NDLI: Commissioner of Income Tax, West Bengal Vs. Calcutta Agency Ltd.

Content Provider	Supreme Court of India
e-ISSN	30484839
Language	English
Access Restriction	NDLI
Subject Keyword	Indian income tax act
Content Type	Text
Resource Type	Law Judgement
Jurisdiction	India
Act(s) Referred	Indian Income-tax Act, 1922 (11 of 1922)
Case Type	Appeal
Court	Supreme Court of India
Disposal Nature	Appeal Allowed
Headnote	Indian Income-tax Act (XI of 1922), ss. 10 (2) (xv), 66-Reference-Jwrisdiction of High Court-Duty to decide case on facts stated by Tribunal-Accepting arguments of Counsel as proved facts and basing decision on them, impropriety of-Business expenditure Payment to avoid disclosure of misfeasance of directors -- Burdon of Proof.The jurisdiction of the High Court in the matter of income tax references is an advisory jurisdiction and under the Income tax Act the decision of the Appellate Tribunal on facts is final unless it can be successfully assailed on the ground that there was no evidence for the conclusions on facts recorded by the Tribunal. It is therefore the duty of the High Court to start by looking at the facts found by the Tribunal and answer: the questions of law on that footing. It is not p1·oper to depart fron1 this rule of law as it will convert the High Court into a fact finding authority, which it is not, under the advisory jurisdiction. As the statement of the case prepared by the Appellate Tribunal in accordance with the rules fran1ed under the Income-tax Act is prepared with the knowledge of the parties concerned and they have full opportunity to apply for any addition or deletion from that statement, if they have approved of the state1nent n1ade by the Tribunal, it is the agreed statement of facts by the parties on which the High Court has to pronounces its judgment. The High Court would be acting improperly if it takes the arguments of the counsel for the assesses as if they were facts and bases its conclusion on those arguments. One of the directors of the assessee company, acting in the capacity of managing agents of certain Mills, had drawn some hundis in the name of the Mills, and as the Mills repudiated liability, suits were filed on the hundis against the Mills and the assessees. The assessees thereupon agreed to reimburse the Mills by permitting the latter to deduct a moiety of the commission payable to them under the agreement of managing agency, against payments which the Mills may have to make under the decrees. In their assessment for income-tax the assessees claimed that the amounts so deducted should be excluded from their as Reusable income as business expenditure under s. 10 (2) (xv) of the Income tax Act. The Appellate Tribunal found that the assessees had agreed to pay off the decree a1nount from the remuneration due to them, that the decree was passed against them evidently for some misfeasance committed by their directors, that the books of both companies showed that the assessees were paid their remuneration in full, and that the expenditure was not therefore laid out for the purpose of carrying on the business, and also that, as the payment was made for the liquidation of a debt, it was not a revenue expenditure. In the High Court the assessees' counsel argued, relying on the case cf Mitchell v. B. W. Noble Ltd.(1), that the payments were made by the assessees to avoid the publicity of an action against them and the consequent exposure and loss of reputation as a. managing agency company, and as such the payments were deductible as business expenditure. The High Court accepted this argument and reversed the decision of the Tribunal.
Judge	Honble Mr. Justice Harilal Jekisundas Kania
Neutral Citation	1950 INSC 39
Petitioner	Commissioner Of Income Tax, West Bengal
Respondent	Calcutta Agency Ltd.
SCR	[1950] 1 S.C.R. 1008
Judgement Date	1950-12-21
Case Number	59

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