) and Indian Aluminium Co., Ltd. vs Commissioner of Income tax (2) that the two cases in which this Court interfered with appellate orders of a Tribunal and relied upon before us, were of a special kind.
In Dhakheshwari Cotton Mills case(3) there was a breach of the principle, of natural justice, and that was held sufficient to entitle an aggrieved party to come to this Court against the appellate order of the Tribunal under article 136.
In (1) ; (2)Civil Appeal No. 176 of 1959 decided on April 24, 1961.
(3) ; 845 Baldev Singh 's case (1) this Court entertained an appeal against the appellate order of the Tribunal, because limitation to take other remedies was IS barred without an fault of the assessee concerned.
The ratio in each of these cases is that a circumstance which cannot be corrected by the procedure of a stated question of law on a statement of the case may afford a ground for invoking the jurisdiction of Court under article 136.
That ratio does not apply, where a question of law can be raised, and is capable of being answered by the High Court or on appeal by this Court.
An appeal against an order of the High Court deciding a question referred or against a refusal to call for a statement can be brought before this Court under section 66A, if the High Court decides the question referred and under article 136, if the High Court refuses to call for a statement.
In the present case, the order of the High Court on the question referred was not brought before this Court by the ordinary, mode indicated in the Indian Income tax Act, presumably because of the concession of counsel that he could not claim that the question be answered in favour of the assessee and the attitude of the Department that the assessment of "Brijlal Nandkishore" would be cancelled.
The order refusing to call for a statement on questions other than the one referred is also not questioned before us.
The attempt is to bring this case within the ratio of Dhakeshwari Cotton Mills ' case(2),and in support, it has been pointed out mainly that the examination of Sri A. L. Mazumdar in the absence of Kanhaiyalal Lohia was against the principles of natural justice.
The statement of Sri A. L. Mazumdar was taken on March 28, 1950, and it is recorded as follows : "Mr. Mazumdar is questioned by me as to what be knows regarding the alleged gift as recorded in the books of Kanhaiyalal Lohia in favour of Brijlal and Nand Kishore.
He says (1) ; (2) ; 846 that I don 't remember things very distinctly but 1 can say that the gifts to Brij Lal or Nand.
Kishore were not made in my presence as alleged.
Mr. Kanhaiyalal Lohia used to tell me that his brother and nephew are idling away their time hence I shall give them a. gift and make them work by that money.
The partnership deed was most probably drawn up by me.
The gift, was reported to have been made to Brij Lal and Nand Kishore before I should have taken up the drafting of the deed.
Kanhaiyalal told me several times that he wanted to separate his brother and nephew.
When the firm was started then Brijlal came to me and asked me if father and son 's partnership deed could be drawn up.
I don 't know anything else than this in the matter.
" The lie given by Sri Mazumdar to the statement of Kanhaiyalal Lohia has affect his credibility.
The order sheet shows that Mr. B. Sen Gupta took a copy of Sri Mazumdar 's statement and expressed a desire to cross examine him; but when the opportunity was given, he failed to appear.
It is impossible to think in these circumstances that there has been any breach of the principles of natural justice.
The order sheets of March 29 and 30, 1950 clearly record the absence of Mr. B. Sen Gupta.
In our opinion, there is no breach of the principles of natural justice in this case to entitle the appellants to invoke the ruling in Dhakeshwari Cotton Mills case It was contended before us that the finding of the Tribunal was perverse, and that on an examination of the total circumstances, it is quite clear that the gifts were not only real, but were acted upon.
This was a matter within the jurisdiction of (1) ; 847 the Appellate Tribunal as the final fact finding authority.
The Tribunal acted within its powers in refusing to accept the evidence tendered, and looking at the circumstances of the. case, we cannot say that the finding has been perversely reached.
For a number of years, the brother and the nephew were supported by Kanhaiyalal Lohia, and it does not appear that a gift of even a small sum was made to them to put them on their legs.
Suddenly in the year 1943, 'Kanhaiyalal Lohia made up ' his mind to put them in business with a gift of the order of Rs. 7,60,000 odd.
For this purpose, he had to overdraw his accounts with the Bank and to pay interest to the Bank.
It does not appear why he felt that the establishment of his brother and nephew in business should be made on such a grand scale, which involved him in debt.
This circumstance, taken with the fact that Mr. Mazumdar stated that he had always complained that they were good for nothing and were idlers, makes the transactions auspicious.
It was presumably done with a view to reduce the assessable profits in the hands of Kanhaiyalal Lohia, and on the evidence, the Tribunal was entitled to hold, as it did, that this was a sham transaction.
In our opinion, no special circumstances exist, on which the appellants can claim to come to this Court against the decision of the Tribunal, by passing the decision of the of High Court on the question referred and there fusal 'the High Court to call for a statement of the case from the Tribunal on questions which the Tribunal refused to refer to the High Court.
The appeals are, therefore, within the rulings of this Court in Chandi Prasad Chokhani vs State of Bihar (1) and Indian Aluminium Co., Ltd. vs Commissioner of Income tax(2), and must be regarded as incompetent.
The appeals are dismissed with costs, one set.
Appeal dismissed.

summary/full:
The appellant supported his brother and his nephew for a number of years as they were doing no work.
In the year 1943 he made a gift of Rs. 7,60,000 odd to them though he had to overdraw his account with the Bank and to pay interest or the amount borrowed to raise the money.
He also made a transfer of some of his businesses to them.
His explanation was that these gifts were made to set these two persons up in business.
The Income tax Officer held that the gifts were riot bonafide and he assessed, the income of all the businesses in the hands of the appellant.
The appellant had produced letters from some businessmen in support of his case.
One such person was one M. who was examined by the Income tax Officer without notice to the appellant.
Later, however, a copy of the statement of M. was taken by the appellant 's counsel and at his request M. was summoned for cross examination but on the date fixed none appeared for the appellant who was also absent.
The appellant made a petition under section 66(1) of the Income tax Act to the Tribunal asking that a number of questions of law be referred to the High Court.
Only one question was referred by the Tribunal which declined to refer the other questions.
In the High Court the question referred by the Tribunal was answered against the appellant on the admission of his counsel.
The High Court was moved also under section 66(2) to order a reference of the remaining questions but the High Court rejected the application.
The appellant did not appeal against these two orders of the High Court and instead filed appeals against the orders of the Tribunal.
The appellant relied upon two cases of this Court viz. Dhakeshwari Colton Hills ' Case and Baldev Singh 's case and contended that tile appeal to this court was competent.
Held, that the appeals were incompetent in view of the decisions of this Court in Chandi Prasad Chokhani vs State of Bihar and The Indian Aluminium Co., Ltd. 840 Held.
further, that an appeal against an order of the High Court deciding a question referred or against a refusal to call for a statement can only be brought before the Supreme Court under section 66(A) of the Income tax Act, if the High Court decides the question referred, and under article 136 of the Constitution if the High Court refuses to call for a statement.
There can be no direct appeal to the Supreme Court by passing the decisions of the High Court.
Held,.
also, that there was neither any breach of the principles of natural justice in this case nor the existence of circumstances as existed in Baldev Singh 's case to justify the appeal.
Held, that where a witness has been examined by the Income tax Officer behind the back of the assessee but a copy of the statement of the witness is made available, to the assessee and an opportunity is given to him to cross examine the witness, thereis no breach of the principle of natural justice.
ChandiPrasad Chokhani vs State of Bihar.
(1962) 2 S.C.R. 276and Indian Aluminium Co., Ltd., vs Commissioner of Income tax.
(Civil Appeal No. 176 of 1959, decided on April 24, 1961) followed.
Dhakeshwari Cotton Mills Ltd. vs Commissioner of Income.
tax ; and Sardar Baldev Singh vs Commissioner of Income tax, Delhi and Ajmer.
; , explained. ,