Appeal No 501 of 1957
Appeal by special leave from the judgment and order dated September 13 1954 of the Bombay High Court in Income tax Reference No 13 of 1954
K N Rajagopala Sastri and D Gupta for the appellant
A V Viswanatha Sastri and P L Vohra for the respondent
April 6
The Judgment of section K Das J L Kapur M Hidayatullah and T L Venkatarama Aiyar JJ was delivered by Venkatarama Aiyar J J C Shah J delivered a separate Judgment
VENKATARAMA AIYAR J
The respondents were the owners of a steamship called El Madina
That was requisitioned by the Government during the last world war and was lost by enemy action on March 16 1944
As compensation therefore the Government paid the respondents Rs 2000000 on July 17 1944 Rs 2300000 on December 22 1944 and Rs 33333 on August 10 1946
The original cost of the ship was Rs 2495016 and its written down value at the commencement of the year of account was Rs 1568484
The difference between the cost price and the written
down value viz Rs 926532 represents the deductions which had been allowed year after year on account of depreciation
As the total compensation received exceeded the cost price the respondents have recouped themselves all the amounts deducted for depreciation
792 On these facts the point in controversy between the respondents and the Department is whether the amount of Rs 926532 is liable to be included in the total income of the company for the year of assessment which is 1946 47
The provision of law under which the charge is sought to be imposed is section 102vii of the Indian Income tax Act 1922 hereinafter referred to as the Act and that is omitting what is not relevant as follows 2 Such profits or gains shall be computed after making the following allowances namely vii in respect of any such building machinery or plant which has been sold or discarded or demolished or destroyed the amount by which the written down value thereof exceeds the amount for which the building machinery or plant as the case may be is actually sold or its scrap value Provided further that where any insurance salvage or compensation moneys are received in respect of any such building machinery or plant as aforesaid and the amount of such moneys exceeds the difference between the written down value and the scrap value no amount shall be allowable under this clause and so much of the excess as does not exceed the difference between the original cost and the written down value less the scrap value shall be deemed to be profits of the previous year in which such moneys were received
It is not disputed by the respondents that the sum of Rs 926532 would be profits liable to be taxed under this proviso if it applies
Equally it is not disputed by the appellant that apart from this proviso the amount in question could only be regarded as capital receipt not liable to be taxed
Before the income tax authorities the respondents sought to avoid the application of this proviso on the ground that on representations made by them with reference to this very matter the Board of Revenue had directed that for the purpose of Rule 4 Schedule II of the Excess Profits Tax Act 1940 the amount payable as 793 compensation both the initial advance as well as any further payment that may be made should be taken into account as though it had actually been received within thirty days of the date of the loss of the ship and that in consequence the amount should be deemed to have been received on April 16 1944
If that contention is correct the amounts would have been received not in the year of account which was July 1 1944 to June 30 1945 but in the year previous there to and they could not therefore be included in the income of the company for the year of assessment
This contention however was rejected by all the income tax authorities
Dealing with it the Appellate Tribunal observed in its Order dated July 15 1953 that the concession which the Board of Revenue had intended to give was limited to excess profits tax and could not in any event be relied on for the purpose of cutting down the operation of the statutory provision enacted in the relevant proviso ins
102vii and that the material date was when the compensation was in fact received and that was in the year of account and not when it became due and payable in the year previous thereto
In the result the Tribunal held that the amount was liable to be included in the total income of the company
The respondent then filed an application before the Tribunal under section 66l of the Act requiring certain questions to be referred to the court and one of them was as follows Whether in view of the fact that the 4th proviso to section 102vii of the Indian Income tax Act did not apply to the assessment for the Assessment year 1945 46 and under the law in force as applicable to that assessment year the sum of Rs 926532 which accrued in the previous year relevant to that Assessment year was not taxable at all and the fact that having regard to the Assessee s method of accounting the said sum should not be assessed in any other year the Assessment in respect of the  said sum in the subsequent Assessment year 1946 47 was valid in law 794 By its order dated February 9 1954 the Tribunal referred the following question for the opinion of the court whether the sum of Rs 926532 was properly included in the assessee company s total income computed for the assessment year 1946 47
 The reference came up for hearing before a Bench of the Bombay High Court consisting of Chagla CJ and Tendolkar J and then the respondents raised the contention that the proviso to section 102vii under which the charge was made could not be taken into account in making the present assessment as the same had been introduced by the Income tax Amendment Act 1946 VIII of 1946 which came into force on May 4 1946 whereas the liability of the company to be taxed fell to be determined as on April 1 1946 when the Finance Act 1946 came into force
The appellant raised a preliminary objection to this question being raised for the first time before the court on the ground that it did not arise out of the Order of the Tribunal having been neither raised before it nor dealt with by it and that further it had not been referred to the court
Overruling this objection the learned Judges observed that the form in which the question was framed was sufficiently wide to take in the new contention that even if the particular aspect of the question had not been argued before the Tribunal it was implicit in the question as
framed and that therefore the assessee could raise it
On the merits they held that as the proviso was not retrospective in its operation the amount in question was not liable to be included in the taxable income and answered the question in the negative
It is against this decision that the present appeal by special leave is directed
The main contention urged before us by the appellant is that it was not open to the High Court in the present reference to go into the question as to the applicability of the proviso to section 102vii as it was neither raised before the Tribunal nor considered by it and could not therefore be said to be a question arising out of the order of the Tribunal which alone could be 795 referred for the decision of the court under section 66l
The court had no jurisdiction it is argued to allow a question to be raised before it which could not be referred to it under the section
The contention of the respondents is that all questions of law which arise on the findings given by the Tribunal in its order can properly be said to arise out of its order and that in making a reference under section 66l the Tribunal is not limited to those questions only which were raised before it and dealt with in its order nor even to those questions which were raised in the application for reference under section 66l
It is further contended that in the present case the question as framed and refer red was wide enough to take in the contention as to the applicability of the proviso and that the High Court was in consequence within its power in entertaining it and deciding the reference on it
We may now refer to the provisions of law bearing on the question
Section 66l of the Act confers on the assessee and the Commissioner a right to apply to the Tribunal in the prescribed form to refer any question of law arising out of its order for the decision of the High Court
If the Tribunal is satisfied that a question of law arises then it has to draw up a statement of the case and refer it to the decision of the High Court
But if it considers that no question of law arises on its order and dismisses the application under section 66l then the assessee or the Commissioner as the case may be has a right to move the court under section 662 and if the court is not satisfied about the correctness of the decision of the Tribunal it can require it to state the case and refer it to its decision
Under section 664 the High Court can for the purpose of disposing of the reference which comes to it under section 66l and 2 call for additional statement from the Tribunal
Under section 665 the High Court is to decide the question of law raised in the case and send a copy of its judgment to the Tribunal and the latter is to pass appropriate orders for giving effect to it
Section 59 of the Act confers on the Central Board of Revenue power to make rules for carrying out the purpose of the Act and under sub section 5 the rules 796 made thereunder shall on publication in the official gazette have effect as if enacted under the Act
Rule 22A framed under this section provides that An application under sub section 1 of section 66 requiring the Tribunal to refer to the High Court any question Of law shall be in the following form
 The form is RT of which paragraphs 3 to 5 are relevant for the present discussion and they are as follows 3
that the facts which are admitted andor found by the Tribunal and which are necessary for drawing up a statement of the case are stated in the enclosure for ready reference
4 that the following questions of law arise out of the order of the Tribunal 3 5 that the applicant therefore requires under sub section 1 of section 66 of the aforesaid Act that a statement of the case be drawn up and the questions of law numbered out of the questions of law referred to in paragraph 4 above be referred to the High Court
 On these provisions the question that arises for decision is whether in a reference under section 66 the High Court can consider a question which had not been raised before the Tribunal andor dealt with by it in its order even though it be one of law
On the answer to be given to it there has been a difference of opinion among the High Courts and that turns on the meaning to be given to the words any question of law arising out of the order of the Tribunal
There is no pronouncement of this Court which concludes this ques tion though there are decisions which afford guidance in the determination thereof
These decisions will now be considered
In Commissioner of Income tax Madras vs Mtt
Arunachalam Chettiar 1 an order of assessment made by the income tax officer was corrected by the Appellate Tribunal not in an appeal under section 334 but in a miscellaneous application presented to it under 1 1953 SCR 463 471
797 section 35
The Commissioner being dissatisfied with the order applied for a reference under section 66l
The Tribunal was of the opinion that the order in question could be made in the exercise of its inherent jurisdiction and referred the question of its legality to the court under section 66l
The Madras High Court declined to answer it on the ground that as the order was not one passed in an appeal the reference under section 66l was incompetent as under that provision the power of the Tribunal to refer was limited to questions of law arising out of an order passed in an appeal
In affirm ing this decision this Court observed The jurisdiction of the Tribunal and of the High Court is conditional on there being an order by the Appellate Tribunal which may be said to be one under section 334 and a question of law arising out of such an order This is an authority for the position that the jurisdiction of the Tribunal to make and of the High Court to hear a reference must be strictly sought within the four corners of section 66
In The Commissioner of Income tax Bombay South vs Messrs Ogale Glass Works Ltd 1 the question referred by the Tribunal under section 66l was whether certain amounts received by the assessee from the Government by cheques drawn on the Reserve Batik at Bombay were income received in British India within section 4la of the Act
The High Court had held that
as the cheques were received in the State of Aundh in unconditional discharge of the claim the receipt was not in British India
On appeal to this Court it was contended that as the cheques were posted in British India the income must be held to have been received in British India
An objection was put forward to this contention being raised on the ground that it was not argued before the Tribunal or decided by it and that therefore it did not arise out of its order as required by section 66l
But this Court hold that as the question as framed and referred was of sufficient amplitude to cover the new point urged and as no contention was raised that the question had not 1 1955 1 SCR 185 197
798 been properly referred under section 66l it could be decided under section 665 and that in that view it was not necessary to express any opinion on the larger question as to the scope meaning and import of the words any question of law arising
out of  the Tribunal s order on the interpretation of which there exists a wide divergence of judicial opinion
There was accordingly no decision on the point now under consideration
In New Jehangir Vakil Mills Ltd vs Commissioner of Income tax 1 the point under discussion wag whether the High Court was competent under section 664 to call for additional statement with reference to a question which had not been referred to it under section 66l or section 662
This Court held that the scope of a reference under section 662 was coextensive with that of one under section 66l of the Act that therefore the court had no power under section 662 to travel beyond the ambit of section 66l that under both these provisions it is only a question of law arising out of the order that could be referred that the object of section 664 was to enable the court to obtain additional statements only for the purpose of deciding questions referred under section 66l and 2 and that accordingly no investigation could be ordered in respect of new questions which were not and could not be the subject matter of a reference under section 66l and 2
Here again there was no decision on the meaning of the words any question of law arising out of the order of the Tribunal
In Kusumben D Mahadevia vs Commissioner of Income tax 2 the question actually referred under section 66l to the court was whether a sum of Rs 47120 received by the assessee had accrued to her in the former State of Baroda or whether it had accrued or should be deemed to have accrued to her in British India
On this reference the High Court resettled the question so as to raise the contention as to whether the assessee was entitled to any concession under the Merged States Taxation Concessions Order 1949 as regards the income of Rs 47120 and holding that she was not answered the reference against her 1  2 196O 3 SCR 417 422 799 without deciding the question as to where the income accrued
Against this Judgment the assessee appealed to this Court and contended that the High Court was in error in not deciding the question which was actually referred
This Court accepted this contention and remanded the case to the High Court for hearing on that point
So far this decision does not bear on the present controversy
But a further point was discussed and considered by this Court and that was that it was not open to the court to raise the question about the applicability of the Merged States Taxation Concessions Order 1949 as that was not a question which was raised before or considered by the Tribunal or referred under section 66l
In agreeing with this contention this Court observed Section 66 of the Income tax Act which confers jurisdiction upon the High Court only permits a reference of a question of law arising out of the order of the Tribunal
It does not confer jurisdiction on the High Court to decide a different question of law not arising out of such order
It is possible that the same question of law may involve different approaches for its solution and the High Court may amplify the question to take in all the approaches
But the question must still be one which was before the Tribunal and was decided by it These observations bear on the question now under consideration but the actual decision was one remanding the case with a direction to the High Court to decide the question that was referred to it
In Zoraster  Co vs Commissioner of Income tax 1 the assessees were manufacturers of certain kinds of goods in Jaipur
The Government of India purchased these articles and paid the price by cheques on the Bombay branch of the Reserve Bank of India
The Tribunal held that the profits of these sales had been received in British India but on the application of the assessees referred that question to the court
The High Court remanded the case to the Tribunal under section 664 for a supplemental statement observing that 1 1961 1 SC It
800 it would be necessary for the Appellate Tribunal to find inter alia whether the cheques were sent to the assessee firm by post or by hand and what directions
 if any had the assessee firm given to the Department in the matter
 The correctness of this order was challenged by the assessee on the ground that the court had no power to call for a fresh statement for the investigation of a new point and reliance was placed on the decision in New Jehangir Vakil Mills Ltd vs Commissioner of Income tax 1
This Court held following that decision that the jurisdiction to call for supplemental statement was confined a to the facts on record andor found by the Tribunal and b to the question which would arise from the Tribunal s order and that further it could be exercised with reference to a new question if it was an integral or even incidental part of the question which had been referred
This decision also proceeds on the view that a question which is unconnected with the question already referred cannot be agitated for the first time in the reference
There being thus no direct decision of this Court on the precise meaning of the words any question of law arising out of the order of the Tribunal we must examine the decision of the High Courts on the question and as already stated they are in a state of conflict
In A Abboy Chetty and Co vs Commissioner of Income tax Madras 2 the application of the assessee under section 66l required the Tribunal to refer a question of res judicata to the court
The Tribunal declined to do so on the ground that question had not been argued before it
The assessee then moved the court under section 662 for an order requiring the Tribunal to refer that question
Dismissing that application Patanjali Sastri J as be then was observed as follows  Mr Radhakrishnayya for the petitioner contends that a question though not raised before the Appellate Tribunal can well be said to arise out of its order  if on the facts of the case appearing from the order the question fairly arises
I am unable 1  2 444 801 to agree with that view
I am of opinion that a question of law can be said to arise out of an order of the Appellate Tribunal only if such order discloses that the question was raised before the Tribunal
 Adverting to the contention that the Privy Council had in M E Moola Sons Limited vs Burjorjee 1 allowed a question of law arising on the facts found to be raised for the first time before it the learned Judge observed The case furnishes no useful analogy as the scope of the remedy under section 66 of the Indian Income tax Act has to be determined with reference to the language of the statute
This decision was followed by the Madras High Court in Commissioner of Income tax vs Modern Theatres Ltd 2 and in The Trustees Nagore Durgah vs Commissioner of Incometax 3
In G M Chenna Basappa vs Commissioner of Income tax 4 the Andhra High Court followed the decision in A Abboy Chetty and Co vs Commissioner of Income tax Madras 5 and observed that a question not raised before the Tribunal cannot be said to arise out of its order even if it could be sustained on the facts in the statement of the case by the Tribunal and that further the order of the Tribunal should disclose that the point of law was raised before it
The same view was adopted by the Patna High Court in Maharaj Kumar Kamal Singh vs Commissioner of Income ax 6
There discussing the question with reference to the language of section 661 and 2 and Rule 22A the court observed as follows The provisions of Section 661 and Section 662 do not confer upon the High Court a general jurisdiction to correct or to decide a question of law that may possibly arise out of the income tax assessment
The section on the contrary confers a special and limited jurisdiction upon the High Court to decide any specific question of law which 1 Rang
3 5  444
2 4 6  86 802 has been raised between the assessee and the Department before the Income tax Tribunal and upon which question the parties are at issue
 It was accordingly held that only a question of law which had been actually raised before the Tribunal or actually dealt with by it could be referred under section 661
This is also the view consistently held by the Calcutta High Court III Commissioner of Excess Profits Tax vs Jeewanlal Ltd 1 it was held agreeing with the decision in A Abboy Chetty and CO
V Commissioner of Income tax Madras 2 that a question of law not raised before the Tribunal could not be said to arise out of its order even if on the facts of the case appearing from the order the question fairly arises
In Chainrup Sampatram vs Commissioner of Income tax 3 the assessee had applied under section 661 of the Act to refer the question whether a sum of Rs 220887 was on a true construction of section 142c of the Act assessable to tax
The Tribunal dismissed the application on the ground that the question sought to be raised had not been mentioned at the hearing of the appeal and had not been dealt with by the Tribunal and was therefore not one which arose out of its order
The question having been brought up before the court under section 662 Chakravartti J held that under section 661 it was only a question that arose out of the Tribunal s order that could be referred and that that must be some question which was actually raised before the Tribunal and dealt with by it and that under section 662 the words no question of law arises could only mean that the question of which reference had been asked for by the applicant did not arise and that the High Court could not require the Tribunal to refer some question which was not proposed before it
The learned Judge then went on to observe The Indian Income tax Act has not charged the High Court with the duty of setting right in all respects ill assessments that might come to its notice its jurisdiction is not either appellate or revisional 1 2 444
3  495
803 nor has it a general power of superintendence under Section 66
Its sole duty is to serve as the appointed machinery for resolving any conflict which may arise between an assessee or the Commissioner on the one hand and the Tribunal on the other regarding some specific question or questions of law
If on an application under section 662 the High Court finds that the question which the applicant required the Tribunal to refer was not a question that arose out of the Tribunal s appellate order it ought in my view to refuse to require the Tribunal to refer any such question
 The same view was taken in Allahabad Bank Ltd vs Commissioner of Income tax 1 and in Commissioner of Income tax vs State Bank of India 2
In Mash Trading Co vs Commissioner of Income tax 3 a Full Bench of the Punjab High Court had to consider the true character of the jurisdiction under section 66
Therein Kapur J as he then was held on an examination of the section and on a review of the authorities that under section 661 it is only questions which had been raised before and dealt with by the Tribunal that could be referred to the High Court that the power of the High Court under section 662 to direct a reference is limited to questions which could be referred under section 661 and which the applicant required it to refer that the Tribunal has no power to raise a question suo motu and likewise the High Court cannot raise any question which had not been referred to it either under section 661 or section 662 but when once a question is properly raised and referred to the High Court the High Court is bound to answer that question
In this view it was held that a reference to the High Court on a question which was not raised before or considered by the Tribunal was not compe tent
Falshaw J while generally agreeing with this view considered that there might be cases in which strict adherence to this view might work injustice as for example when a point raised before the Tribunal had not been dealt with by it owing to mistake or 1 2 3 804 inadvertence or when its jurisdiction itself was ques tioned
The learned Judge added that in the former case the point might be deemed to have been decided against the assessee in the order thereby attracting section 66
It should be noted that all the Judges agreed in holding that the reference in question was incompetent as the point had not been raised before the Tribunal
We must now consider the decisions which have taken a somewhat different view
Vadilal Lallubhai Mehta vs Commissioner of Income tax 1 was a case under section 66 of the Act as it stood prior to the amendment of 1939 and what was held there was that even though the assessee had not stated in his application for reference the questions which really arose out of the order it was for the Commissioner to formulate the correct questions and refer them to the court and where he had failed to do so the court could direct him to do so
This is not a decision on the question as to whether questions not raised before or decided by the Commissioner could be held to be questions arising out of his order
In New Piece goods Bazar Co Ltd V Commissioner of Income tax 2 the question that was referred under section 661 was whether taxes paid on urban immovable property by the assessee were an allowable deduction under section 91iv and section 91v of the Indian Income tax Act
An objection was raised before the court that the question as to the application of section 91iv had not been argued before the Tribunal and therefore it could not be referred
Repelling this contention Kania J as he then was observed that the specific question had been put forward as a ground of appeal and that was quoted by the Tribunal in its judgment but not dealt with by it and that in the circumstances the proper order to pass was to refer the case back to the Tribunal and invite it to express  its opinion on this aspect of the contention and raise a proper question of law on that point also This judgment
again proceeds on the view that it is only a question raised before and dealt with by the Tribunal 1 2 805 that could be referred under section 661 and that is clear from the observations of the learned Judge that the decisions of the Privy Council in Commissioner of Income tax vs Kameshwar Singh1 and National Mutual Life Association V Commissioner of Income tax 2 deprecating the practice of raising new questions in the stage of argument on the reference in the High Court did not stand in the way of the case being referred back to the Tribunal
In Madanlal Dharnidharka V Commissioner of Income tax 3 the Tribunal referred under section 661 the following question for the decision of the court Whether the remittance of Rs 201000 out of profits made by the assessee in the years preceding the Maru year 1999 2000 as a nonresident could be included tinder section 41biii of the Indian Income tax Act in his total income of the year of account in which he was a resident in British India This question had not been argued before the Tribunal but the Tribunal itself referred it because it considered that it arose out of its order
The reference was heard by Chagla C J and Tendolkar J
Before them an objection was raised that the Tribunal could not refer this question under section 661 as the same had not been raised before it
Chagla C J observed In my opinion it is necessary clearly to re state the jurisdiction of this court
This is not a Court of appeal
This court merely exercises an advisory jurisdiction
Its judgments are in the nature of advice given on the questions submitted to it by the Tribunal
Its advice must be confined to questions referred by the Tribunal to this court and those questions must be questions of law which must arise out of the order made by the Tribunal
Now looking at the plain language of the section apart from any authority I should have stated that a question of law arose out of the order of the Tribunal if such a question was apparent on the order itself or it could be raised on the facts found by the 1 2 3  233 234
806 Tribunal and which were stated in the order
I see no reason to confine the jurisdiction of this court to such questions of law as have been argued before the Tribunal or are dealt with by the Tribunal
The section does not say so and there is no reason why we should construe the expression arising out of such order  in a manner unwarranted by the ordinary grammatical construction of that expression
This court has no jurisdiction to decide ques tions which have not been referred by the Tribunal
If the Tribunal does not refer a question of law under section 661 which arises out of the order then the only jurisdiction of the court is to require the Tribunal to refer the same Under section 662
It is true that the court has jurisdiction to resettle questions of law so as to bring out the real issue between the parties but it is not open to the court to raise new questions which have not been referred to it by the Tribunal
 Expressing next his disagreement with the decision of the Madras High Court in A Abboy Chetty and Co vs Commissioner of Income tax Madras 1 the learned Judge observed The decision of the Madras High Court would also result in this extraordinary situation
An assessee may raise a question and argue it before the Tribunal but if the Tribunal thought fit to ignore that argument and not to refer to that point of law in its order then the court would have no jurisdiction to call upon the Tribunal to refer that question of law to the High Court
It is true that the Income tax Act is a very technical statute but I see no reason why when the plain grammatical construction of the section does not make it necessary to come to that conclusion it is necessary to do so and arrive at such an anomalous result
 In Mohanlal Hiralal vs Commissioner of Income tax 2 a Bench of the Nagpur High Court hearing a reference under section 661 held that on the statement of the case by the Tribunal the question of law as framed was not correct
Then observing that in view 1 2  452 453 807 of the decision of the Privy Council in Commissioner of Income tax vs Kameshwar Singh 1 it could not itself resettle it called for a fresh statement from the Tribunal under section 664
Thus far the judgment is on the same lines as New Piecegoods Bazar Co Ltd vs Commissioner of Income tax 2 and an earlier decision of the Nagpur High Court in Beohar Singh vs Commissioner of Income tax 3
When the case came back on the further statement under section 664 criticising certain remarks therein that the court had no power to direct the Tribunal to refer a question not argued before it the Court observed that they were made under a misconception and quoted the observations of Chagla CJ in Madanlal Dharnidharka vs Commissioner of Income tax 4 extracted above with approval
This can hardly be said to be a decision on the present point
It will be seen from the foregoing review of the decisions that all the High Courts are agreed that section 66 creates a special jurisdiction that the power of the Tribunal to make a reference and the right of the litigant to require it must be sought within the four corners of section 661 that the jurisdiction of the High Court to hear references is limited to questions which are properly referred to it under section 661 and that such jurisdiction is purely advisory and extends only to deciding questions referred to it
The narrow ground over which the High Courts differ is as regards the question whether it is competent to the Tribunal to refer or the High Court to decide a question of law which was not either raised before the Tribunal or decided by it where it arises on the facts found by it
On this question two divergent views have been expressed
One is that the words any question of law arising out of the order of the Tribunal signify that the question must have been raised before the Tribunal and considered by it and the other is that all questions of law arising out of the facts found would be questions of law arising out of the order of the Tribunal
The 1latter is the view 1 3 2 4  233
234 808 taken by the Bombay High Court in Madanlal Dharnidharka vs Commissioner of Income tax1 and approved by the Nagpur High Court in Mohanlal Hiralal vs Commissioner of Income tax 2
The former is the view held by all the other High Courts
Now the argument in support of the latter view is that on the plain grammatical construction of section 661 any question of law that could be raised on the findings of fact given by the Tribunal would be questions that arise out of the order and that to hold that they meant that the question must have been raised before the Tribunal and decided by it would be to read into the section words which are not there
In support of this contention Shri Viswanatha Sastri learned Counsel for the respondents argued that it was a fundamental principle of jurisprudence that the duty of the litigants was only to state the facts and that it was for the court to apply the appropriate law to the facts found arid he relied on the observations of Atkin L J in Attorney General vs Avelino Aramavo  Co1 that the court was not limited to particular questions raised by the Commissioners in the form of questions on the case and that if the point of law or the erroneous nature of the determination of the point of law was apparent on the case as stated and there were no further facts to be found the court could give effect to it  He also maintained that the position under the Indian law was the same as under the British statute because under section 661 of the Act the Tribunal has to refer not only questions of law arising out of its order but also a statement of the case that under section 662 the court can likewise require the Tribunal to state the case and refer it and that under section 665 the court has to decide the question of law raised by the case
We are unable to agree with this contention
Under the British statute when once a decision is given by the Commissioners it is sufficient that the assessee should express his dissatisfaction with it and ask that the matter be referred to the decision of the High Court
1 194816 ITR 227
2 3 809 It is then for the Commissioners to draw up a statement of the case and refer it for the decision of the court
The British statute does not cast as does section 661 of the Act a duty on the assessee to put in an application stating the questions of law which he desires the Commissioners to refer to the court and requiring them to refer the questions which arise out of that order
In Commissioner of Income tax Madras vs Mtt
section Ar
Arunachalam Chettiar 1 this Court has decided that the requirements of section 661 are matters affecting the jurisdiction to make a reference under that section
The attempt of the respondents to equate the position under section 661 of the Act with that under the British statute on the ground that the Tribunal has to draw up a statement of the case and refer it and that the court is to decide questions of law raised by it must break down when the real purpose of a statement in a reference is kept in view
A statement of case is in the nature of a pleading where in all the facts found are set out
There is nothing in it which calls for a decision by the court
It is the question of law referred under section 661 that calls for decision under section 665 and it is that that constitutes the pivotal point on which the jurisdiction of the court hinges
The statement of the case is material only as furnishing the facts for the purpose of enabling the court to decide the question referred
It has been repeatedly laid down by the Privy Council that the Indian Act is not in pari materia with the British statute and that it will not be safe to construe it in the light of English decisions vide Commissioner of Income tax vs Shaw Wallace  Co 2
In view of the difference between section 661 and the corresponding provision in the British statute we consider that no useful purpose will be served by referring to the English decisions for interpreting section 66
But the main contention still remains that the language of section 661 is wide enough to admit of questions of law which arise on the facts found by the Tribunal and that there is no justification for cutting 1   471
2 1932 LR 59 I A 206102 810 down its amplitude by importing in effect words into it which are not there
There is considerable force in this argument
But then there are certain features which distinguish the jurisdiction under section 66 and they have to be taken into consideration in ascertaining the true import of the words any question of law arising out of such order
 The jurisdiction of a court in a reference under section 66 is a special one different from its ordinary jurisdiction as a civil court
The High Court hearing a reference under that section does not exercise any appellate or revisional or supervisory jurisdiction over the Tribunal
It acts purely in an advisory capacity on a reference which properly comes before it under section 661 and 2
It gives the Tribunals advice but ultimately it is for them to give effect to that advice
It is of the essence of such a jurisdiction that the court can decide only questions which are referred to it and not any other question
That has been decided by this Court in New Jehangir Vakil Mills Ltd vs Commissioner of Income tax2 Kusumben D Mahadevia vs Commissioner of Income tax2 and Zoraster  Co vs Commissioner of Income tax 3
If the true scope of the jurisdiction of the High Court is to give advice when it is sought by the Tribunal it stands to reason that the Tribunal should have had an occasion to consider the question so that it may decide whether it should refer it for the decision of the court
How can it be said that the Tribunal should seek for advice on a question which it was not called upon to consider and in respect of which it had no opportunity of deciding whether the decision of the court should be sought It was argued for the respondents that in view of the fact that the court could compel the Tribunal to refer a question of law under section 662 for its decision not much significance could be attached to the advisory character of its jurisdiction
It is not conceivable it was said that any authority should have a right to compel another authority to take its advice
We see no force in this contention
Section 662 1  2  3  811 confers on the court a power to direct a reference only where the Tribunal was under a duty to refer under section 661 and it is therefore subject to the same limitations as section 661
That has been held by this court in New Jehangir Vakil Mills Ltd vs Commissioner of Income tax 1 and in Zoraster  Co vs Commissioner of Income tax 2
Moreover the power of the court to issue direction to the Tribunal under section 662 is as has often been pointed out in the nature of a mandamus and it is well settled that no mandamus will be issued unless the applicant had made a distinct demand on the appropriate authorities for the very reliefs which he seeks to enforce by mandamus and that had been refused
Thus the power of the court to direct a reference under section 662 is subject to two limitations the question must be one which the Tribunal was bound to refer under section 661 and the applicant must have required the Tribunal to refer it
RT is the form prescribed under Rule 22A for an application under section 661 and that shows that the applicant must set out the questions which he desires the Tribunal to refer and that further those questions must arise out of the order of the Tribunal
It is therefore clear that under section 662 the court cannot direct the Tribunal to refer a question unless it is one which arises out of the order of the Tribunal and was specified by the applicant in his application under section 661
Now if we are to hold that the court can allow a new question to be raised on the reference that would in effect give the applicant a right which is denied to him under section 661 and 2 and enlarge the jurisdiction of the court so as to assimilate it to that of an ordinary civil court of appeal
It is again to be noted that whereas section 6P1 as it stood prior to the amendment of 1939 conferred on the Commissioner a power to refer a question of law to the court suo motu that power has been taken away under the present section and it has accordingly been held that under section 661 as it now stands there is no power in the Tribunal to refer a question of law suo motu for the decision of the court
If as contended 1  2  812 for by the respondents the court is to be held to have power to entertain in a reference any question of law which arises on the facts found by the Tribunal its jurisdiction under section 665 must be held to be wider than under section 661 and 2
The correct view to take in our opinion is that the right of the litigant to ask for a reference the power of the Tribunal to make one and the jurisdiction of the court to decide it are all co extensive and therefore a question of law which the applicant cannot require the Tribunal to refer and one which the Tribunal is not competent to refer to the court cannot be entertained by the court under section 665
In view of the above considerations we are unable to construe the words any question of law arising out of such order as meaning any question of law arising out of the findings in the order of the Tribunal
One of the reasons given by Chagla C J in Madanlal Dharnidharka vs Commissioner of Income tax1 for differing from the decision in A Abboy Chetty and Go
vs Commissioner of Income tax Madras 2 that it is only a question which was raised before the Tribunal that could be said to arise out of its order was that that view must result in great injustice in a case in which the applicant had raised a question before the Tribunal but it had failed to deal with it owing to mistake or inadvertence
In such a case it was said the applicant would be deprived for no fault of his of a valuable right which the legislature had intended to give him
But we see no difficulty in holding that in those cases the Tribunal must be deemed to have decided the question against the appellant as Falshaw J was disposed to do in Mash Trading Co vs Commissioner of Income tax 3
This is only an application of the principle well known to law that a relief asked for and not granted should be deemed to have been refused
It is on this footing that Kania J held in New Piecegoods Bazar Co Ltd vs Commissioner of Income tax 4 that in the circumstances stated above the court could call upon 1  233 234
3 2 4 813 the Tribunal to state a supplemental case after giving its own decision on the contention
That was also the procedure adopted in Mohanlal Hiralal vs Commissioner of Income tax1
Such cases must be exceptional and cannot be founded on for putting a construction different from what the language of section 661 would otherwise warrant
There was also some argument as to the position under section 661 when the Tribunal decides an appeal on a question of law not raised before it
That would undoubtedly be a question arising out of the order and not the less so because it Was not argued before it and this conclusion does not militate against the construction which we have put on the language of section 661
The result of the above discussion may thus be summed up 1 When a question is raised before the Tribunal and is dealt with by it it is clearly one arising out of its order
2 When a question of law is raised before the Tribunal but the Tribunal fails to deal with it it must be deemed to have been dealt with by it and is therefore one arising out of its order
3 When a question is not raised before the Tribunal but the Tribunal deals with it that will also be a question arising out of its order
4 When a question of law is neither raised before the Tribunal nor considered by it
 it will not be a question arising out of its order notwithstanding that it may arise on the findings given by it
Stating the position compendiously it is only a question that has been raised before or decided by the Tribunal that could be held to arise out of its order
In this view we have next to consider whether the question which was raised before the High Court was one which arose out of the order of the Tribunal as interpreted above
Now the only question on which the parties were at issue before the income tax authorities was whether the sum of Rs 926532 was assessable to tax as income received during the year of 1 814 account 1945 46
That having been decided against the respondents the Tribunal referred on their application under section 661 the question whether the sum of Rs 926532 was properly included in the assessee company s total income for the assessment year 194647 and that was the very question which was argued and decided by the High Court
Thus it cannot be said that the respondents had raised any new question before the court
But the appellant contends that while before the income tax authorities the respondents disputed their liability on the ground that the amount in question had been received in the year previous to the year of account the contention urged by them before the court was that even on the footing that the income had been received in the year of account the proviso to section 102vii had no application and that it was a new question which they were not entitled to raise
We do not agree with this contention
Section 661 speaks of a question of law that arises out of the order of the Tribunal
Now a question of law might be a simple one having its impact at one point or it may be a complex one trenching over an area with approaches leading to different points therein
Such a question might involve more than one aspect requiring to be tackled from different standpoints
All that section 661 requires is that the question of law which is referred to the court for decision and which the court is to decide must be the question which was in issue before the Tribunal
Where the question itself was under issue there is no further limitation imposed by the section that the reference should be limited to those aspects of the question which had been argued before the Tribunal
It will be an over refinement of the position to hold that each aspect of a question is itself a distinct question for the purpose of section 661 of the Act
That was the view taken by this Court in The Commissioner of Income tax Bombay vs Messrs Ogale Glass Works Ltd 1 and in Zoraster  Co vs Commissioner of Income tax 2 and we agree with it
As the question on which the parties were at issue which was referred 1 2  815 to the court under section 661 and decided by it under s665 is whether the sum of Rs 926532 is liable to be included in the taxable income of the respondents the ground on which the respondents contested their liability before the High Court was one which was within the scope of the question and the High Court rightly entertained it
It is argued for the appellant that this view would have the effect of doing away with limitations which the legislature has advisedly imposed on the right of a litigant to require references under section 661 as the question might be framed in such general manner as to admit of new questions not argued being raised
It is no doubt true that sometimes the questions are framed in such general terms that construed literally they might take in questions which were never in issue
In such cases the true scope of the reference will have to be ascertained and limited by what appears on the statement of the case
In this connection it is necessary to emphasize that in framing questions the Tribunal should be precise and indicate the grounds on which the questions of law are raised
Where however the question is sufficiently specific we are unable to see any ground for holding that only those contentions can be argued in support of it which had been raised before the Tribunal
In our opinion it is competent to the court in such a case to allow a new contention to be advanced provided it is within the framework of the question as referred
In the present case the question actually referred was whether the assessment in respect of Rs 926532 was proper
Though the point argued before the Income tax authorities was that the income was received not in the year of account but in the previous year the question as framed is sufficient to cover the question which was actually argued before the court namely that in fact the assessment is not proper by reason of the proviso being inapplicable
The new contention does not involve re framing of the issues
On the very terms of the question as referred which are specific the question is permissible and was open to the respondents
Indeed the very order of reference 816 shows that the Tribunal was conscious that this point also might bear on the controversy so that it cannot be said to be foreign to the scope of the question as framed
In the result we are of opinion that the question of the applicability of the proviso is really implicit as was held by Chagla CJ in the question which was referred and therefore it was one which the court had to answer
On the merits the appellant had very little to say
He sought to contend that the proviso though it came into force on May 5 1946 was really intended to operate from April 1 1946 and he referred us to certain other enactments as supporting that inference
But we are construing the proviso
In terms it is not retrospective and we cannot import into its construction matters which are ad extra legis and thereby alter its true effect
Then it was argued that the amount of Rs 926532 having been allowed as deduction in the previous years may now be treated as profits received during the year of assessment and thereby subjected to tax
But this is a point entirely new and not covered by the question and on the view taken by us as to the scope of a reference under section 661 it must be disallowed
In the result this appeal is dismissed with costs
SHAH J
The Income tax Appellate Tribunal Bombay Bench A referred the following question to the High Court of Judicature at Bombay under section 661 of the Indian Income tax Act Whether the sum of Rs 926532 was properly included in the assessee company s total income computed for the assessment year 1946 47
 The question comprehends two component parts 1 whether the amount of Rs 926532 was properly included in the assessee s income and 2 whether the amount was properly included in the taxable income of the assessees for the assessment year 1946 47
The amount sought to be taxed was part of compensation received by the assessees from the Government of India for loss in 1944 by enemy action of their ship El Madina The assessees maintained before the 817 taxing authorities and the Tribunal that the compensation accrued to them on April 16 1944
This plea was rejected but rejection of that plea was not sufficient to make the amount taxable
it had still to be decided whether the amount which was received in the months of July and December 1944 war taxable as income
It is common ground that before the amendment by Act 8 of 1946 of section 10 sub section
2 cl
7 by the inclusion of the fourth proviso compensation received for loss of a capital asset like a ship was not taxable as income under the Indian Income tax Act
The tribunal observed that the compensation accrued when it was ascertained and was received by the assessees in the year of account and the amount was therefore rightly brought to tax in the year of assessment 1946 47
Manifestly the tribunal its attention to the statutory provision on the application of which the exigibility of the tax depended
But proviso IV to section 10 sub section
2 cl
7 came into force on May 4 1946
It was not in force on April 1 1946 the day on which the liability to pay tax for the year of assessment 1946 47 crystallized
The tribunal erroneously assumed that the amending Act was in force at the date of commencement of the year of assessment and the assessees did not attempt to remove that misapprehension
But the question whether the amount sought to be taxed was properly included did arise out of the order of the tribunal the tribunal having held that the amount of compensation was taxable by virtue of section 10 sub section
2 cl
7 proviso IV
The question whether the statutory pro vision relied upon to tax the assessees was applicable to the amount sought to be assessed as income was as much a question arising out of the order of the tribunal as the question whether the interpretation placed by the tribunal upon that proviso was correct may be
The assessees had maintained that they were not liable to be taxed under section 10 sub section
2 el
7 proviso IV because the amount sought to be taxed was received before the year of account relevant for the 103 818 assessment year 1946 47
The tribunal held negativing the contention that it was taxable under section 10 sub section
2 el
7 proviso IV
A question of law whether the amount was properly included in the taxable income for the year of assessment clearly arose and that question was referred by the tribunal to the High Court
The High Court under section 66 cl
5 of the Income tax Act has to record its opinion on the questions arising out of the order of the tribunal and not on the arguments pro and con advanced before the tribunal
In my view the High Court had jurisdiction on the question arising out of the order of the tribunal and referred in deciding that the Act which made the amount taxable was not in operation at the material date
This would be sufficient to dispose of the appeal but counsel for the revenue submits that as it was never urged before the tribunal by the assessees that the amending Act 8 of 1946 which made the compensation received by the assessees taxable as income was brought into operation after the commencement of the year of assessment 1946 47 and the tribunal never directed its attention to that plea it had no jurisdiction to refer that question to the High Court arid the High Court was not competent to answer that question even if on the facts found the question clearly arose out of the order of the tribunal
Counsel urges that the question arising out of the order of the tribunal is only that specific question which has been raise and argued before the tribunal and on which the tribunal has given its decision
We have heard elaborate arguments on the true meaning of the expression any question of law arising out of such order and the nature of the jurisdiction exercised by the High Court under section 66 of the Income tax Act
There is wide divergence of opinion oil the true import of this clause
Before I refer to the authorities it would be useful to set out the scheme of the Income tax Act relating to reference of questions to the High Court under section 66 and the nature of the jurisdiction which the High Court exercises
819 1 Within sixty days of the date upon which he is served with notice of an order under sub section
4 of section 33 the assessee or the Commissioner may by application in the prescribed form require the Appellate Tribunal to refer to the High Court any question of law arising out of such order and the Appellate Tribunal shall draw up a statement of the case and refer it to the High Court Provided  2 If on any application being made under sub section
1the Appellate Tribunal refuses to state a case on the ground that no question of law arises the assessee or the Commissioner as the case may be may apply to the High Court and the High Court may if it is not satisfied of the correctness of the decision of the Appellate Tribunal require the Appellate Tribunal to state a case and to refer it and on receipt of any such requisition the Appellate Tribunal shall state the ease and refer it accordingly
3   4 If the High Court is not satisfied that the statements in a case referred under this section are sufficient to enable it to determine the question raised thereby the court may refer the case back to the Appellate Tribunal to make such additions thereto or alterations therein as the court may direct in that behalf
5 The High Court upon the hearing of any such case shall decide the questions of law raised thereby and shall deliver its judgment thereon containing the ground on which such
decision is founded and shall send a copy of such judgment to the Appellate Tribunal which shall pass such orders as are necessary to dispose of the case conformably to such Judgment
6 7 7A 8   
Under the scheme of the Indian Income tax Act the appellate tribunal is the sole judge of facts
The High Court indisputably exercises a special advisory 820 jurisdiction to record its opinion on questions submitted by the tribunal it does not act as a court of appeal or revision on questions of law or fact
After the disposal of the appeal by the tribunal under section 334 of the Income tax Act the revenue or the tax payer may call upon the tribunal to state a case on the questions of law arising out of the order
If the tribunal refuses to state a case the party aggrieved may move the High Court to call upon the tribunal to state a case and the High Court may so direct if it is not satisfied as to the correctness of the decision of the tribunal refusing to state a case
The question must be one of law and not of fact and not merely academic it must be a concrete problem bearing directly on the rights and obligations of the revenue or of the assessees
The power of the High Court is to require the tribunal to state a case only if it is satisfied that the view of the tribunal not on the merits of the order under section 33 el
4 but on the application under section 661 is erroneous
If the tribunal is not called upon to refer a question the High Court cannot arrogate to itself the power to call upon the tribunal to refer questions which arise out of the findings recorded by the tribunal but which the tribunal was not called upon to refer
But there is in my judgment no warrant for the view that the question which the tribunal may refer or which the High Court on the refusal of the tribunal may call upon the tribunal to refer must be a question which was raised and argued before the tribunal at the hearing under section 334
The statute does not specifically impose such a restriction nor is it implied
To import in the meaning of the expression any question of law arising out of such order the concept that the question must have been argued before and dealt with by the tribunal in its judgment deciding the appeal is to impose a fetter upon the jurisdiction of the High Court not warranted by the plain intendment of the statute
The source of the question must be the order of the tribunal but of the question it is not predicated that the tribunal must have been asked to decide it at the hearing of the appeal
It may very well happen and frequently 821 cases arise in which the question of law arises for the first time out of the order of the tribunal
The tribunal may wrongly apply the law may call in aid a statutory provision which has no application may even misconceive the question to be decided or ignore a statutory provision which expressly applies to the facts found
These are only illustrative cases analogous cases may easily be multiplied
It would indeed be perpetrating gross injustice in such cases to restrict the assessee or the Commissioner to the questions which have been raised and argued before the tribunal and to refuse to take cognisance of questions which arise out of the order of the tribunal but which were not argued because they could not in the absence of any indication as to what the tribunal was going to decide be argued
A concrete question of law having a direct bearing on the rights and obligations of the parties which may be founded on the decision of the tribunal is one which in my judgment arises out of the order of the tribunal even if it is not raised or argued before the tribunal at the hearing of the appeal
It is the duty of the tribunal to draw up a statement of the case and to frame questions that duty can only be performed adequately if specific questions relating directly to the dispute between the parties are raised
If the import of the question is unduly large the High Court has and is indeed bound in dealing with it to restrict it to its true content in the light of the findings recorded by the tribunal
But in dealing with the question the High Court may not only entertain those aspects of the case which were argued before the tribunal but all such aspects as have fairly a direct bearing on the dispute
The jurisdiction of the High Court is by statute not expressly circumscribed to recording its opinion on arguments advanced before the tribunal and the nature of the jurisdiction exercised by the High Court does not demand that such a limitation should be implied
The court has jurisdiction to decide questions which arise out of the order of the tribunal not merely those which were raised and argued before the tribunal
822 On the meaning of the expression question of law arising out of such order judicial opinion in the High Courts is divided and this court has not expressed any authoritative opinion thereon
No useful purpose will be served by entering upon an analysis of the decisions of  the High Courts and there are many on this question
The decisions fall into two broad divisions
On the one hand it is ruled that a question of law can be said to arise out of an order of the Appellate Tribunal within the meaning of section 661 of the Indian Income tax Act only if such order discloses that the question was raised before the tribunal
A question not raised before the tribunal cannot be said to arise out of its order even if on the facts of the case appearing from the order the question fairly arises
 The leading cases in support of this view are A Abboy Chetty  Co vs Commissioner of Income tax Madras 1 and The Commissioner of Excess Profits Tax West Bengal vs Jeewanlal Ltd Calcutta 2
This view has been adopted with some variations in the norms of expression in the following cases Maharaj Kumar Kamal Singh vs Commissioner of Income tax 3 G M Chenna Basappa vs Commissioner of Income tax Hyderabad 4 and Punjab Distilling Industries Ltd Commissioner of Income tax Punjab 5
On the other hand is the view expressed by Chagla C J in Madanlal Dharnidharka vs Commissioner of Income tax 6 where the learned Chief Justice recorded his conclusion as follows I should have stated that a question of law arose out of the order of the Tribunal if such a question was apparent on the order itself or it could be raised on the facts found by the Tribunal and which were stated in the order
I see no reason to confine the jurisdiction of this Court to such questions of law as have been argued before the Tribunal or are dealt with by the Tribunal
he section does not say so and there is no reason why we should construe the expression arising out of such order  in a manner unwarranted by the 1 3 5 2 4 6 823 ordinary grammatical construction of that expression
 For the reasons already set out in my view the interpretation placed by Chagla C J on the expression arising out of such order is the correct one
Appeal dismissed


Summary:
By section 66 1 of the Indian Income tax Act 1922 the assessee or the Commissioner may by application in the prescribed form  require the Appellate Tribunal to refer to the High Court any question of law arising out of such order and the Appellate Tribunal shall  draw up a statement of the case and refer it to 789 the High Court
 The respondents who received compensation from the Government as owners of a requisitioned steamship lost in enemy action were assessed to tax under the fourth proviso to section 1O2Vii of the Indian Income tax Act which was inserted into the Act by the Income tax Amendment Act 1946 VIII Of 1946 that came into force on May 4 1946
Before the Tax Authorities the respondents sought to resist the liability on the ground that the income was received not in the year of account but in the previous year but failed
No question as to the applicability of the said proviso was either raised before the Tribunal or dealt with by it
The question that was referred to the High Court was as follows Whether the sum of Rs 926532 was properly included in the assessee company s total income computed for the assess ment year 1946 47 In the High Court the respondents contended that the said proviso had no application
The appellant took a preliminary objection to this contention being raised on the ground that it was not raised and argued before the Tribunal but the High Court overruled the objection and held that the compensation amount was not liable to charge as the proviso in question was not in force on the material date
Against this decision the Commissioner of Income tax appealed
The point for determination in the appeal was whether the High Court in answering a reference under section 66 could decide a question not raised or argued before the Tribunal
Held per Das Kapur Hidayatullah and Venkatarama Aiyar jj that the jurisdiction of the High Court under section 66 of the Indian Income tax Act is purely advisory and therefore different from its ordinary jurisdiction as a Civil Court
It is of the essence of such a jurisdiction that the High Court can decide only such questions as are referred to it and that implies that the questions must necessarily be those that the Tribunal had occasion to consider
The words any question of law arising out of such order in section 661 of the Indian Income tax Act 1922 do not in the context mean any question of law arising out of the findings in the order of the Tribunal but only such questions as were raised before or decided by the Tribunal
The Indian Income tax Act I 922 is not in Pari materia with the British Statute and in view of the difference between section 66i and the corresponding provisions of the British Statute no useful purpose can be served by referring to English decisions for interpreting section 66 of the Indian Act
Commissioner of Income tax vs Shaw Wallace  Co 1932 LR 59 IA 2o6 referred to
Attorney General vs Avelino Armavo  Co  considered
790 The power the High Court has under s 662 Of the Act to direct a reference can make no difference since such power is subject to the same limitations as that of the Tribunal under section 66i of the Act
Commissioner of Income tax Madras vs Mtt
section Ar
Arunachalam Chettiar 1953 SCR 463 New jehangir Vakil Mills Ltd vs Commissioner of Income tax 1960 1 SCR 249 Kusumben D Mahadevia vs Commissioner of Income tax and Zoraster  Co vs Commissioner of Income tax   referred to
Madanlal Dharnidharka vs Commissioner of Income tax  disapproved
Case law reviewed
The jurisdiction of the High Court in deciding a reference under section 665 is co extensive with the right of the litigant to ask for a reference and the power of the court to make one
Therefore the High Court has jurisdiction in a reference to decide questions of law arising out of the order of the Tribunal that is question of law raised and decided by the Tribunal or question of law raised before the Tribunal but not decided by it or question of law decided by Tribunal though not raised before it but not questions not raised or decided by the Tribunal even though it may arise from its findings
A question of law may have more than one aspect and section 661 of the Act does not contemplate that each aspect of a question is by itself a distinct question
It only requires that the question of law which is referred to the Court must have been in issue before the Tribunal
It does not further require that the reference should be limited to those aspects of the question which had been argued before the Tribunal
The Commissioner of Income tax Bombay South vs Ms Ogale Glass Works Ltd 1955 I SCR 185 and Zoraster  Co vs Commissioner of Income tax   approved
In the instant case the question referred to the High Court was wide enough to cover the contention raised by the respondent and the High Court was right in holding that the fourth proviso to section 102Vii Of the Act not being retrospective in operation bad no application
Per Shah J Section 66 of the does not contemplate that the question which tire Tribunal may refer or which the High Court may call upon the Tribunal to refer must be one that is raised and argued before the Tribunal at the hearing under section 334 Of the Act
The section does riot specifically impose such a restriction nor is it implied
To import into the expression any question of law arising out of such order any limitation that the question must either have been argued before the Tribunal or dealt with by it would be not only to impose fetters upon the jurisdiction of the High 791 Court which were plainly not intended by the statute and in certain cases might involve gross injustice to the parties
Madanlal Dharnidharka vs Commissioner Of Income tax  approved
Under section 665 Of the Act the court has to record its opinion on the questions arising out of the order of the Tribunal and not on the arguments advanced before it
In the instant case the High Court on the question arising out of the order of the Tribunal and referred to it had jurisdiction to decide that the proviso which made the amount taxable was not in operation at the material date