Law: Income Tax Act, 1961

Section: 256

Income-tax---Reference--Reference not permissible where answer to question is self-evident concluded by decision of Supreme Court--Receipt of income--Decision of Supreme Court that if income does not result at all there can be no tax--'Tribunal applying decision of Supreme Court and holding that income was not assessable-¬Reference not permissible from order of Tribunal. Where the answer to a question is self-evident or is concluded by a decision of the Supreme Court, it would be futhe to make a reference and in such a case to decline the request for a reference would be well-justified. Income-tax is a levy on income. Though the Income-tax Act takes into account two points of time at which the liability to tax is attracted viz., the accrual of the income or its receipt, yet the substance of the matter is the income. If income does not result at all, there cannot be a tax even though in book-keeping an entry is made about a "hypothetical income" which does not materialise. This principle has been reiterated by the Supreme Court in C.I.T. v. Shoorji Vallabhadas & Co. (1962) 46 I.T.R. 144 and C.I.T. v. Birla Gwalior (P.) Ltd. (1973) 89 I.T.R. 266. Held, that, in the instant case, the findings recorded by the Tribunal were that the disputed amount had not accrued to the assessee during the year under consideration. The assessee was allowed to collect the entire amount as rent as a result of the interim order passed by the High Court and there was nothing to indicate that the assessee was permitted to receive that amount as its income. In fact the assessee had no enforceable right in respect of the excess amount collected by it at the direction of the High Court. The amount collected was handed over to the District Magistrate and the assessee had no access to it nor any control or jurisdiction over that amount. Hence, the amount was not assessable. The view taken by the Tribunal was in line with the decisions of the Supreme Court. Hence, the Tribunal could not be directed to make a reference to the High Court from its order. C.I.T. v. Birla Gwalior (Pvt.) Ltd. (1973) 89 ITR 266 (SC) and C.I.T. v. Shoorji Vallabhdas & Co. (1962) 46 ITR 144 (SC) applied.…

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