judgement:
Appeals Nos.
2441 and 2442 of 1968.
Appeals by special leave from the judgment and order dated October 17, 1968 of the Bombay High Court in Arbitration Petitions Nos. 49 and 50 of 1968.
I. N. Shroff, for the appellant (in C.A. No. 2441/1968).
V. M. Tarkunde and I. N. Shroff, for the appellant (in C.As.
2442 of 1968).
section V. Gupte, B. R. Agarwala for the respondent (in both the appeals).
The Judgment of the Court was delivered to Ray, J.
These two appeals are by special leave against I the judgment dated 17 October, 1968 of the High Court at Bombay determining under section 33 of the that the umpire rightly entered upon the reference and further extending the time till 31 December, 1968 for making an award thereof by the umpire.
Two questions arise for consideration in these appeals.
First, whether there can be any valid appointment of umpire by arbitrators without obtaining consent of the appointee to be an um 697 pire.
Second, on the construction of the arbitration agreement in the present case was the operation of paragraph 4 of Schedule: I of the excluded with the result that the umpire could enter upon the reference only in the event of a difference arising between the arbitrators.
On 26 April, 1967 there was an arbitration agreement between the partnership firm of Indian Engineering Company and Keshavsinh Dwarkadas Kapadia.
Kapadia had appointed M/s. Chetan Trading Company as the sole selling agent of Kapadia 's, several products including aluminium and copper wire by an agreement dated 16 September, 1965.
Chetan Trading Company in their turn appointed Indian Engineering Company as their sole selling agent in respect of aluminium and copper wires.
Chetan Trading Company terminated their agreement with Indian Engineering Company.
Kapadia also terminated the sole selling agency with Chetan Trading Company Indian Engineering Company contended that on the termination of the sole selling agency between themselves and Chetan Trading Company Indian Engineering Company became the sole selling agent of Kapadia in terms of the agreement ' dated 16 September, 1965.
Indian Engineering Company claimed damages against Kapadia for breach of the agreement.
Kapadia claimed damages and moneys from Indian Engineering Company. 'Disputes arose between the parties.
These disputes were referred to arbitration in accordance with the agreement dated 26 April, 1967.
There was a similar arbitration agreement between Chetan Trading Company and Indian Engineering Company on 5 June, 1967 in respect of their disputes and claims against each other.
The arbitration agreement and the arbitrators were identical in both the cases.
Clauses 1, 2, 5 and 6 of the arbitration agreement which are relevant for the purposes of the present appeals are as follows: Clause (1): All the disputes and differences arising out of or in relation to the said Sole Selling Agency Agreement be and they are hereby referred to the arbitration of the said Shri H. G. Advani and Shri J. N. Gandhi.
Clause (2) That the arbitration shall be governed by them provisions of the .
Clause (5): The arbitrators shall make and publish their award within four months from the date of their entering upon the reference and they are hereby authorised to extend the said time from time to time as may be required with the previous written consent of both the parties hereto.
698 Clause (6): The said arbitrators shall before proceeding with the arbitration appoint an umpire and in the event of any difference arising between them they shall refer the 'matter to the umpire for his decision and award.
The arbitrators Messrs. Advani and Gandhi held their first meeting on 12 September, 1967.
At the said meeting before entering upon the reference the arbitrators appointed an umpire in the following terms: "Mr. Porus Mehta failing him Mr. Murzban Mistry appointed umpire".
On 11 January, 1968 the time laid down by clause (5) of the agreement for making the award expired.
On 14 January, 1968 the respondents wrote to the appellants to obtain the neces sary extension of time for making the award.
The appellants did not comply with the request and on 6 March, 1968 wrote to the arbitrators that Mr. Advani one of the arbitrators would be biased in favour of the respondents.
Thereafter, the respondents through their solicitors called upon the arbitrators to refer the matter to the umpire and also by a separate letter called upon the umpire Mr. Porus A. Mehta to enter on the reference as umpire appointed by the arbitrators.
Mr. Mehta fixed a meeting on 27 May, 1968.
The appellants raised certain objections.
The meeting was adjourned.
Another meeting was fixed on 17 June, 1968.
At the meeting held on 17th June, 1968 Mr. Mehta gave certain directions in regard to the proceedings and instructions thereof and fixed 12 July, 1968 for hearing.
The appellants by letter dated 12 July, 1968 addressed to Mr. Mehta contended that the consent of the umpire was not obtained before his appointment and therefore there was no valid appointment of the umpire.
Mr. Mehta fixed the meeting on 13 July, 1968 and decided to proceed with the arbitration and adjourned the meeting to 20 July, 1968.
The appellants obtained an adjournment on the ground that the appellants wanted to file a petition challenging the appointment of Mr. Mehta as an umpire.
Mr. Mehta adjourned the matter till 30 July, 1968.
In this context of events the appellants filed applications under section 33 of the which resulted in the order appealed against.
Three contentions which had been advanced An the High Court were repeated here.
First, that the arbitrators before pro ceeding with the reference did not obtain consent of the umpire to his appointment as umpire, and, therefore, there was no appointment of umpire.
Secondly, under clause (6) of the arbitration agreement operation of paragraph 4 of Schedule I of the 699 was excluded and the umpire could enter upon the reference only in the event of a difference arising between the arbitrators on their disagreement.
No difference arose between the arbitrators in the present case but only time for making the award expired.
Therefore, the umpire had no right to enter upon the reference.
Thirty under clause (6) of the arbitration agreement, the umpire had no right to enter upon the reference unless the arbitrators referred the matter to the umpire.
The High Court relied on the decision of the Judicial Committee in Mirza Sadik Husain vs Mussanmat Kaniz Zohra Begam and Anr.(1) (38 I.A. 181) and held that the umpire signified the consent by taking up the office and the umpire rightly entered on the reference.
The High Court held that the contingency provided for in paragraph 4 of Schedule I to the was not excluded.
The High Court however said that if the High Court was wrong in the view that paragraph 4 of Schedule I to the was not excluded, expiry of time to make an award could not be regarded as a disagreement between the arbitrators.
The third contention of the appellants was also rejected by the High Court on the ground that clause (6) of the arbitration agreement in the present case did not apply when the arbitrators did not make an award within time.
Counsel for the appellants contended that the words 'if any appointed arbitrator or umpire I neglects or refuses to get ' occurring in section 8(1) of the mean that one can refuse to act only after one has accepted the appointment.
This contention was supported by relying on the following observation in Russell on Arbitration, 18th Edition, at page 212: "Acceptance of offices: Acceptance of the office by the arbitrator appears to be necessary to perfect his appointment.
It has been so decided in the case of an umpire, and it would seem to be only reasonable that an appointment should not be considered effective until the person appointed has agreed either expressly or tacitly to exercise the function of the office".
Two decisions are cited in Russell in support of the view expressed by the author.
These decisions are: Ringland vs Lowndes (7 ) ; E.R. 749 and Tradax Export section A. vs Volkawagenwerk 3 A.G. ', (1969) 2 O.B. 599.
The decision in Tradax Export case (supra) has been affirmed by the Court of Appeal as will appear in It is important to notice the distinction between appointment and acceptance of office.
The present appeals concern the appointment of an umpire.
The questions of effectiveness or per 700 fection of appointment are by the nature of things subsequent to appointment unless the agreement or the statute provides otherwise.
Arbitrators and umpire too are often appointed by the parties.
Sometimes an umpire is appointed by arbitrator.
The constitution of the arbitral body and the manner in which the appointments are made are primarily dealt with in the arbitration agreement or else the will apply.
In some cases, the appointment of arbitrator may require special consideration.
If, for instance, two arbitrators are required to be appointed one by each party an appointment of arbitrator by a party is not complete without communication thereof to the other party.
The reason in the words of Lord Denman is this : 'Neither party can be said to have chosen an arbitrator until he lots the other party know the object of his choice" (See Thomas vs Fredricks) ( 1 847) 10 Q.B. 775).
Where each party was to appoint a valuer by 31 May, 1847 and one of the parties nominated a referee late on 31 May and sent by that night 's post a notice thereof to the defendant who received it on 1 June, it was held that the plaintiff had not nominated a referee by 31 May. (See Tew vs Harris The necessity for communication of appointment of arbitrator to the parties as also to the appointee depends often on the languae of the arbitration clause.
In the Tradax Export case, (supra) the arbitration clause was as follows : ". .
Any claim must be made in writing and claimant 's arbitrator appointed within three months ' of final discharge and where this provision is not complied with the claim shall be deemed to be waived and absolutely barred".
This is described as the usual Centrocon arbitration clause in charterparty agreement.
It is noticeable that in the Centrocon arbitration clause the claimant is required to appoint an arbitrator within three months of final discharge of cargo or else the claim is barred.
An effective appointment of an arbitrator in such a clause is necessary to constitute arbitral authority within the stipulated time to prevent the claim from being barred.
Therefore, in such a clause not only communication to the appointee but also the acceptance of office by the appointee is essential for effective appointment of arbitrator within the meaning of the clause.
A mere nomination or appointment unknown to the appointee was held not to be an appointment far less an effective appointment of arbitrator within the meaning of that clause.
The appointment will be effective only when the appointed arbitrator accepts office and is armed with the duty and authority of an arbitrator.
Even in such a clause the stage of effective appointment will be when he has indicated his willingness to act in that matter.
701 In the Tradax Export case (supra) the charterers gave notice of appointment to the arbitrator.
Three months expired The other side contended that there was no appointment of arbit rator within the stipulated time.
The arbitrator was not set in motion.
Neither was the arbitrator clothed with the mandate of arbitration nor was the machinery of arbitration invoked by the charterers.
The appointment of an arbitrator there had to be perfected and implemented by calling upon the appointee to act.
In the Tradax Export case (supra) the Court of Appeal observed that if an application under section 27 of the English Arbitration Act, 1950 had been made, the court would have, granted relief as explained in Liberian Shipping Corporation 'Pegasus ' vs A. King & Sons Ltd. Section 27 of the English Arbit ration Act is a special provision conferring power upon the court to extend the time for commencement of arbitration proceedings where in the circumstances of the case undue hardship would otherwise be, caused.
This aspect indicates that in the Centrocon clause commencement of proceedings by effective appointment is vital and that is why relief against rigour of time clauses is granted under section 27 of the English Arbitration Act, 1950.
In the present appeals, the reference was to arbitrators and they were required to appoint an umpire.
The appointment of an umpire by two arbitrators means that the arbitrators are to coneur in appointing an umpire.
There is no particular method of appointment of an umpire prescribed by the Act.
The usual method of appointment of an umpire by the arbitrators is in writing.
Arbitrators who are required to appoint an umpire are under no obligation to obtain the approval of the choice of the personnel by the parties who appointed the arbitrators.
If any party is dissatisfied with the choice that will not affect the validity of the appointment (See Oliver vs Collings E.R. (1045).
The appointment by arbitrators of an umpire should be the act of the will and judgment the two.
Such an appointment is to be one of the choice and not of chance.
[See Re.
Cassell ; E.R. 232].
If an umpire declines the office the appointment is ineffectual.
Ile arbitrators in such a case can make another appointment of an umpire if the arbitration agreement empowers them to do SO Or the court can appoint an umpire in lieu of an appointed umpire who refuses to act.
Declining the office will be refusal to act.
It is, therefore, apparent that appointment of umpire is something different from the acceptance of office by the umpire.
The arbitrator Or umpire assumes his office when he accepts the appointment.
There is no NO authority for the proposition that consent of the appointee is required before an umpire is appointed by the arbitrators.
The observations in Russll on arbitration.
18 th Ed. 702 at page, 212 do not support that submission.
The decision in Ringland vs Lowndes supra) which is referred to in Russell had very special features.
Under the Public Health Act, 1848 a disputed claim to compensation was to be settled by arbitration.
Arbitrators were required to make an award within 21 days after the appointment or within extended time, if any.
If arbitrators neglected or refused to appoint an umpire for seven days after being requested so to do by any party the court of quarter sessions would on the application of such party appoint an umpire.
In that case arbitrators were appointed in January, 1861.
The arbitrators refused to appoint an umpire.
The plaintiff applied at the Easter sessions to appoint an umpire but failed in consequence of want of a notice of his intention to make such application.
The plaintiff thereafter gave the required notice and the second application was made at the Midsummer sessions.
One Johnson was named as umpire.
But as his consent had not been obtained no formal appointment was made.
A third application was made at the Michaelms sessions and Johnson was on 14 October appointed umpire and accepted the appointment.
The question for consideration was whether the appointment of the umpire was at the Midsummer sessions or at the Michaelmas sessions.
Under the statute the award was, to be made within three months from the umpire,s appointment.
The umpire made an award on 30 December, 1861.
If the appointment was in the Midsummer sessions the Award would be bad.
It will appear from the report (15 C.B ' (N.S.) 173 at pp.
178, 179 and 749 at pp.
752 and 759) that it was the duty.
and practice of the clerk of the peace to make an, entry of the acts and proceedings of the court from Which the orders of the court were subsequently formally drawn up and no order would in the course of practice be formally drawn up unless the assent of the umpire to act had been previously obtained.
Counsel for the board in Ringland 's case did not strongly press the objections that ' an order 'was made at the Midsummer sessions because there was no formal order of the Court in Midsummer 'sessions.
The decision in Ringland vs Lowndes (supra) went up on appeal as will, appear from; , , E.R. 207, The appeal, however was on actual decision in Tringland,s case (supra) ;is 'to whether a party who attended before, an, arbitrator under protest, cross examined adversary 's witnesses and called witnesses did not preclude himself from afterwards objecting that the arbitrator was proceeding without authority it will appear at conceded that the, appointment of Johnson as an umpire took Place the October sessions.
the special provisions of the statute, the mode.
of making an application to the court of quarter Sessions, me practice of the court in regard to drawing up of 703 orders for appointment of umpire and the specific requirement of consent of the appointee to an order for appointment of umpire are all special and peculiar features in Ringland vs Lowndes (supra) to support the view that acceptance of umpirage is necessary for the appointment of the umpire.
The decision of the Judicial Committee in Mirza Sadiq Husain vs Musammat Kaniz Zohra Begam (supra) was on the meaning of the words 'refuses to act ' occurring in section 510 of the Code of Civil Procedure, 1882.
That section conferred power on the court to appoint a new arbitrator or umpire "if the arbitrator or the umpire refuses to act".
The, Judicial Committee did not accept the construction put upon the words 'refuses to act ' by the High Courts in India that the power of the court under section 5 10 to appoint a new arbitrator in place of another arises only when that other had first consented to act and thereafter refused or became incapable.
The Judicial Committee said "it appears to their Lordships that when an.
arbitrator is nominated by parties, his refusal to act is signified as clearly by his refusal to accept nomination as by any other course he could pursue.
His refusal to act necessarily follows, for he has not performed the first action of all, namely, to take up the office by signifying his assent to his appointment Their Lordships do not enter at length,into the matter as it appears that any other construction would open the way to an easy defeat of the provisions of the statute".
Under section 8 of the Arbitration Act ,1940 if any umpire refuses to act and the arbitration agreement does not show that it was intended that the vacancy should not be supplied, and the parties or the arbitrators as the case may be, do not supply the vacancy any party may take recourse ' to the provisions of the statute for appointment of umpire.
The construction which the Judicial Committee put upon the words 'refuses to act ' in Mirza Sadik Husain 's case (supra) applies to the provisions contained in the .
Where the arbitrators appoint an umpire upon the condition of the umpire 's acceptance of office, the arbitrators wilt have power to reappoint an umpire if the post is refused. 'Where, again, the arbitrators appoint an umpire, without any such condition of acceptance of office, and the appointee declines the office, the, arbitrators in accordance with their powers under the arbitration agreement ea appoint an umpire again.
The court has also power to appoint in lieu of an appointed umpire who refuges to act, as stated in section 8 of the .
In all these cases the appointment of an.
umpire becomes effective by acceptance of the office.
Thereupon the power of appointment is exhausted.
If the appointed person 704 after acceptance of office refuses to act or will not act the parties have to take recourse to the court.
When the umpire assumes his office he accepts the appointment.
The acceptance may be express or implied.
Ile acceptance need not be in writing.
It may be evidenced by conduct.
It may be also by proceeding with the arbitration.
In Mirza Sadik Husain 's case (supra) both the parties by agreement appointed arbitrators to settle their respective rights.
One of the arbitrators refused to act.
The respondents in that case declined to nominate another arbitrator in their behalf .
The Judicial Committee said that this declinature was within their rights, the reason being that the arbitrator refused to accept office or to act after he had been appointed.
The arbitrators in the present case completed their appointment of umpire before entering on the reference.
Thereafter, it remained for the umpire to act or to refuse to act.
The question of acceptance of appointment of umpire arises with reference to the stage when he is called upon to act.
The does not say that appointment of umpire by arbitrators is to be made only after obtaining consent of the appointee.
The arbitrators here appointed an umpire before entering on the reference: The appointment was not conditional upon the acceptance of appointment by the umpire.
The scheme of arbitration proceedings indicates that the appointment of umpire and the acceptance of office are two separate matters arising at different stages in the proceedings.
When the umpire is called upon to proceed in terms of the, appointment he will either assent expressly or by conduct to act or he will decline to act.
The High Court was correct in holding that there was a valid appointment of the umpire and the umpire rightly entered upon the reference.
Ile umpire 's authority commenced when he entered upon the reference on being asked to proceed with the reference.
The other contention on behalf of the, appellants that para graph 4 of the First Schedule to the was excluded by clause (6) of the arbitration agreement in the: present case is unsound.
Section 3 of the provides that an arbitration agreement, unless a different intention is expressed therein, shall be deemed to include the provisions set out in the First Schedule in so far as they are applicable to the reference.
Paragraph 4 of the First Schedule provides that if the arbitrators have allowed their time to expire without making an award or have delivered to any party to the arbitration 705 agreement or to the umpire a notice in writing stating that they cannot agree, the umpire shall forthwith enter on the reference in lieu of the arbitrators.
Clause (6) of the arbitration agreement does not state that only in the event of a difference arising between the arbitrators there shall be a reference to the umpire.
There is no intention in the agreement to exclude the operation of paragraph 4 of the First Schedule to the .
In the present case the agreement provided for appointment of umpire.
The agreement also provided for making of the award by the arbitrators.
It is, therefore, apparent that the intention of the parties was that when arbitrators would allow their time to expire without making the award the umpire would enter on the reference in lieu of the arbitrators.
The High Court expressed the view that if the arbitrators allowed the time to expire that by itself would not amount to disagreement between the arbitrators.
As to what constitutes disagreement cannot be laid down in abstract or inflexible propositions.
It will depend upon the facts of the case as to whether there was a disagreement.
The High Court did not agree with the view expressed in Russel on Arbitration, 18th Ed.
at pages 205 and 208, that failure to make an award in time where the agreement prescribed time in which the arbitrators award is to be made would amount to disagreement.
In Lossifoglu vs Counmantaro [1941] 1 K.B. 396 the arbitration clause provided "in case the arbitrators so appointed disagree they shall appoints an umpire".
One of the arbitrators repeatedly endeavoured to arrange a meeting with the other, but failed to arrange such a meeting.
The arbitrator then unsuccessfully attempted to obtain consent of the latter to the appointment of umpire.
Thereafter, application was made to the court for the appointment of umpire.
Disagreement between the arbitrators may take various shapes and forms.
In the present case the arbitrators by reason of attitude of a party in correspondence addressed to the arbitrators could not agree to proceed with the matter.
Where one of the arbitrators decline to act and the other is left alone it will in a case of this type amount to disagreement between the two arbitrators.
In the Present case, there was disagreement between the arbitrators.
Time to make the award also expired.
Therefore, from both points of view the umpire had authority to inter upon the reference.
For these reasons, we are of opinion that the High Court was correct in making the order.
The appeals are dismissed.
The order of the, High Court is upheld, In view of the fact that the time granted by the High Court till 31 December, 1968 for making the award cannot apply, the umpire Porus A. Mehta is I L3Sup.
Cl/72 706 granted time for three months to make the award.
Three months will run from the date of service of this order by any party to these appeals.
The appellants will pay one set of hearing fee to the respondents.
V.P.S Appeals dismissed.

summary/full:
Disputes having arisen between the appellant and the respondent, they were referred to arbitration in accordance with an arbitration agreement.
The arbitrators entered upon the reference and also appointed an umpire.
After the time for making the award had expired the appellant took the stand that one of the arbitrators would be biased in favour of the respondents.
The respondents therefore called upon the arbitrators to refer the matter to the umpire and also wrote to the umpire and the umpire entered upon the reference.
Thereafter, the appellants filed applications under section 33 of the .
The High Court held that the umpire rightly entered upon the reference, and extended the time to enable the umpire to make an award.
In appeal to this Court it was contended that : (1) the appointment of the umpire was not valid because the consent of the appointee was not obtained,; and (2) under cl. 6 of the Arbitration agreement the operation of para 4 Sch.
I of the was excluded, and the umpire could enter upon the reference only in the event of a difference arising between the arbitrators and the arbitrators referred the matter to the umpire.
Dismissing the appeal, HELD : (1) There is a distinction between appointment and acceptance of an office.
The question of effectiveness or perfection is ordinarily subsequent to appointment.
The scheme of arbitration proceedings indicates that the appointment of an umpire and the acceptance of office are two separate matters arising at different stages in the proceedings.
[699 H; 700 A: 704 E] When the arbitrators are required to appoint an umpire it only means that the arbitrators are to concur in appointing the umpire.
There is no particular method of appointment of an umpire though the usual method is by writing.
Arbitrators who are required to appoint an umpire are under no obligation to obtain the approval of the choice of the person by the parties who appointed the arbitrators.
If any party is dissatisfied with the choice it will not affect the validity of the appointment; nor is the appointment conditional upon the acceptance of appointment by the umpire.
The necessity for communication of appointment to the parties as well as to the appointee depends on the language of the arbitration clause.
The does not say that the appointment of umpire by the arbitrators is to be made only after obtaining the consent of the appointee.
[700 D E; 701 D F; 704 D E] When the umpire assumes his office he accepts the appointment.
Acceptance may be express or implied.
It need not be in writing; it may be evidenced by conduct.
It may also be evidenced by proceeding with 696 the arbitration.
When the umpire is called upon to proceed in terms of the appointment he will either assent expressly or by conduct to act, or he will decline to act.
[704 A B, D, E F] Mirza Sadik Husain vs Mussamat Kaniz Zohra Begam, L.R. 38 I.A. 181, applied.
Ringland vs Lowndes, ; ; and Tradax Export S.A. vs Vokswagenwerk A.G. , explained and distinguished.
(2) (a) Paragraph 4 of the first schedule provides that if the arbitra delivered to any party to the arbitration agreement or to the umpire a notice in writing stating that they cannot agree, the umpire shall forthwith enter on the reference in lieu of the arbitrators. 'Mere is no intention in cl. 6 of the agreement to exclude the operation of this paragraph.
On the contrary the agreement shows that the intention of the parties was that when the arbitrators allowed time to expire without making the award the umpire should enter on the reference in lieu of the arbitrators.
[704 H; 705 A C] (b) In the present case, the arbitrators, by reason of the attitude of one of the parties could not agree to proceed with the matter.
Where one of the arbitrators declines to act and the other is left alone in a case of this type, it will amount to disagreement between the arbitrators.
[705 F G] (c) Failure to make an award in time where the agreement prescribed time does in.
certain circumstances, amount to disagreement.
[705 D E] Iossifoglu vs Counmantaros, and Russel on Arbitration, 18th Ed. pp. 205, 208, referred to.


judgement:
l Appeals Nos. 1970 to 1973 of 1968.
Appeals from the judgment and order dated September 20, 1967 of the Delhi High Court in Income tax Reference Nos. 2 :and 3 of 1967.
V.C. Mahajan and H. K. Puri, for the appellant (in all the appeals) V.S. Desai, R. N. Sachthey and B. D. Sharma, for the respondent (in all the appeals).
The Judgment of the Court was delivered by Hegde, J.
In these appeals by certificate, the only question arising for decision is : "whether on the facts and in the circumstances of the case, the assessee.
continued to be the owner of the property for the purposes of computation of income under section 9 of the Income tax Act, 1922" (to be hereinafter referred to as the Act).
A Full Bench of the Delhi High Court speaking through section K. Kapur, J. answered that question in the negative.
Being dissatisfied with that decision the assesses has brought these appeals.
Now turning to the facts of the case, the concerned assess ment years are 1952 53, 1955 56 and 1956 57, the relevant accounting periods being financial years ending March 31, 1952, March 31, 1955 and March 31, 1956.
The assesses is a registered 641 firm deriving income from interest on securities, property, business and other sources.
Sometime In the year 1946 it purchased the Nedous Hotel in Lahore for a sum of Rs ' 46 lakhs.
For that purpose it raised a loan of Rs. 30 lakhs from M/s. Bharat Bank Ltd., Lahore and a loan of Rs. 18 lakhs from the Raja of Jubbal.
The loan taken from the bank was partly repaid but as regards the loan taken from the Raja, the assessee came to an agreement with the Raja under which the Raja accepted a half share in the said property in lieu of the loan advanced and also 1/3rd of the outstanding liability of the bank.
This arrangement came into effect on November 1, 1951.
After the creation of Pakistan, declared an evacuee property and consequently vested in the Custodian in the Pakistan.
In its return for the relevant assessment years, the assessee claimed losses of Rs. 1,00,723.
Rs. 1,16,599/ and Rs. 1,16,599/ respectively but showed the gross annual letting.
value from the said property at Nil.
The loss claimed was stated to be on account of interest payable to the bank.
Since the property in question has vested in the Custodian of Evacuee Property, in Pakistan, the Income tax Officer held that no income or loss from that property can be considered in the assessee 's case.
He accordingly disallowed the assessees claim in respect of the interest paid to the bank.
The Appellate Assistant Commissioner confirmed the order of the Income tax Officer.
In second appeal the Tribunal came to the conclusion that the assessee still continued to be the owner ' of the property for the purpose of computation of loss.
The Tribunal held that the interest paid is a deductable allowance under section 9(1)(iv) of the Act.
In arriving it that conclusion, the Tribunal relied on its earlier decision in the case of the assessee in respect of the assessment year 1951 52.
thereafter at the instance of the assessee, the Tribunal submitted the question set out earlier.
Ile High Court on an analysis of the various provisions of the Pakistan (Administration of Evacuee property) Ordinance, 1949 (XV of 1049) (to be hereinafter erred to as the 'Ordinance) came to the conclusion that for the purpose of section 9 of the Act, the assasee cannot be considered as .he owner of that property.
It was urged by Mr. V. C. Mahajan, learned Counsel for the assessee that the High Court erred in opining that the assessee was not the owner of the property, for the purpose of section 9 of the Act.
According to him the property vested in the Custodian only for the purpose of administration and the assessee still continued to be its owner.
He contended that the expression "owner" means the person having the ultimate right to the property.
He further contended that the so long as the assessee had a right to that 7 L3Sup.
C.I./72 property in whatever manner that right might have been hedged in or restricted, he still continued to be the owner.
On the other hand, it was contended on behalf of the Revenue that the Incometax is concerned with income, gains and profits.
Therefore for the purpose of that Act, the owner is that person who is entitled to the income.
According to the Revenue the word "owner" in section 9 refers to the legal ownership and not to any beneficial interest in the property.
For deciding the question whether the assessee was the owner of the property for the purpose of section 9 of the Act during the relevant accounting years, we have to look to the provisions of the Ordinance.
Let us first take a survey of the relevant provisions of the Ordinance and thereafter analyse the effect of those provisions.
The long title of the Ordinance says that it is an Ordinance to provide for the administration of the evacuee property in Pakistan and for certain matters incidental thereto.
The preamble says that "whereas an emergency has arisen which renders it necessary to provide for the administration of evacuee property in Pakistan and for certain matters incidental thereto".
Section 6(1) provides that all evacuee property shall vest and shall be deemed always to have vested in the Custodian with effect from the 1st day of March 1947.
Section 9 gives Dower to the Custodian to take possession of the evacuee property.
Section 11 provides that any amount due to an evacuee or payable in respect of any evacuee property, shall be paid to the Custodian by the person liable to pay the same and the payment to the Custodian discharges the debtor 's liability to the extent of the payment made.
Section 12 prescribes that the property which hag vested in or of which possession has been taken by the Custodian shall be exempt from all legal process, including seizure, distress, ejectment or sale by any officer of a Court or any other authority a;; no injunction or other order of whatever kind in respect of such property shall be granted or made by any Court or any ot" authority.
Section 14(1) permits the Rehabilitation Authority, allot evacuee property to the refugees.
Section 16(1) says the no creation or transfer of any right or interest in or encumbrane, upon any property made in any manner whatsoever on or after the first day of March, 1947 by or on behalf of an evacuee or by or on behalf of a person who has or may become an evacuee after the date of such creation or transfer, shall be effective so as to confer any right or remedy on any party thereto or on any person claiming under any such party, unless it is confirmed by the Custodian.
Section 19 empowers the Custodian to restore the evacuee property to the lawful owner subject to such conditions as he may be pleased to impose.
Section 20(1) stipulates that the Custodian may take such measures as he considers 643 necessary or expedient for the purpose of administering, preserving and managing any evacuee property which has vested in him and may for any such purpose as aforesaid, do all acts and incur all expenses necessary or incidental thereto.
Sub section
(2) of that section provides that "without Prejudice to the generality of the provisions contained in sub section
(1), the Custodian may.
(m)sell any evacuee property, notwithstanding any this contained in any law or agreement to the contrary relating thereto, Provided that the Custodian shall not under this Clause or the next succeeding clause sell any immovable evacuee property or any business or undertaking which is evacuee property, except with the previous approval of the Central Government.
" Clause (i) of that sub section empowers the Custodian to demolish or dismantle any evacuee property which in his opinion cannot be repaired, or sell the site of such property and the materials thereof.
The Custodian can recoup all the expenses incurred by him in the administration of the evacuee property from out of the receipts in his hand in respect of that property, Section 22(1) requires the Custodian to maintain separate account of the property of each evacuee of which he has taken possession and shall cause to be made therein entries of all receipts and expenditure in respect therof.
The Ordinance starts by saying that it is an Ordinance to provide for the administration of evacuee property and not management of evacuee property.
The expression "administra tion" in relation to an estate, in law means managements and settling of that estate.
It is a power to deal with the estate.
The evacuee could not take possession of his property.
He could not lease that property.
He could not sell that property without the consent of the Custodian.
He could not mortgage that property.
He could not realise the lncome of the property.
On the other hand, the Custodian could take possession of that property.
He could realise its income.
He could alienate the property and he could under certain circumstances demolish the property.
All the rights that the evacuee had in the property he left in Pakistan were exercisable by the Custodian excepting that he could not appropriate the proceeds for his own use.
The evacuee could not exercise any rights in that property except with the consent of the Custodian.
He merely had some beneficial.
interest in that property.
No doubt that residual interest in a sense is ownership.
The property having vested in the Custodian, who bad 644 all the powers of the owner, he was the legal owner or the property.
In the eye of the law, the Custodian was the owner of that property.
The position, of the Custodian was no less than that of a Trustee.
Section 9(1) says : "The tax shall be payable by an assessee under the head "Income from Property" in respect of the bona fide annual value of property consisting of any buildings or lands appurtenant thereto of which he is the owner, other than such portions of such property as he may occupy for the purposes of any business, profession or vocation carried on by him the profits of which are assessable to tax subject to the following allowances namely : The question is who is the "owner" referred to in this section ? Is it the person in, whom the property vests or is it he who is entitled to some beneficial interest in the property It must be remembered that section 9 brings to tax the income from property and not the interest of a person in the property.
A property cannot be owned by two persons, each one having independent and exclusive right over it.
Hence for the purpose of section 9, the owner must be that person who can exercise the rights of the owner, not on behalf of the owner but in his own right.
For a minute, let us look at things from the practical point of view.
If the thousands of evacuees who left practically all their properties as well as business in Pakistan had been considered as the owners, of those properties and business as long as the 'Ordinance ' was in force then those unfortunate persons would have had to pay income tax on the basis of the annual letting value of their properties and on the income, gains and profits of the businesses left by them in Pakistan though they did not get a paisa out of those properties and businesses.
Fortunately no one in the past interpreted the law in the manner Mr. Mahajan wants us to interpret.
It is time that equitable considerations are irrelevant in interpreting tax laws.
But these laws, like all other laws have to be interpreted reasonably and in consonance with justice.
The question as to who is Vie owner of a house property under section 9 of the Act in circumstances similar to those before us came up for consideration before the Calcutta High Court in the matter of The Official Assignee for Bengal (Estate of Jnanendra Nath Pramanik) (1).
In that case on the adjudication of a person as insolvent under the Presidency Towns Insolvency Act, 1909, certain house property of the insolvent vested in the Official Assignee.
The question arose whether the Official Assignee (1)5.
I.T.R. 233.
645 could be taxed in respect of the income of the property under section 9.
The High Court held_ that the property did not by reason of the adjudication of the debtor cease to be a subject fit for taxation and in view of the provisions of section 17 of the Presidency Towns Insolvency Act, the Official Assignee was the, "owner" of the property and he could rightly be assessed in respect of the income from that property under section 9.
Section 17 of the, Presidency Towns Insolvency Act, reads: "On the making of an order of adjudication, the property of the insolvent wherever situate shall vest in the official assignee and shall became divisible among his creditors, and thereafter, except as directed by this Act, no creditor to whom the insolvent is indebted in respect of any debt provable in insolvency shall, during the pendency of the insolvency proceedings, have any remedy against the property of the insolvent in respect of the debt: or shall commence any suit or other legal proceedings except with the leave of the Court and on such terms as the Court may impose : Provided that this section shall not affect the power of any secured creditor to realize or otherwise deal with his security in the same manner, as he would have been entitled to realise or deal with it if this section had not been passed.
" We may note that the powers of the Custodian are no less than that of the Official Assignee under the Presidency Towns Insolvency Act, 1909.
Delivering the judgment of the Court in the Official Assignee 's case(1), Costello, J. observed : "With regard to the first point, Mr. Page argued that although by section 17 of the Presidency Towns Insolvency Act these properties vested in the Official Assignee he did not thereby or thereupon become the owner of those properties within the meaning properly ascribable to that word for the purposes of the applicability of Section 9.
What Mr. Page really invited us to do was to restrict the meaning of the word by putting before it the qualifying adjective "beneficial".
What was argued by Mr. Page was that the Official Assignee had no legal interest in the properties themselves, they were merely vested in him for the purposes of the administration of them in the interest of the creditors of the insolvent.
I am unable to accept Mr. Page 's contention.
In this country there is no difference between "legal estate" and "equitable estate".
In this connection the case of Sir Currimbhoy Ebrahim Baro (1) 646 netcy Trust vs Commissioner of Income tax, Bombay 612 I.A. 1209) is of assistance.
At page 217 Sir Sydney Rowlatt when giving the judgment of the Privy Council made this observation: "In their Lordships" opinion the effect of the Act creating these trusts is not to give the baronet for the time being any right to any part of the interest or property specifically or any right which, even granting that the legal title is not the only thing that can ever be looked at, would make it true to say that any proportion of the interest is not 'receivable ' or any proportion of the property is not 'owned ' by the incorporated trustees.
" The learned judges of the Calcutta High Court in reaching that conclusion relied on the decision in The Commissioner of Inland Revenue vs Fleming(1).
That appeal related to a claim for repayment of income tax to which the respondent claimed to be entitled in respect of "personal allowance" introduced into the Income tax system by section 18 of the Finance Act, 1920.
The claim arose in the following circumstances : The respondent was declared insolvent in 1921.
He was then the owner of heritable properties.
His insolvency lasted till May 10, 1926.
When he received his discharge on payment of composition and was reinvested in his estate.
At that time his estate consisted of (1) Two of the original heritable properties which had not been realised by the trustee in the insolvency and (2) a balance in cash of pound 53 odd.
During the insolvency, the trustee paid income tax on the full annual value of the two properties in question.
The contention of the respondent was that the radical right to these properties was in him all that time; and that; in paying the tax, the trustee was really paying it on his behalf that is, on his income and that consequently there arose in each of the years in which the payment was made a right to deduct his "personal allowance" from the annual value 'of the properties.
The right to this abatement is said to have passed to the Respondent himself in virtue of the reinvestment in his estate which occurred upon his discharge on composition.
Rejecting this contention Lord President observed : "It is obvious that, unless during the years in question the annual value of the properties was income of the Respondent, he cannot have any claim to abatement of it for income tax purposes; and accordingly everything depends upon the soundness of the proposition that the income consisting in the annual value of (1) 14, Tax Cases 78.
647 these properties was truly income of the Respondent.
I do not see how it can possibly be so described.
It was part of the income arising from the sequestrated estates vested in the trustee for the Respondent 's creditors.
Any income that did arise from those estates was income of the trustee as such, and he (and he alone) had the right to put it into his pocket as income.
It was not income that went or could go into the pocket of the Respondent as income in any of the years in question.
How then can it be said to have reached his pocket as income on his subsequent reinvestiture.
" For determining the person liable to pay tax, the test laid down by the court was to find out the person entitled to that income.
An attempt was made by Mr. Mahajan to distinguish this case on the ground that under the corresponding English statute the liability to tax in respect of income from property is not laid on the owner of the property.
It is true that section 82 of the English Income tax Act, 1952 is worded differently.
But the principles underlying the two statutes are identical.
This is clear from the various provisions in that Act.
The conclusion reached by Costello, J. in Official Assignee 's case(1) receives support from the decision of the Privy Council in Trustees of Sir Currimbhoy Ibrahim Baronetcy Trust vs Commissioner of Income tax, Bombay(2).
The Counsel for the appellant was unable to point out to us any decision which has taken a view contrary to that taken in Official Assignee 's case(3).
The learned judges of the High Court in reaching their con clusion that the assessee was not the owner of the property in the relevant assessment years, took assistance from the decisions of English courts dealing with the question of levy of income tax on the income from enemy properties taken possession of by the Custodian during war.
In those cases the English judges have enunciated the theory of suspended ownership.
We do not think that we need call assistance from those decisions.
Mr. Mahajan contended that despite the fact that evacuee property was taken over by the Custodian and that he had been conferred with large powers to deal with it, an evacuee from Pakistan who owned that property before he migrated to India still continued to be the owner of the property.
For this contention of his he placed reliance on some of the observations of this Court in Amar Singh vs Custodian, Evacuee Property, Punjab(1).
Therein delivering judgment of the Court Jagannadhadas, J. observed (at p. 815 of the report): (1)5 I.T.R. 233.
(2)2 I. T.R. 148.
(3) [1957] S.C.R. 648 "Stopping here it will be seen that the position, in its general aspect, is that all evacuee property is vested in the Custodian.
But the evacuee has not lost his ownership in it.
The law recognised his ultimate ownership subject to certain limitations.
The evacuee may come back and obtain return of his property, as also an account of the management thereof by the Custodian.
" Those observations have to be understood in the context in which they were made.
Therein, their Lordships were considering whether the right of an evacuee in respect of the property left by him in the country from which he migrated was property right for the purpose of article 19 (1 ) (1) (f ) of the Constitution.
No one denies that an evacuee from Pakistan has a residual right in the property that he left in Pakistan.
But the real question is, can that right be considered as ownership within the meaning of section 9 of the Act.
As mentioned earlier that section seeks to bring to tax income of the property in the hands of the owner.
Hence the focus of that section is on the receipt of the income.
The word "owner" has different meanings in different contexts.
Under certain circumstances a lessee may be considered as the owner of the property leased to him.
In Stroud 's Judicial Dictionary (3rd Edn.), various meanings of the word "owner" are given. ' It is not necessary for our present purpose to examine what the word "owner" means in different contexts.
The meaning that we give to the word " owner" in section 9 must not be such as to make that provision capable of being made an instrument of oppression.
It must be in consonance with the principles underlying the Act.
Mr. Mahajan next invited our attention to the observations in Pollock on Jurisprudence (6th Edn. 1929) 178 80: "Owner ship may be described as the entirety of the powers of use and disposal allowed by law.
The owner of a thing is not necessarily the person who at a given time has the whole power of use and disposal; very often there is no such person.
We must look for the person having the residue of all such power when we have accounted for every detached and limited portion of 'it; and he will be the owner even if the immediate power of control and use is elsewhere".
It is not necessary to consider whether those observations hold good even now because of the various legislative measures enacted during the last about forty years after those observations were made.
Suffice it to say that those observations are inapplicable to the case of the "owner" under section 9 of the Act.
649 Mr. Mahajan in support of his contention next placed reliance on the decision of the Patna High Court in Raja P. C. Lal Choudhary vs Commissioner of Income tax(1).
Therein the question was whether the receiver of a property appointed by court was the owner of the property for the purpose of section 9 of the Act.
The court came to the conclusion that he was not the owner as the property did not vest in him.
In fact in the course of the judgment, the court made a distinction between a receiver and a trustee and an official assignee.
In our opinion this decision instead of supporting the case of the appellant may lend some support to the contention of the Revenue.
Reliance was next placed on the decision of the Calcutta High Court in Nawah Bahadur of Murshidabad vs Commissioner of Income tax, West Bengal(2).
The facts of that case were : Properties which belonged to the ancestors of the Nawab of Murshidabad as Rulers, were, some time after the territories had been conquered by the British, settled by the Secretary of State for India in the year 1891 on the then Nawab of Murshidabad under a deed of settlement which provided that such properties " shall henceforth and for ever be held and enjoyed by the said Nawab Bahadur and such one among his lineal male heirs as may be successively entitled to hold the said title in perpetuity,.
with and subject to the incidents, power, limitations and conditions as to the inalienability and otherwise hereinafter contained".
One of the conditions was that he was not entitled to sell or alienate the properties except with the approval of the Governor of Bengal.
The Settlement deed was confirmed by Act XV of 1891.
The question arose whet her Nawab of Murshidabad was liable to pay tax in respect of the income of those properties under section 9 of the Act.
The Court held that whatever might have been the original nature of the "State properties, after the deed of settlement and the Act of 1891, as the dual status of the Nawab as the holder of the State and as an individual ceased, it could not be said that the Nawab for the time being was not the "owner" of such properties for the purposes of section 9 of the Act and the Nawab was therefore liable to be assessed to income tax on the income of such properties.
The Court further held that the word "owner" in section 9 of the Act applies to owners of the whole income, even though they are under certain restrictions with regard to the alienation of the properties.
We are unable to see how this decision gives any support to the contentions advanced on behalf of the assessee.
After giving our careful consideration to the question of law under consideration, we have come to the conclusion that the (1) (2) 650 assessee was not the owner of Neadous Hotel during the relevant assessment years for the purpose of section 9 of the Act.
Hence these appeals fail and they are dismissed.
In the circumstances of the case we make no order as to costs in these appeals.
G.C. Appeals dismissed.

dataset_name: IN-Abs

summary/full:
The assessee was a .,registered firm deriving income from securities, property, business and other sources.
In 1946 it purchased a hotel in 'Lahore for a sum of Rs. 46 lacs.
For that purpose it raised a loan of Rs. 30 lacs from a bank and a loan of Rs. 18 lacs from one R. The 'loan taken from the, bank was largely repaid but with R the assessee came to an agreement whereby R accepted a half share in the said property in lieu of the loan advanced and .
also 1/3rd of the outstanding liability of the bank.
This arrangement came into effect on November 1, 1951.
After the creation of Pakistan, Lahore became a part of Pakistan and the hotel in question was declared evacuee property.
As such it came to vest in the Custodian in Pakistan.
In its returns for the assessment years 1952 53, 1955 56 and 1956 57 the assessee claimed certain amounts as losses on account of interest payable to the bank but showed the gross annual letting value from the said property at Nil.
The Income tax Officer held that since the property had vested in the Custodian no income or loss from that property could be considered in the assessee 's case.
The Appellate Assistant Commissioner confirmed the order of the Income tax Officer.
The Appellate Tribunal however came to the conclusion that the assessee still continued to be the owner of the property for the purpose of the computation of loss, and the interest paid was a deductible allowance under section 9(1) (iv) of the Income tax Act, 1922.
reference the High Court on an analysis of the various provisions of the Pakistan (Administration of Evacuee Property) Ordinance.15 of.
1949 came to the conclusion that for the purpose of section 9 of the Act the assessee could not be considered as the owner of that property: 'In the assesee 's appeal to this Court it was contended that the property vested in the Custodian only for.
the purpose of administration and the assessee still continued to be its owner.
HELD : Under the Pakistan (Administration of Evacuee Property) Ordinance 1949 the evacuee could not take possession of his property.
He could not lease that property.
He could not sell the property without the consent of the custodian.
He could not mortgage that property.
He could not realise the income of the property.
All the rights that the evacuee had in the property were exercisable by the Custodian excepting that he could not appropriate the proceeds to his own use.
The evacuee had only a beneficial interest in the property.
In the eye of the law the Custodian who had all the powers of the owner was the owner of the property.
His position_ was no less than that a Trustee.
[643 F 644 A] Section 9 of the Income tax Act, 1922, brings.to tax the income from property and.
not the interest of a. person in the property.
A property cannot be owned by two persons, each one having independent and exclusive right over it.
Hence for the purpose of section 9 the owner must be 640 that person who can exercise the rights of the owner, not on behalf of the owner but in his own right.
Accordingly the assessee was not the owner of the property in question during the relevant assessment years for the purpose of section 9 of the Act.
[644 D] It is true that equitable considerations are irrelevant in interpreting tax laws.
But those laws like all other laws have to be interpreted reasonably and in consonance with justice.
If the thousands of evacuee who left practically all their properties as well as businesses in Pakistan had been considered as the owners of those properties and businesses as long as the 'ordinance ' was in force then those unfortunate persons would have had to pay income tax on the basis of the annual letting value of their properties and on the income, gains and properties of the business left by them in Pakistan though they did not get a paisa out of those properties and business.
Fortunately no one in the past interpreted the law in the manner suggested by the assessee.
[644 E G] Official Assignee for Bengal (Estate of Jnanendra Nath Pramanik), , Commissioner of Inland Revenue vs Fleming, and .Sir
Currimbhoy Ibrahim Baronetcy Trust vs C.I.T., Bombay, , applied.
Amar Singh vs Custodian, Evacuee Property, Punjab, [1957] S.C.R. 801, distinguished.
P.C. Lai Choudhary vs C.I.T., and Nawab Bahadur of Murshidabad vs C.I.T., West Bengal, 28 I.T.R. 510, considered.


judgement:
Appeal No. 2149 of 1968.
Appeal from the judgment and order dated January 3, 1967 of the Rajasthan High Court in D. B. Wealth Tax Reference No. 6 of 1963.
section Mitra, O. P. Malhotra, R. N. Sachthey and B. D. Sharma, for the appellant.
M. C. Setalvad, H. P. Gupta and B. R. Agarwala, for the respondent.
The Judgment of the Court has delivered by Hegde, J.
This appeal by certificate arises out of the wealth tax assessment of the assessee respondent, an individual, for the year 1959 60, the corresponding valuation date being* March 708 31, 1959.
The assessee is the, wife of Maharaja of Jaipur.
On September 9, 1953, the Maharaja made a settlement at London.
Under the deed of settlement, he appointed Sir Harold Augustus Warner as the trustee of the property detailed in the deed of settlement.
The settlement is an irrevocable one and the properties mentioned in the schedule to the trust deed stood transferred to the name of the trustee.
The trust deed provides that the trustee should pay to the assessee during her life time 50 per cent of the income of the trust fund.
The question arose whether the assessee can be held to have any share in the corpus of the trust and whether the same can be brought to tax under the provisions of the Wealth Tax Act, 1957 (to be hereinafter referred to as the Act).
The Wealth tax Officer came to the conclusion that the assessee 's interest in U.K. Trust amounting to Rs. 15,75,694/ plus the income tax reserve thereon Rs. 1,75,401/have to be included in the assessee 's total wealth.
This decision was confirmed by the Appellate Assistant Commissioner in appeal.
Thereafter the assessee took up the matter in second appeal to the Income tax Appellate Tribunal.
The Tribunal for reasons set out in paragraphs 6 to 10, 12 and 13 of its order held that the assessee did not get any life interest in the corpus but it held that her interest was an interest which was an asset under the Act, but for section 2 (e) (iv) of the Act.
In other words, it held that the assessee had only a right to get annuity from out of the trust fund and as such her right is exempt from wealth tax in view of section 2 (e) (iv) of the Act.
In the view it took, the Tribunal considered that it was not necessary to ascertain the proper and correct method of valuation of the assessee 's right.
It directed that if and when its conclusion on the interpretation of the clauses were set aside, the appeal should be posted again before it for further hearing for ascertaining the correct method, of valuation.
At the instance of the Department, the Tribunal stated the case and referred the following two questions to the High Court of Rajasthan for its opinion. "(1) Whether on a proper construction of the deed of settlement the assessee has any interest in the corpus of the deed of settlement.
(2) Whether in the facts and circumstances of this case, the right of the assessee derived under the deed of settlement is exempt from wealth tax by virtue of the provisions of sec.
2 (e) (iv) of the Act.
" A Division Bench of that High Court answered the first question in the negative and the second question in the affirmative both against the Department.
The High Court held 709 1.
that the assessee was not given any interest in the corpus of the, property.
that the income that the assessee was receiving on account of the 15/30 parts of the trust fund was in the nature of an annuity, and 3.
that the terms and conditions relating to the assessee 's right to annuity preclude commutation of any portion thereof into a lump sum grant.
The only question that arises for decision in this appeal is whether the share of income to which the assessee is entitled to receive under the trust deed executed by her husband can be considered as annuity within the meaning of that expression in section 2 (e) (iv).
If it is considered as an annuity, there is no dispute that the, terms and conditions relating to the assessee 's right relating to annuity precluded commutation of any part thereof into a lump sum grant.
Therefore all that we have to see is whether the income received by the assessee was an annuity or an aliquot share in the income arising from the fund.
As seen earlier, the High Court as taken the view that the income in question was an annuity.
In arriving at that conclusion, it has referred to various decisions of the English courts as well as the courts in this country.
But in view of the two recent decisions of this Court, it is not necessary for us to examine those decisions.
In Ahmed G. H. Ariff and Ors.
vs Commissioner of Wealth tax(1) one of us (Grover, J.) speaking for the Court observed that the right of a beneficiary to receive an aliquot share of the net income of properties comprised in a wakf alal aulad created by a Muslim governed by the Hanifi school of Mohamedan law is "property" and is covered by the definition of "assets" in section 2 (e) of the Wealth Tax Act, 1957 and the capitalised, value of that right is assessable to wealth tax.
In Commissioner of Wealth Tax, Gujarat vs Arundhati Bal krishna, (2) this Court accepted as correct the distinction brought out between an annuity and an aliquot share in the income of a fund by Kindersley V. C. in Bignold vs Giles ( 3) Therein the learned judge stated the law thus : "An annuity is a right to receive de anno in annum a certain sum; that may be given for life, or for a series of years; it may be given during any particular period or in perpetuity and there is also this singularity (1) (2) (3) ; 113 Revised Reports 390.
710 about annuities, that although payable out of the personal assets, they are capable of being given for the purpose of devolution, as real estate; they may be given to a man and his heirs, and may go to the heir as real estate; so an annuity may be given to a man and the heirs of his body, that does not, it is true, constitute an estate tail, but that is by reason of the Statute De which contains only the word 'tenements ' and ' an annuity, though a hereditament is not a tenement, and an annuity so given is a base fee.
" Proceeding further the learned judge observed "But this appears to me at least clear, that if the gift of what is called an annuity is so made, that, on the face of the will itself, the testator shows his intention, to give a certain portion of the dividend of a fund, that is a very different thing; and most of the cases proceed on that footing.
The ground is, that the court construes the intention of the testator to be, not merely to? give an annuity, but to give an aliquot portion of the income arising from a certain capital fund." Applying the principles laid down in these decisions, we have now to see as to what was the nature of the right conferred on the assessee under the trust deed ? The trust deed starts by saying that "the settlor is, absolutely entitled to the investments specified in the Schedule hereto (hereinafter called "the Scheduled Property")" and that he is desirous of making an irrevocable settlement of the Scheduled Property for the benefit of his wife (the assessee) and his four sons.
One of the clauses in the deed says that "the settlor has accordingly transferred( or intends forthwith to transfer the Scheduled Property into the name of the Trustee to be held by him upon the trusts and with and subject to the powers and provisions hereinafter declared and contained concerning the same." "The Scheduled Property and any other invest ments or property which may from time to time be transferred to and accepted by the Trustee as additions, to the Scheduled Property and any other capital moneys, which may be received by the Trustee in respect of the 711 trust premises and the investments and property for the time being representing the same respectively are together called "the Trust Fund".
From this clause, it is clear that the "Trust Fund" is not a fixed sum.
It is capable of being augmented in several ways.
At the time of creation of the trust, the only assets mentioned in the schedule to the trust deed was pound 300,000 31 War Loan.
But as seen earlier this fund was capable of being augmented.
Clauses of the trust deed which are relevant for our pre sent purpose are clauses 2, 3, 4(1) and 7.
They read: Clause 2 : The Trustee shall stand possessed of the scheduled property and any other investments or property which may from time to time be transferred to and accepted by the Trustee as aforesaid UPON TRUST that the Trustee may either allow the same to remain actually invested so long as the Trustee thinks fit or may at any time or times at his discretion sell call in or convert into money the same or any part thereof and shall at his discretion (but subject to the restriction contained in clause 9 hereof) invest the moneys produced thereby and any other capital moneys which may be received by him in respect of the trust premises in the name or under the legal control of the Trustee in or upon any investments hereby authorised with power at his discretion to vary or transpose any investments for or into others of any nature hereby authorised.
" Clause 3 : The Trustee shall divide the Trust Fund into thirty equal parts and shall stand possessed of such parts and the income thereof respectively upon the trusts and, with and subject to the powers and provisions herein after declared and contained concerning the same.
Clause 4(1) : THE TRUSTEE shall stand possessed of fifteen such parts of the Trust Fund UPON TRUST to pay the income thereof to the wife during her life and after her death shall hold the said fifteen such parts of the Trust Fund and the income thereof Upon the same powers and provisions as are hereinafter declared and contained concerning the share in the Trust Fund which is hereinafter directed to be held in trust for the said 712 Maharaj Kumar Jagat Singh or as near thereto as cir cumstances will admit.
Clause 7.
NOTWITHSTANDING the trusts hereinbefore declared the Trustee if he in his absolute discretion thinks fit may at any time by writing under his hand declare that the whole or any part of the share (whether original or accruing) in the Trust Fund to the income whereof any Beneficiary shall then be entitled in possession or any property appropriated in or towards the satisfaction of such share shall thenceforth be held IN TRUST for such Beneficiary absolutely and thereupon the trusts hereinbefore declared concerning such share or the part thereof or the property to which such declaration relates shall forthwith determine and the Trustee may at any time thereafter transfer such share or the part thereof or the property to which such declaration relates to such Beneficiary absolutely." From these clauses it is clear that the intention of the Maharaja was that the assessee should get a half share in the income of the trust fund.
Neither the trust fund was fixed nor the amount payable to the assessee was fixed.
The only thing certain is that she is entitled to a 15/30 shares from out of the income of the trust fund.
That being so, it is evident that what she was entitled to was not an annuity but an aliquot share in the income of the trust fund.
Mr. Setalvad, learned Counsel for the assessee contended that during the year with which we are concerned, there was no change in the trust fund and in view of that fact and as we are considering the liability to pay wealth tax, we would be justified in holding that the amount receivable by the assessee in the year concerned was an annuity.
We see no force in this contention.
The question whether a particular income is an annuity or not does not depend on the amount received in a particular year.
What we have to see is, what exactly was the intention of the Maharaja in creating the trust.
Did he intend to give the assessee a pre determined sum every year or did he intend to give her an aliquot share in the income of a fund ? On that question, there can be only one answer and that is that he intended to give her an aliquot share in the income of the trust fund.
As income cannot be an annuity in one year and an aliquot share in another year.
It cannot change its character year after year.
From the facts found, it is clear that the assessee has a life interest in the trust fund.
713 For the reasons mentioned above, we allow this appeal, set aside the judgment of the High Court and discharge the answers given by the High Court to the questions referred to it by the Tribunal and in its place we answer those questions in favour of the Department.
The Commissioner is entitled to his costs of this appeal from the respondent, V.P.S. Appeal allowed.

summary/full:
The trust deed executed by the husband of the respondent assessee provided that the trustees should pay to the assessee during her life time 50 per cent of the income of the trust fund.
The settlement was irrevocable and the properties mentioned in the schedule to the trust deed stood transferred to the name of the trustees.
Under the clauses of the deed ,the trust fund was not a fixed sum but was capable of being augmented.
On the question whether the assessee was entitled only to an annuity within the meaning of that expression in section 2(e) (iv) of the Wealth Tax Act or had an interest in the corpus of the trust which could be brought to tax under the Wealth tax Act.
HELD: The intention of the husband was that the assessee should get 15130 share from out of the income of the trust fund.
Since neither the trust fund nor the amount payable to the assessee was a fixed sum, what the assessee was entitled to was not an annuity but an allquot share in the income of the trust fund.
The fact that in the particular assessment year there was no change in the trust fund was irrelevant because the question whether a particular income is an annuity or not does not depend upon the amount received in a particular year.
[712 D H] Hence the assessee had a life interest in the trust fund which could be brought to tax under the Wealth tax Act.
[713 A B] Ahmed G. H. Ariff & Ors.
vs Commissioner of Wealth tax, and Commissioner of Wealth tax, Gujarat Arundhati Balkrishna, , followed.


judgement:
l Appeals Nos.
2350 to 2353 of 1968 and 1313 to 1316 of 1971.
727 Appeals by certificate from the judgment and order dated July 7, 1967 of the Gujarat High Court in Income tax Reference No. 22 of 1965.
section C. Manchanda, R. N. Sachthey and B. D. Sharma, for the appellant (in all the appeals).
section T. Desai and I. N. Shroff, for the respondent (in all the: appeals).
The Judgment of the Court was delivered by Hegde, J.
These are some of the appeals where the appellant unfortunately had to file two different appeals in respect of the same matter.
Civil Appeals Nos. 2350 2353 of 1968 were brought on the strength of the certificates granted by the High Court of Gujarat.
No reasons were given in support of those, certificates.
Hence those certificates must be considered as having not been properly granted.
The resulting position was that the appeals brought on the strength of those certificates became unsustainable.
To get over that difficulty, the Commissioner of Income tax, Gujarat.
invoked our jurisdiction under article 136 of the Constitution to appeal against the judgment of the High Court.
Civil Appeals Nos.
1313 1316 of 1971.
The assessee is a Private Limited Company and the concerned assessment years are 1957 58, 1959 60, 1960 61 and 1961 62.
The only question for decision in these appeals is whether the assessee company comes within the scope of section 23 A of the Indian Income tax Act, 1922 (to be hereinafter referred to as the Act) ? The assessee company was incorporated on October 11, 1941 The object clause in the memorandum of association contains the usual string of objects. 'Confining ourselves to the objects relevant for our present purpose.
we get in Clause (3) of the memorandum power "to acquire and hold shares, stocks, debentures, debenture stocks, bonds, obligations and securities issued or guaranteed by any company constituted or carrying on business in British India".
Sub cl.
(p) of that Clause empowers the company "to take part in the formation, management, supervision or control of the business or operation of any company or undertaking and for that purpose to appoint and remunerate any directors.
accountants or other experts or agents".
Clause (q) provides power to carry on all or any of the following businesses : "Agents, Chief agents or licensed agents of any company. . " We are not concerned with the other objects mentioned in the memorandum.
728 In July 1942, the assessee company promoted a company known as New India Industries Ltd. By an agreement dated July 24, 1942, the assessee company was appointed as managing agents of the said New India Industries Ltd. In 1956, the said managing agency was renewed for a period of five years in view ,of the provisions of the .
The group of persons who had floated the assessee company had earlier in the year 1940 floated a company called the Cotton Fabrics Private Ltd.
By an agreement dated April 22, 1943, the assessee company was appointed the managing agent of the said Cotton Fabrics Private Ltd.
In 1956, the said managing agency agreement was also renewed for a period of five years for the very reason referred to earlier.
We have already noted that the assessee company is a Private Company.
As such it is not a company in which the public is substantially interested.
The Income tax Officer was of the opinion that as during the company 's income from its business activity "in the dealing in or holding of investments" was very much more than that its income from its managing agencies and further as it had used a very large portion of its assets in the former activity, it must be considered as an "investment company" an expression not found in the Act.
Basing himself on that finding, he reasoned thus : Statutory percentage of profits to be declared as dividends by such a company under section 23A was 100 per cent in the first two assessment years and 90 per cent in the remaining two assessment .years.
The dividends declared by the assesssee company fell much below that percentage.
Hence it was liable under section 23A to pay super tax at the rate of 50 per cent on the undistributed balance of the total income reduced as provided in section 23A (1) accordingly.
In appeal this decision was affirmed by the Assistant Appellate Commissioner excepting in regard to certain deductions with which we are not concerned.
Aggrieved by the order of the Assistant Appellate Commis sioner, the assessee took up the matter in second appeal to the Income tax Appellate Tribunal.
The Tribunal agreed with the ,conclusions reached by the Assistant Appellate Commissioner. 'Thereafter at the instance of the assessee, the following two questions were referred to the High Court under section 66(1) of the Act.
Whether on the facts and circumstances of the case the Tribunal was justified in holding that the assessee company is an investment company for purposes of section 23A of the Income tax Act, 1922 ? 729 2.
Whether the Tribunal was justified in law in holding that while determining the undistributed balance of the total income for charging super tax under the provisions of section 23A of the Act no deduction can be allowed in respect of the expenses actually incurred by the assessee company but disallowed for the purposes of computing its assessable income ?" Before the High Court, Counsel for the assessee did not press an answer to the second question.
Hence the High Court did consider that question.
Nor are we called upon to consider at question.
The High Court reframed the first question thus "Whether on the facts and circumstances of the case the Tribunal was justified in holding that the assessee company is a company whose business consists mainly in dealing in or holding of investments within the meaning of clause (i) of the second Explanation to section 23A of the Income Tax Act, 1922 ?" The High Court answered that question in the negative and in favour of the assessee.
It is the correctness of that decision that is in issue before us.
We have now to consider whether the High Court was right in concluding that the assessee company did not come within the scope of section 23A.
In arriving at its conclusion the High Court had approached the question before it from three different angles viz (1) the objects of the company as mentioned in its memorandum of association; (2) the profits earned the company during the relevant previous years from its various activities and (3) the assets used by the company in those years for the purpose of holding the shares of the managed companies, dealing with the shares of other companies and in collection with its other business activities.
Section 23A to the extent relevant for our present purpose reads : " (1) Where the Income Tax Officer is satisfied that in respect of any previous year the profits and gains distributed as dividends by any company within the twelve months immediately following the expiry of that pre vious year are less than the statutory percentage of the total income of the company of that previous year as reduced by (a). . . . . . (b). . . . . . . (c). . . . . 730 The Income tax Officer shall, unless he is satisfied that, having regard to the losses incurred by the company, in earlier years or to the smallness of the profits made in the previous year, the payment of a dividend or a larger dividend than, that declared would be unreasonable, make an order in writing that the company shall, apart from the sum determined as payable by it on the basis of the assessment under section 23, be liable to pay super tax at the rate of fifty per cent.
In the case of a company whose business consists wholly or mainly in the dealing in or holding of investments and at the rate of thirtyseven percent, in the case of any other company on the undistributed balance of the total income of the previous year, that is to say, on the total income as reduced by the amounts, if any referred to in clause (a), clause (b) or clause (c) and the dividends actually distributed, if any. ." Explanation 2, to that section says: "For the purposes of this section, statutory percentage means: (i) in the case of a company whose business consists wholly or mainly in the dealing in or holding of investments 100 % . " We have now to see what exactly is the meaning of the expression "in the case of a company whose business "consists wholly or mainly in the dealing in or holding of investments" in the main section 23A and the expression "in the case of a company whose business consists wholly or mainly in the dealing in or holding of investments" in cl.
(i) of Explanation 2 to section 23A.
The Act contains many mind twisting formulaes but section 23A along with some other sections takes the place of pride amongst them.
Section 109 of the 1961 Income tax Act which has taken the place of old section 23A of the Act is more understandable and less abstruse.
But in these appeals we are left with s.23A of the Act.
Clause (i) of Explanation 2 to section 23A concerns itself with a company whose business consists "wholy or mainly in the dealing in or holding of investments".
The word "mainly" in that clause as well as in the main section 23A must necessarily take its colour from the word "wholly" preceding that word in those provisions.
In other words the company which comes within the scope of those provisions must be one whose primary business must be "in the dealing in or holding of investments".
If a company engages itself in two or more equally or nearly equally important business 731 activities, then it cannot be said that the company 's business consists "wholly or mainly" in dealing in a particular thing.
Further even in cases where a company has more than one business activity and one of its activity is more substantial than the others, unless that activity is the primary activity of the company, it cannot be said that that company is engaged in "wholly or mainly" in any one of its business activities.
Section 23A in our opinion applies only to cases where the primary activity of tile company is in 'the dealing in or holding of investments '.
We shall presently see whether on the facts found by the Tribunal, it can be said that the assessee company 's business in the relevant years consisted "of mainly in the dealing in or holding of investments" as it was not the case of the Revenue that it was wholly engaged in that business.
We next come across with another expression which is far more difficult to comprehend than the one that we were considering till now.
Section 23A speaks of the business of "holding of investments".
Here comes the enigma.
It is easier to understand when the section speaks of a company having the business of dealing in investments, though to say that the company is dealing in investments may at first sight look somewhat incongruous.
When the legislature spoke of dealings in investments, it meant dealing in shares, stocks and securities etc.
But when a person invests.
in the share of some of the companies, it is difficult to say that his business is one of investing.
In commercial circles investing is not considered as business.
An investor may feel perplexed if he is called a businessman.
This Court in Bengal and Assam Investors Ltd. vs Commis sioner of Income tax, West Bengal(1); came to the conclusion that an individual who merely invests in shares for the purpose of earning dividend, does not carry on a business and that the only way he can come under section 10 of the Act is by converting the shares acquired by him into stock in trade i.e. by carrying on the business of dealing in stocks and shares.
In that case this Court was considering whether the dividend income of the assessee company therein could be considered as business income under section 10 of the Act.
Therein this Court was not considering the scope of section 23A.
But all the same in that case this Court proceeded on the basis that no one can make a business of investing.
But then section 23A speaks of the business of "holding of investments".
We were told by the Counsel for the assessee that that expression is an incongruous one and that we should, following the decision of this Court in Bengal and Assam Investors Ltd.(1) hold that there is nothing like a business of "holding of investments".
We feel unable to accede to that contention.
We cannot say that the (1) 732 legislature did not know its own mind when it used that expression in section 23A. We must give some reasonable meaning to that expression.
No part of a provision of a statute can be just ignored by saying that the legislature enacted the same not knowing what it was saying.
We must assume that the legislature deliberately used that expression and it intended to convey some meaning thereby.
The expression " 'business" is a well known expression in income tax law.
It means as observed by this Court in Narain Swadesh Weaving Mills vs Commissioner of Excess Profits Tax (1) : " some real, substantial and systematic or organised course of activity or conduct with a set purpose".
is also the meaning given to that expression in the earlier decisions of the High Courts and the Judicial Committee.
We must, therefore, proceed on the basis that the legislature was aware of the meaning given by courts to that expression when it incorporated section 23A into the Act in 1957.
Hence we must hold that when the legislature speaks of the business of 'holding of investments ', it refers to real, substantial and systematic or organised course of activity of investment carried on by an assessee for a ,set purpose such as earning profits.
Now let us leave section 23A and proceed to examine the facts of the case to find out whether the assessee company can be held to ,,come within the scope of section 23A in the light of our interpretation of that provision.
We have earlier referred to the objects clause in the memo randum of association.
The memorandum permits the assessee company to take up the management of the other companies, to invest in the shares of the other companies, and to deal in the shares of the companies.
Therefore it cannot be said that the assessee company was incorporated primarily with the object of carrying on the business of the "dealing in or holding of investments".
The objects of the assessee company are many fold.
The object of carrying on the business of "dealing in or holding of investments" is only one of them.
Hence the memorandum of association does not assist us in deciding whether the business of the assessee company "consists of wholly or mainly in the dealing in or holding of investments.
" We shall now take up the question of the profits earned by the assessee company during the relevant previous years.
The High Court has in its judgment set out a statement showing the profits I earned by the assessee company through its various activities.
It would be convenient to set out the same now (1) 733 ASSESSMENT YEAR 1957 58 1959 60 1960.61 1961.62 Rs. Rs. Rs. Rs. 1.
Managing Agency 2,09,999 2,56,3152,41,7051,96,384 2.
Dividend on shares of managed companies 1,95,179 2,58,511 3,21,746 3,12,251 3.
Income from shares held as stock in trade (i) interest on debentures 369 342 309 312 ' (ii) Dividends 3,40,6954,68,7755,48,3255,53,999 (iii) Dealing in shares 23,86716,75528,32922,100 (iv) Share transfer fee 10 10 10 10 Total of Nos.
(i) to (iv)3,64,941 4,85,8825,76,9735,76,421 4.
Income from interest 4,5953,35815,27623,617 In order to find out the implications of this statement we have to first decide whether the assessee company can be said to be a company engaged in the business activity of "holding of investments.
" The finding of the Tribunal on this point is stated thus "We agree with the assessee that the shares in the managed companies were acquired with a view to safely hold the managing agencies, but we do not agree that for that reason only those shares cannot be taken into account for the purpose of a business of dealing in or hold ing of investments".
All the shares held by the assessee company as its investments were the shares of the two company which it was managing agent.
It invested in no other shares.
The Tribunal has found that the managed company 's shares were acquired by the assessee company for the purpose of safeguarding its managing agency business.
Therefore it is quite clear that those investments were made not in the course of any business of investment but for the purpose of securing its managing agencies.
Those investments were made for a collateral purpose viz. to have a firm grip over its managing agency business.
If we are correct in this, finding Jr we think, we are then it follows that the dividend income from shares of the managed companies cannot be taken into consideration in finding out whether the assessee company 's business "consisted wholly or mainly in the dealing in or holding of investments".
The investments made by the assessee company in the shares of the managed companies are essentially linked with its 'I managing agencies and not with the dealing of that company in shares of the other companies.
In other words those investments form part of the assessee company 's managing agency business 734 activity.
If we add the dividend income of the shares of the managed companies, to the managing agency commission, the total income from those two sources is much more than the income earned by the assessee company from its share dealings, in each one of the assessment years.
Hence viewed from the point of view of profits earned by the assessee company, it cannot be said that in the relevant previous years the assessee company 's business consisted wholly or mainly in the dealing in or holding of investments".
Now let us look at the question from the point of view of the assets employed by the assessee company.
Here again we can take assistance from the schedule given in the judgment of the High Court setting out in details the assets used by the assessee company in its several business activities.
That Schedule reads thus : SHARES OF MANAGED COMPANIES Treated by the Income Tax Department as investments not forming part of the business of dealing in shares.
New India Indus tries 6,91,084 6,96,883 6,96,883 6,96,883 2.Cotton Fabrics Ltd. (i) Ordinary shares 3,69,285 3,69,2853,69,2853,69,275 (ii) Preference shares 88,46388,46390,48390,483 Total 11,48,83211,54,63111,56,65111,56,651 Shares of other companies Treated by the Income tax Department as held for dealing in shares (stock in trade). 25,07,96930,13,51829,88,94636,07,063 Total investment as per balance sheet 36,56,80141,68,14941,45,59747,63,714" It is true that the assets used by the assessee company in its share dealing are far more than that used by it for investment in the shares of the managed company.
But then we have to bear in mind that we do not exhaust the total assets of the company by merely referring to the tangible assets used by it.
In addition, we have to take into consideration the value of the managing agencies held by the assessee company.
Looked that way, it cannot be said that the assets of the company, used in its share dealings are far more than its other assets.
At any rate on the basis of the assets used, it cannot be concluded that the assessee 's business consisted "wholly or mainly" in the dealing in investments.
735 It follows from the conclusions reached by us earlier, that our answer to the question before us must be the same as that given by the High Court.
We not only agree with the conclusions reached by the High Court but also with premises on the basis of which those conclusions were reached.
In the result Civil Appeals Nos. 1313 to 1316 of 1971 are dismissed on merits with costs one set of fees and Civil Appeals Nos.
2350 2353 of 1968 are dismissed as being not maintainable but without any order as to costs.
section C. Appeals dismissed.

summary/full:
The assessee is a private limited company and was the Managing Agent of two other companies.
All the shares held by the assessee company as its investments were the shares of those two companies.
The Income tax authorities held that the assessee company was an 'investment company ' within the scope of section 23A of the Act and ordered the company to pay super tax as provided under section 23A(1).
The High Court in reference held in favour of the assessee.
Dismissing the appeals, HELD : (1) In the facts and circumstances of the present case, the assessee company cannot be said to be an 'investment company ' coming within the scope of section 23A of the Act.
The meaning of the expression "in the case of a company whose business consists wholly or mainly in the dealing in or holding of investments" both in the main section 23A and in the Explanation concerns itself with a company whose business consists "wholly or mainly in the dealing in or holding of investments".
The word "mainly" must necessarily take its colour from the word "wholly" preceding that word.
, In other words the company which comes within the scope of those provisions must be a company whose primary business is in the dealing in or holding of investments and only in such cases, section 23A applies.
And the expression 'business of holding of investments ' in the said section refers to a real, substantial and systematic or organised course of activity of investment carried on by an assesses for a set purpose such as earning profits.
[730 H, 731 D] All the shares held by the assessee company as its investments were the shares of the two companies of which it was the Managing Agent.
These investments were made for a collateral purpose viz., to have a firm grip over its Managing Agency business.
The investments made by the assessee company in the shares of the managed companies are essentially linked with its Managing Agencies and not with the dealing of that company in shares of other companies.
The company 's total income from dividend income of the shares of the managed companies and the Managing Agency commission together is much more than the income earned by the company from its share dealings.
Further the assets of the company used in its share dealings are not more that its other assets.
Therefore, it cannot be said that the assessee company 's business consisted wholly or mainly in the dealing in investments.
[7.33 F] Bengal Assam Investors Ltd. vs C.I.T., West Bengal, and Narain Swadesh.
Weaving Mills vs Commissioner of Excess Profits Tax, , referred to.