The case of the assessee for asst. yr. 1973-74 was adjudicated upon by the Tribunal vide its order dt. 28th Jan., 1978. The issue before the Tribunal was regarding the inclusion of share income of the minor sons from the firm of M/s. N. T. Rama Raos Estate in the assessment of the assessee. The Tribunal, after hearing the parties to the dispute, followed the decision of the Andhra Pradesh High Court in the case of CIT vs. Sanka Shankaraiah (1978) 113 ITR 313 (AP), wherein it was held that S. 64 would apply to the computation of total income of an individual, that the expression "individual" did not comprehend in its meaning the Karta of a joint family, that if it were the intention of the Legislature that the expression "individual" used in S. 64 should also take in a joint family, then it would have used the expression "person" so as to include an HUF and not the words "spouse of such individual" in cl. (i) to sub-s. (1), or the words "a minor child of such individual" in cl. (ii), or the words "either spouse or parent" in the Explanation. In the light of the said decision, the Tribunal rendered decision in favour of the assessee and against the Revenue.
2. The Revenue filed reference application, R. A. No. 90/Hyd/1978-79, dt. April, 1978, and requested the Tribunal to refer the following question of law : "Whether, on the facts and in the circumstances of the case, it has been rightly held that the provisions of S. 64(1) (ii) of the IT Act, 1961 would not be applicable and, therefore, the share incomes arising to the minor sons of the assessee have to be deleted." The Tribunal referred the said question of law for the opinion of the Honble High Court of Madras. The Honble High Court of Madras has answered the question of law referred to it vide its judgment dt. 22nd Jan., 1990 in T. C. No. 768 of 1979 (Ref. No. 449 of 1979). In rendering the decision, the Honble High Court has followed its own order in the case of CIT vs. V. Balasubramaniam (1984) 147 ITR 732 (Mad). The question referred was answered in favour of the Revenue and against the assessee. While delivering the judgment, the Honble High Court did not follow the decision of the Andhra Pradesh High Court in the case of CIT vs. Sanka Shankaraiah (supra). This judgment of the High Court of Madras is before us for the purpose of passing an order in conformity with the said decision.
3. The case of the assessee was posted for hearing. On behalf of the assessee, Sri B. Ravindra, learned counsel, attended and argued that in the case of the assessee, the assessment was completed by the ITO in Hyderabad and, therefore, reference, if any, should have been made to the High Court of Judicature, Andhra Pradesh. The reference to any other High Court is, therefore, invalid, incompetent and irrelevant. He draws our attention to S. 256(1) of the IT Act and points out that the words used by the Legislature in the said section are "the High Court" and "a High Court". The decision of the Madras High Court on an invalid reference under S. 256(1) is also an invalid order and, therefore, no effect can be given to the said decision. Even assuming that the assessee had given consent for the case to be referred to Madras High Court, the said consent does not confer any jurisdiction on the Madras High Court. The learned counsel, therefore, urges that the decision of the Madras High Court should be ignored. In this regard, he draws our attention to the decision of the Delhi High Court in the case of Seth Banarsi Dass Gupta vs. CIT (1978) 113 ITR 817 (Del), in which the facts of the case and the decision of the Court were as under : "The assessee, an HUF, resided and carried on business in Meerut in U.P. Assessment orders were passed by the ITO at Meerut and appeals therefrom were heard by the AAC at Meerut. Further appeals were heard by the Delhi Bench of the Tribunal and on the applications of the parties, a reference was made to the Delhi High Court. On these facts, it was held, returning the reference to the Tribunal, that the Delhi High Court had no jurisdiction to entertain the reference. The place of location of the Bench of the Tribunal which hears and determines the appeal did not provide a basis for the determination of the jurisdiction of the High Court to which the case had to be stated.....
the appeal before the Tribunal had arisen out of assessment orders of the ITO at Meerut which was in the State of Uttar Pradesh and, therefore, it was the Allahabad High Court to which the reference should have been made." Similarly, in the case before us, the learned counsel points out that the case was completed in Hyderabad and, therefore, the reference, if at all, should have been made to the jurisdictional High Court of Andhra Pradesh. The same ratio, he points out, has been laid down again by the Delhi High Court in the case of Birla Cotton, Spinning and Weaving Mills Ltd. vs. CIT (1980) 123 ITR 354 (Del), wherein it has been held that the reference would lie depending on the place and jurisdiction of the ITO. In this regard, the learned counsel has also taken us through the decision in the case of CIT vs. S. Sivaramakrishna Iyer (1968) 70 ITR 860 (Mad), and the decisions in AIR 1977 SC 1201, AIR 1965 SC 2065 and AIR 1965 SC 1449. With the help of these decisions, the learned counsel contends that the reference made by the Tribunal to Madras High Court was invalid and consequently the decision of the Madras High Court is also invalid. He, therefore, urges that no order under S. 260(1) need be passed.
4. On the other hand, Sri B. Shyam Sundar, the learned Departmental Representative, urges that the decision of the High Court is binding as the said decision has been rendered with reference to the reference made by the Income-tax Appellate Tribunal, Hyderabad Bench B. The decision of the High Court is binding and an order under S. 260 is to be passed in conformity with the said decision. He, therefore, strongly opposes the contention of the learned counsel for the assessee.
5. We have heard the rival submission. It is seen from the facts of the case that in April 1978, application under S. 256(1) was filed by the CIT, Madras (Central). In the said application, a prayer was made to refer the case to the Madras High Court. After hearing both the parties, the Tribunal had prepared a draft statement of case dt. 9th Oct., 1978 at which the parties were represented by Sri G. Rajagopala Rao for the assessee and Sri D. Bhaskara Rao on behalf of the Revenue.
The said draft statement of case was finalised on 26th Oct., 1978. Sri G. Rajagopala Rao, who represented the assessee, did not suggest any change in the draft statement of case. In the draft statement of case, it had been specifically mentioned : "This is a reference application filed by the CIT (Central), Madras, stating that the following question said to be a question of law arises from the order of the Tribunal in ITA No. 1535/Hyd/1976-77 and requiring us to draw up a statement of case and refer the said question to the Honble High Court of Madras for its opinion :- ". Thus, it was clear that the finalised draft statement of case was to be referred to the High Court of Madras. Sri G.Rajagopala Rao did not raise any objection to this. A statement of case was, therefore, accordingly filed with the said High Court on 29th Oct., 1978. It may also be mentioned that the assessee, Sri N. T. Rama Rao, while filing the return of income, had declared his address as "63-A, Bazullah Road, T. Nagar, Madras-17". We are, therefore, of the opinion that the reference to Madras High Court was made within the knowledge of the assessee and at the time of draft statement of case or its finalisation, no objection was raised by either party. Therefore, it is now too late in the day to raise this issue.
6. Under the provisions of S. 260(1), the Tribunal, on receiving a copy of the judgment of the High Court, is duty-bound to pass such orders as are necessary to dispose of the case conformably to such judgment. The section clearly imposes an obligation upon the Tribunal to dispose of the appeal in the light of and conformably with the judgment of the High Court. If the High Court concurs with the views of the Tribunal, the appeal may be disposed of by a formal order. But, if the High Court disagrees with the Tribunal on a question of law, the Tribunal must modify its order in the light of the order of the High Court. It is, therefore, clear from the provisions of S. 260(1) that the powers of the Tribunal while passing an order under S. 260(1) are very limited.
It is not open to the Tribunal to take upon itself the task of scrutinizing the correctness or otherwise of the order of the High Court. It is the bounden duty of the Tribunal to act upon the judgment of the High Court. In this regard, we are supported by the decision in the case of State of Tamil Nadu vs. K. O. Mohd. Suleman & Co. (1980) 46 STC 151 (Mad). The Supreme Court of India in the case of Esthuri Aswathaiah vs. CIT (1967) 66 ITR 478 (SC), had an occasion to adjudicate upon the duty of the Tribunal under S. 66(5) of the 1922 Act. It has been held by the apex Court that S. 66(5) of the Indian IT Act, 1922, clearly imposes an obligation upon the Tribunal to dispose of the appeal in the light of and conformably with the judgment of the High Court. Before the Tribunal passes an order disposing of the appeal, there should normally be a hearing. The scope of the hearing must of course depend upon the nature of the order passed by the High Court. If the High Court has agreed with the views of the Tribunal, the appeal may be disposed of by a formal order; if the High Court disagrees with the Tribunal on a question of law, the Tribunal must modify its order in the light of the order of the High Court. In other words, the Tribunal would be under a duty to dispose of the case conformably with the opinion of the High Court and on the merits of the dispute. Similar views were also expressed by the Supreme Court again in the case of CIT vs. Jubilee Mills Ltd. (1968) 68 ITR 630 (SC). We are, therefore, of the view that we are duty-bound to give effect to the order of the Madras High Court particularly in view of the fact that we had ourselves made the reference to the said High Court.
7. We do not agree with the submission of the learned counsel for the assessee that consent cannot confer jurisdiction on the Madras High Court to answer the reference made. The provisions of S. 256(1) are enacted for the benefit of parties before the Tribunal. Both the parties, at the time of draft finalisation of the case, felt that the Madras High Court would be convenient and accessible to answer the reference. Therefore, the question of conferring jurisdiction on the Madras High Court by the consent does not arise now. The parties, particularly the assessee, waived the benefit given under S. 256(1) and, therefore, the same cannot be agitated now. It has been held by the Supreme Court in the case of Director of Inspection of Income-tax (Investigation) & Anr. vs. Pooran Mall & Sons & Anr. (1974) 96 ITR 390 (SC), that if a benefit is conferred by law, the same can be waived by agreement and the question of consent or waiver does not arise.
8. After hearing the arguments of the learned counsel for a considerable length of time, we are of the opinion that the decisions relied upon by him do not support his case. We, therefore, pass order under S. 260(1) in conformity with the judgment of the Madras High Court referred to above.
9. On the issue before us, the Honble High Court has answered the question in favour of the Revenue and against the assessee and, therefore, we reverse our decision on this count. The appeal of the Revenue is allowed.