Appeal No 96 of 1963
Appeal by special leave from the judgment dated October 13 1960 of the Punjab High Court in Income tax Case No 21 of 1958
KN Rajagopala Sastri and RN Sachthey for the appellant
AV Viswanatha Sastri and NN Keshwani for the respondent
November 18 1963
The Judgment of the Court was delivered by SHAH J
MS Indian Woollen Textiles Mills Amritsar hereinafter called the assessee  had at different places in India branches one of which was an industrial undertaking conducted in the name of Eldee Velvet and Silk Mills called for the sake of brevity Eldee 
Eldee had advanced Rs 321460 to another concern the Bombay Fine Worsted Manufacturers  Castle Mills hereinafter called Castle 
In the assessment year 1951 52 the assessee claimed under section 15C of the Indian Income tax Act1922 exemption from tax in respect of 6 of the capital employed in Eldee  as a newly established undertaking and sought to include in the computation of the capital so employed Rs 321460 advanced to Castle 
The Income tax Officer Special Circle Amritsar and the Appellate Assistant Commissioner rejected the claim
But the Income tax Appellate Tribunal modified the assessment and directed in clusion of the amount advanced to Castle  in the computation of capital invested for the purpose of 429 section 15C
An application submitted under section 661 of the Indian Income tax Act to the Tribunal to refer a question which it was contended by the Commissioner arose out of the order of the Tribunal was rejected and the petition of the Commissioner under section 662 for an order directing the Tribunal to state the case and refer it to the High Court was also dismissed
With special leave the Commissioner has appealed to this Court
The question in dispute before the revenue authorities was whether the business called Castle  at Bombay was a branch of the assessee
The Appellate Assistant Commissioner rejected the claim of the assessee to include the amount of Rs 321460 in the capital employed in the undertaking Eldee  because in his view there were in these two undertakings the same eight partners with a share of 2two annas each and that the constitution of both the undertakings being the same Castle  could not be regarded as a separate entity
The Tribunal disagreed with the view of the Appellate Assistant Commissioner relying upon only one circumstance viz that in the assessment for the year 1951 52 the income from Castle  had not been computed and included in the assessment of the assessee
It did not consider the other questions whether the constitution and ownership of the two businesses were the same
The High Court declined to require the Tribunal to state the case holding that the finding of the Tribunal was one of fact as it was based on the inference arising from the non inclusion by the Income tax Officer in the assessment in question of the income of Castle  and that the factor taken into consideration by the Appellate Tribunal in coming to the conclusion it did was a relevant factor
Section 662 invests the High Court with jurisdiction to require the Appellate Tribunal to state a case and to refer it if the Appellate Tribunal has refused to state the case on the ground that no question of law arises and the High Court being approached 430 by the aggrieved party within the period of limitation prescribed is not satisfied about the correctness of the decision of the Appellate Tribunal refusing to state the case
Under the Income tax Act it is for the Tribunal to decide all questions of fact the High Court has the power merely to advise the Tribunal on questions of law arising out of the order of the Tribunal
In so advising the High Court must accept the findings of the Tribunal on matters of appreciation of evidence
But the refusal of the Tribunal to state a case for the opinion of the High Court on the view that a question of law does not arise out of the order is not conclusive
The High Court has the power to call upon the Tribunal to state the case if in its view a question of law arises out of the order of the Tribunal
Such a question may arise out of the findings of the Tribunal and also if the Tribunal has misdirected itself in law in arriving at its finding
It is not open to the Court to discard the Tribunal s finding of fact if there is some evidence to support the finding of the Tribunal on a question of fact even if on a review of the evidence the Court might have arrived at a different conclusion
It must however appear that the Tribunal had considered evidence covering all the essential matters before arriving at its conclusion
If the conclusion of the Tribunal is based upon some evidence ignoring other essential matters it cannot be regarded as a finding not giving rise to a question liable to be referred to the Court
Non inclusion of the income of Castle  in the assessment of the assessee may have been a relevant circumstance but its effect had to be considered in the light of other circumstances on which the Appellate Assistant Commissioner had relied
Moreover reliance placed by the Tribunal upon the single circumstance on which its decision was founded had proceeded on an assumption that in the previous year to the year of assessment 1951 52 Castle  had carried on business and had earned income
The observations made by the Appellate Assistant Commissioner about 431 Castle  being separately assessed at Bombay in the status of a registered firm apparently refer to assessment of that business in subsequent years and not in the year of assessment 1951 52
The conclusion of the Tribunal therefore suffers from a double infirmity it assumes the only fact on which its conclusion is founded and ignores other relevant matters on which the Appellate Assistant Commissioner relied in support of his conclusion
The Tribunal has therefore misdirected itself in law in arriving at its finding and in refusing to require the Tribunal to state the case and to refer it the High Court was in our view in error
The appeal is therefore allowed and the proceedings are remanded to the High Court with a direction to proceed according to law
Costs in this appeal will be costs in the High Court
Appeal allowed and Case remanded


Summary:
 Eldee  one of the branches of the respondent had advanced a loan to another concern Castle 
The respondent claimed under section 15C of the Income Tax Act exemption from tax in respect of 6  of the capital employed in Eldee  as a newly established undertaking and sought to include in the computation of the capital so employed the amount advanced to Castle 
The Income tax Appellate Tribunal directed inclusion of the amount advanced to Castle  in the computation of capital invested for the purpose of section 15C The Commissioner s application under section 661 of the Act to the Tribunal to refer a question which arose out of the order of the Tribunal was rejected and his petition under s 662 for an order directing the Tribunal to state the case and refer it to the High Court was also dismissed
The question in dispute before the Revenue Authorities was whether Castle  was a branch of the assessee
The Appellate Assistant Commissioner thought that the same eight persons were partners in these two undertakings and that the constitution of both the undertakings being the same Castle  could not be regarded as a separate entity
The Tribunal disagreed with that view relying upon only one circumstance that in the assessment for the year 1951 52 the income from Castle  had not been computed and included in the assessment of the respondent
Held  Under the Income tax Act it is for the Tribunal to decide all questions of fact the High Court has the power merely to advise the Tribunal on questions of law arising out of the order of the Tribunal
In so advising the High Court must accept the findings of the Tribunal on matters of appreciation of evidence
But the refusal of the Tribunal to state a case for the opinion of the High Court on the view that a question of law does not arise out of the order is not conclusive
The High Court has the power to call upon the Tribunal to state the case if in its view a question of law arises out of the order of the Tribunal and also if the Tribunal has misdirected itself in law in arriving at its findings
It is not open to the court to discard the Tribunal s finding of fact if there is some evidence to support the finding of the Tribunal on a question of fact even if on a review of the evidence the court might have arrived at a difficult conclusion
It must however appear that the Tribunal had considered evidence covering all the essential matters before arriving at its con 428 clusion
If the conclusion of the Tribunal is based upon some evidence ignoring other essential matters it cannot be regarded as a finding not giving rise to a question liable to be referred to the Court
ii The conclusion of the Tribunal suffers from a double infirmity it assumed the only fact on which its conclusion was founded and ignored other relevant matters on which the Appellate Assistant Commissioner relied
The Tribunal had therefore misdirected itself in law in arriving at its finding and in refusing to require the Tribunal to state the case and to refer it the High Court was in error