P L D 1969 Dacca 905 (PLP)

A. S. CHOWDHURY, J.‑In this case a Rule was issued at the instance of the petitioner, Commissioner of Income‑tax calling upon the respondent to show cause as to why the Income‑tax Appellate Tribunal, Dacca should not be directed to state the case and refer the following question for our opinion. "Whether on the facts and in the circumstances of the case, the shares income of the three minor sons from the firm Messrs Haji Iqbal & Company are to be included in the assessment of the father under section 16 (3) (a) (iv) of the Income‑tax Act." This application arises in the following circumstances: The respondent Tar Muhammad Haji Hamed is alleged to have carried on business of various kinds during the assessment year and that the Income‑tax Officer added a sum of Rs. 85,964 being the share of the income of his three minor sons, Muhammad Amin, Abdur Rahman and Haji Iqbal from the partnership firm called Messrs Haji Iqbal & Company under the provisions of section 16(3) (a)(1v) of the Act. It is, further, stated that the aforesaid three minor sops were admitted to the benefits of the partnership of the firm referred to above by a deed of partnership executed on the 1st of February 1958, between Fatemabai Habib and Amnabai Haji Habib and that by a second deed of partnership executed between them it was provided that the three minors, Muhammad Amin , Abdur Rahman and Haji Iqbal would cease to be partners and that the father of the minors would be allowed to withdraw all monies including the profit and interest standing to the credit of the said minors at any time he desired. The Income‑tax Officer also found that the assessee deposited a total sum of Rs. 2,25,000 to the credit of his three minor sons in the said partnership firm. The Income‑tax Officer added the share of income of each of the minor sons from the firm to the total income of the respondent and in this manner a sum of Rs. 28,655 for the share of the income of each of the minors from the said firm was added to the total income of the res pondent and a total sum of Rs. 85,000 "was thus added in all to the income of the respondent." The assessee, thereafter, preferred an appeal to the Income -tax Appellate Tribunal which reversed the decision of the Income -tax Officer and excluded the income earned by the minors from the partnership firm from the income of the respondent. The Commissioner of Income‑tax, East Pakistan, thereafter filed an application under section 66 (1) of the Act, for reference to this Court the question of law quoted at the outset. The Tribunal rejected the application and the Commissioner moved this Court and obtained this Rule. At the hearing of the Rule, the Commissioner is represented by Mr. Afzalul Huq and Mr. S. M. Hussain appears for the respondent‑assessee. . Mr. Afzalul Huq urges that the question as framed by the petitioner arises out of the order of the Tribunal, which should be directed to state the case and refer the question for opinion of this Court. Mr. Hussain on the other hand, submits that the case is concluded by findings of fact and a reference in this case would be beyond the scope of subsection (2) of section 66 of the Act. In order to appreciate the arguments so strenuously advanced by both the learned Advocates, it is necessary for me to read the material part of subsection (3) of section 16 of the Act. "In computing the total income of any individual for the purpose of assessment, there shall be included‑ (a) so much of the income of a wife or minor child of such individual as arises directly or indirectly‑ (i) ..... (ii)...... (iii)...... (iv) from assets transferred directly or indirectly to the minor child not being a married daughter, by such individual other wise than for adequate consideration; ." This provision lays down that the income of minor children of the respondent‑assessee derived from the assets transferred directly or indirectly to them without adequate consideration should be included in the income of the respondent. Mr. Afzalul Huq submits that the respondent earned an income from the assets transferred by him to his minor sons and as such the Income‑tax Officer rightly added the sum to the total income of the respondent and the Tribunal erred in law in setting aside the decision of the Income‑tax Officer. Mr. Hussain, on the other hand, points out that a bare reading of the material findings of the Tribunal shows that there has been no transfer of the asset as visualised in sub‑clause (iv) of clause (a) of section 16 (3) of the Act and, therefore, the question of adding the income derived from the same does not arise. In considering this matter, the Tribunal expressed itself in the following terms: ‑ "In order to attract the provision of clauses (a), (iv) of section 16 (3), the income of the minor must necessarily arise directly or indirectly from assets transferred directly or indirectly to the minor otherwise than for adequate consideration. It is not the case of the Department that the firm, to the benefits of which the minors were admitted, was a bogus one. The income of the minors from the partnership business cannot be said to have arisen from the assets, which had been transferred to them by the father. The income arose to them because they were admitted to the benefits of partnership. The accrual of the income was the result of their admission to the benefit of partnership and to no other factor. If the Depart ment's case had been that the minors were the benamdars of the father or that that the father was the real owner of the income accruing to the minors, the position might have been different. On facts and in their circumstances of the case, we hold that the income of the miners could not be taxed in the hands of the assessee under section 16 (1) (a) (iv) and this has got to be excluded from the taxable income of the assessee." It will, therefore, appear that the Tribunal has recorded a firm finding to the effect that the income earned by the minors "cannot be said to have arisen from the assets which had been transferred to them by the father." This is a finding of fact and while exercising the function assigned to this Court under section 66 of the Act, this Court does not examine the evidence afresh to find as to whether or not such a finding is justifiable: If a finding i A based on some evidence, this Court does not interfere with the same under section 66 of the Act for, it being a finding of fact, does not raise a question of law. The Tribunal found that the income was earned by the minor sons of the assessee as a result of their being admitted to the benefits of partnership. It also found that the revenue could adduce no evidence whatsoever that the income earned by the minors was derived‑ from an amount transferred to them by the respondent. The Tribunal observed: "The partnership being thus a family affair it was natural for the major partners to admit the minors to the benefits of partnership. The admission of the minors did not depend on the capital contributed by the minors. The funds were available and the major partners only utilised that money." In view of the finding of fact that the income of the minors from the partnership did not arise from the assets trans ferred to them by the father, we are of opinion that no question of law arises out of the order of the Tribunal. In the case of Messrs Shah Nawaz Khan & Co. Multan v. The Commissioner of Income‑tax, North Zone, West Pakistan, Lahore (1), the Supreme Court refused to grant leave to appeal against an order made by the High Court under section 66 (2) of the Act, refusing to direct the Tribunal to state the case. In that case Hamoodur Rehman, J. (as his Lordship then was) observed: "The High Court also dismissed the petition holding that the questions raised were patently questions of fact and hence no direction of the nature sought could be made:" "The assessee now seeks special leave to appeal and it has been strenuously contended on his behalf that the ques tions framed by him did raise a substantial question of law, namely, as to whether there was any evidence upon which the decision of the Income‑tax Officer could be based. In support of this contention reliance was placed on the decision of Privy Council in the case of Dr. Sardar Bahadur Sir Sunder Singh Majithia v. Commissioner of Income Tax, United and Central Provinces." His Lordship further observed: "In that case the Judicial Committee had itself pointed out that the decision that an instrument is not genuine is a finding of fact, if such a finding is based upon evidence. In the present case it will be patent from what we have already stated that there, were sufficient facts upon which the decision of the Income Tax authorities could be based and, therefore, their decision was clearly a decision on a question of fact and no question of law at all arose." In the case before us also we have already seen that there are sufficient evidence upon which the decision of the Tribunal is based, and therefore no question of law arises out of the order of the Tribunal. Scope of subsection ((1954) 25 I T R 175) of section 66 was dealt with by a Bench of three Judges of the Bombay High Court in the case of Mangaldas N. Verma v. Commissioner of Income‑tax and Excess Profits Tax (1969 S C M R 123). In that case Chagla, C. J. delivering the judgment of the Court observed as follows: ‑ "If the Court finds that the question of law answers itself or that it is latently inarguable, there is no reason why the time of the Commissioner or of the Court should be wasted in asking the Commissioner to refer to us questions of law. Ingenuity of lawyers will always suggest questions of law arising out of the findings of the Commissioner. It is only when the Court is satisfied that a question of law arises and that it requires consideration by the Court that the Court would direct the Commissioner to raise a question of law." I pause here to say that according to the learned Chief Justice it is not enough to find that a question of law arises, it is further necessary to hold that the question requires consideration of the Court. The learned Chief Justice proceeded to observe: ‑ "In that strictly technical sense Mr. Kolah may be right that questions he has argued before us are questions of law. But on a careful consideration of the points, Mr. Kolah has urged before us, we have come to the conclusion that there is no substance whatever in the questions of law and no useful purpose will be served by our asking the Commissioner to refer these questions to us." Here the learned Chief Justice gives clear indication that the question must be of some substance and that the Court should be in a position to think that some useful purpose will be served by asking the Tribunal to refer the question. In this case in the presence of the finding of fact to the effect that the income derived by the minors was not front the amount transferred by the respondent, we arc of opinion, that no useful purpose will be served by asking the Tribunal to refer the question. In the case of Sree Meenakshi Mills Ltd v. The Commissioner of Income‑tax, Madras ((1957) 13 I T R 28) the Supreme Court of India had to consider as to what constitutes a question of law or fact. In that case it was held that a question of fact is open to attack, when there is no evidence to support it or if it is perverse. We have sufficiently indicated that in the instant case it cannot be said that its finding is perverse nor can it be said that there is no evidence to support it. In the case of Mathuraprasad Motilal & Co. v. Commissioner of Income‑tax, Madhya Pradesh ((1956) 30 I T R 695), a Division Bench of the Nagpur High Court, observed that a trifling question of law should not be directed to be referred. In that case it was held, "Even assuming that any question of law does arise, it is not incumbent upon this Court to require the Tribunal to state the case when the answer is evident and there has been no error on the part of the Tribunal in rejecting the application." In view of the finding that the income derived by the minors from the partnership firm is not out of the amount transferred by the respondent, we cannot say that there has been any error on the part of the Tribunal in rejecting the application under section 66(1) of the Act. A similar view was expressed by a Division Bench of the Calcutta High Court consisting of Gentle and Ormond, JJ in the case of Tarak Nath Bagchi v. Commissioner of Income Tax, Bengal ((1946) 14 I T R 319). In that case Gentle, J. delivering judgment of the Court observed "It is only when this Court is not satisfied of the correctness of the decision of the Appellate Tribunal that it should be required to state a case. I am of opinion that the decision of that Tribunal was correct. Even if any point of law arose upon which the Tribunal refused to state the case nevertheless the Tribunal's decision being correct, no direction should be given for stating a case. That is the position, in my view, which arises here." We are in respectful agreement with the view expressed by the learned Judges. In the case of Commissioner of Income‑tax v. Pakistan Beverage Company, Karachi ((1957) 157 Taxation 64), a Division Bench of the High Court of West Pakistan observed : "When a plain reading of the provisions of the Act, to which we have referred, shows that such a question of law, as has been urged, does not properly arise we are not obliged to require the Tribunal to refer such a question for our opinion. If the answer to the question is patently clear and free from any doubt the High Court is not bound to require the Tribunal to state the case and refer it to this Court." Mr. Afzalul Huq argues that consideration as to what is proper legal effect of a finding of fact is a question of law. Here we have no manner of doubt that the proper legal effect of the finding is that there has been no income out of the amount transferred by the respondent to his minor sons and as such no question of law which requires consideration of this Court arises. We are also of opinion even when one arises, a direction for stating a case and referring a question will not be given if it is patently and clearly free from any doubt. For the reasons stated above, the question of law as formulated by the petitioner does not arise in this case. In the result the Rule is discharged. The parties are left to bear their own costs. NURUL ISLAM, J. ‑I agree. Rule discharged.