1982 PLP 206 (PTD)

NAIMUDDIN, J.‑By this application under section 66(2) of the Income‑tax Act, 1922 and applications in Income‑tax Casts Nos. 23/1972 and 24/1972, the applicants namely, Messrs Shambhumal Hiranand & Co. pray to direct the Income‑tax Appellate Tribunal to refer to this Court the following questions said to be of law and arising out of the order of the Tribunal dated 31st July, 1970 on refusal of the Tribunal to refer the same :‑‑ "(1) Whether in the circumstances of the case, 'registration under section 26‑A of the Income‑tax Act has been validly refused ? (2) If the answer to the above question is in the affirmative, whether the refusal. should have been limited only to the extent of the Transport income of the assessee firm when the same was shown separately and registration should have been allowed in regard to income of the other businesses ? (3) Whether the existence of a nominal firm different in constitution from the Applicant‑firm is a valid ground for refusal of registration under section 26‑A of the Income‑tax Act, 1922 ?' Brief facts giving rise to the present application are that the applicants claim to be a partnership firm constituted under Deed of Partnership consisting of the following five partners :‑‑ "(1) Shambhunaal Hiranand. (2) Karamchand Hiranand. (3) Jhamandas Hiranand. (4) Sahedev Shambhumal and (5) Tarachand Jhamandas." This firm applied under section 26‑A of the Act for its registration but the Income‑tax Officer refused to register the same on the ground that there was another firm by the name of Thar Transport Company consisting of (1) Shambhumal Hiranand, (2) Karamchand Hiranand and (3) Jhamandas Hirannnd which was carrying on transport business and the business claimed by the firm which sought registration was the same as was being carried on by the second firm and accordingly he held that "the firm is not genuine and the application for registration was not filed in time, hence I refuse the registration for the assessment year 1960‑61". Registration was also refused for the years 1962 and 1963‑64 on the ground that the firm which applied fur registration was not genuine. Aggrieved by the aforesaid orders the applicants preferred appeals with the Appellate Assistant Commissioner of Income‑tax "C" Range, Hyderabad, who also dismissed the same by separate orders dated 19‑8‑1968. He found that "now Messrs Shambhumal & Co., which is the appellant before me admits that Messrs Thar Transport & Co., was a part of its business. This evidence on record proves beyond any shadow of doubt that there were in fact two firms in existence for the same period; according to one of partnership profit of the business was to be shared by five partners whereas according to the other partnership‑profit of the business was to be shared by three partners. Since this confusion has not been resolved by the counsel of the appellant, I am not prepared to believe that there existed only one firm and which was entitled to registration under section 26‑A". Dissatisfied with the above orders, the applicants preferred appeals to the Income‑tax Appellate Tribunal (Karachi Bench) which were dismissed by a common order dated 31st July, 1970. The Tribunal observed that "in view of the fact that although registration was applied for with regard to a firm having five partners in view of existence of the second firm, namely, Thar Transport and Company which was registered with the Registrar of Firms the appellants could not establish that the firm registration whereof was claimed actually existed and that the profits and gains of the business were distributed in terms of the terms and conditions of the deed of partnership, firm created whereunder was sought to be registered. In the facts and circumstances of the case we feel that the Appellate Assistant Commissioner was justified in law in confirming the order of the Income‑tax . Officer refusing to register the firm Messrs Shambhumal and Company." Thereafter, the applicants filed applications under section 66(1) of the Act with the Tribunal for referring the questions mentioned hereinbefore to this Court, but the Tribunal declined to do so by the order dated 4th March, 1971. In refusing to refer the questions to this Court the Tribunal quoted the passage from their order which we have already quoted here inbefore, and observed that it was evident that the Tribunal decided the appeals on findings of facts. The Tribunal further observed as follows :‑ "(3) At the time of hearing of these applications the counsel for the applicant tried to make out an entirely new case which was never adjudicated either before the Income‑tax Officer, the Appellate Assistant Commissioner or the Tribunal, namely, that although registration might have been refused with regard to the transport business registration should have been allowed with regard to the other business of the firm. The argument sought to be advanced by the learned counsel is absolutely at variance with the facts and circum stances of the case inasmuch as the business of the firm Messrs Thar Transport & Co., Mithi, District Tharparkar, which was registered with the Registrar of Firms and also the firm which was sought to be registerad under section 26‑A of the Income‑tax Act were both one and the same, naniely, the business of motor transport. This will be evident by referring to paragraph 3 of the Tribunal's order where it has been mentioned clearly that both the business as well as the partner of Thar Transport & Co., as well as Messrs Shambhumal & Co. which were seeking registration under section 26‑A of the income‑tax Act, were identical. In this view of the matter there is no scope for the fresh case which the learned counsel for the applicant sought to advance at the time of hearing of‑ these applications that although registration might have been refused as far as the motor transport business was concerned it should have been allowed in respect of other business of the firm seeking registration. In the facts and circumstances of the case the question sought to be referred are not questions of law referable under section 66(1) of the Income‑tax Act. These applications are, therefore, rejected." Therefore, the applicants have filed the present application. We have heard Mr. Rochi Ram Advocate for the Applicants and Mr. Khawaja Salahuddin Advocate for the respondents. Mr. Rochi Ram at the very outset stated that he would not press questions Nos. 1 and 2 for our opinion and he would press for our opinion on Question No. 3 only. However, we are of the opinion that question No. 3 does not arise out of the order of the Tribunal for the Tribunal has as a matter of fact found that the applicants could not establish that the firm of which registration was sought actually existed and that the profits and gains of the businesses were distributed in accordance with the terms and conditions of the Deed of Partnership, the firm created thereunder was sought to be registered. Since the 'tribunal has decided the appeals before them purely on questions of facts, the question does not arise even if it is held to be of law. Even otherwise, it is submitted by Mr. Khawaja Salahuddin that the question is only of an academic nature or unnecessary in view of the concurrent findings of the Income‑tax Officer, the Appellate Assistant Commissioner of Income tax "C" Range, and the Tribunal that the firm of which registration was sought was not genuine. We agree with him for under section. 26‑A, Income tax Officer is required to be satisfied as to the genuineness of the firm of which registration is sought. Further, under the law we are not required to give our opinion on a question of law which is purely academic and the answer to which would have no bearing on any actual right or liability of tax‑payer. If any precedent is needed reference may be had to Sir Rajendra Narayan Bhanja Deo v. Commissioner of Income‑tax, Behar and Orissa ((1940) 8 I T R 495), Noperam Ram Gopal v. Commissioner of Income‑tax, Bihar and Orissa ((1942) 10 I T R 288 ), Messrs Suppat Singh Dugar and others v. Commissioner of Income‑tax, Bengal ((1943) 11 I T R 549, Messrs Khemji Walji & Co. v. Commissioner of Income‑tax, Bihar and Orrisa ((1945) 13 1 T R 421), Madanlal Dharnidharka v. Commissioner of Income‑tax, Bombay City (1948) 161 T R 277)Chatturam Horilram Ltd. v. Commissioner of Income‑tax, Bihar and Orissa ((1954) 25 1 T R 326), and Me3srs Odeon Cinema, Lahore v. The Commissioner of Income‑tax, Lahore Zone, Lahore (PLD 1971 LAH 632). In the first named case it is held by the Privy Council that "in these circumstances their Lordships do not think it would be right to depart from the well established practice of the Board to refuse to decide a question which is purely academic." In the case of Messrs Khemji Walji & Co. v. Commissioner of Income‑tax, Bihar & Orissa ((1945)) 13 I.T.R 421), the facts were as follows:‑ "The' Income‑tax authorities refused to register a firm under section 26‑A of the Income‑tax Act on the ground that the application for registration was defective because the profits of the previous year were not dividend or credited as required by section B of the Schedule to rule 3 of the Income‑tax Rules. The assessee contended that as under the partnership deed profits could not be distributed unless certain dues were paid in full, it was not necessary to comply with that part of rule 3 which requires an applicant to state that the profits had been divided. The Appellate Tribunal rejected this contention but referred to the High Court, at the instance of the assessee, the following question "Whether the provisions of rule 3 of the Indian Income‑tax Rules as amended in 1939 are ultra vires being beyond the competence of the rule‑making powers conferred by section 26‑A(2)." On these facts, it was held by the Patna High Court "The question which has been framed at the instance of the assessee is merely academic and does not arise for decision because even if we hold that the impugned rule is ultra vires the assessee will get no relief. Accordingly I would refrain from giving an answer to the question." In the case of Messrs Odeon Cinema, Lahore v. The Commissioner of Income‑tax, Lahore Zone, Lahore a Division Bench of Lahore High Court consisting of Anwarul Haq, C. J. (as be then was) and Karam Elahi Chauhan, J., at page 639 observed as follows :‑ "

6. Even otherwise it is well settled that the jurisdiction of the High Court under section 66(2) of the Act is discretionary as is clear from use of the word "may" therein, and is very limited in scope and merely advisory in nature. In the exercise of such a special jurisdiction and dis cretion, a High Court is not to answer purely hypothetical and academic questions which are not material for. the case and on the facts found will be of no help to the applicant; nor a reference should be called for when the answer to the alleged question of law is self=evident or i3 already covered by decisions of Courts on the subject. These are sound principles which inter alia regulate the discretion of the High Court in declining to call a reference from the Tribunal. See the .Provincial Library v. The Commissioner of Income‑tax West Pakistan P L D 1958 S C (Pak.) 81; M. E. R. Malax v. Commissioner of Income‑tax, C. P. & Bihar A I R 1932 Nag. 68; Mathuraprasad Motilal & Co. v. Commissioner of Income‑tax, Madhya Pradesh and Bhopal, Nagpur A I R 1957 Nag. 6; Abdul Kadir Saheb v. Commissioner of Income‑tax Mysore A s R 1953 Tra.‑Coch. 526; Vithal Reddy Rangareddy v. Hyd. Government through the Commissioner, D. P. T. A I R 1953 Hyd. 250; and Chaturbhuj v. Commissioner of Income‑tax, U. P. and C. P. A I R 1941 Oudh 445)." We therefore, reject all these applications with costs. Application rejected.