' _.

~ "

~~----------------~

883'"

THE DEPUTY COMMISSIONER OF AGRICULTURAL

INCOME TAX AND SALES TAX, CENTRAL ZONE,

ERNAKULAM . v .

M/S. KOTAK & CO., !JOMBAY, ETC. ETC.

April 3, 1973

(K, S. HEGDE AND H. R. KHANNA, JJ.]

Central Sr.ies Tax Act 1956--S. 5(2) read with Art. 286 of the Consti-· uuion.

A.essee Company sold to bu, ver ilr the course of import-- JVhether an inter-State sale. ~·.

The respondent was engaged in the supply of foreign cotton to texti!emilis. in South India on the basisof import.Jic.cnces issued to the mills-.

3uthori!~Og import of foreign cotton by them.. The firm supplied cotton to the mills on the basis of specific written contracts. One of the co.rrditicns in the -contract is that _the goods imported should not under any cir:"Umstances, be diverted fiom its d.:termined destination, i.e. the mills. _ Secor.dly~ the relative. shipping documnts were issued by theforeign seHer in the names of the respective mills and not in the name- Of the assessee-firm.

Again;_ the import licences issued to 'the mills. authorise the mills to import the goods; and o:n the reverse of. these licences is stated that the goods for the import of which the lice:nces. \vere grante-d should be the property of the licensees at the time of clearance through the customs. Still further, th~ _letters of authorisation isstied by the Gover, ament authorising the assessee-.firm to import the cotton show that the assessce had to do it purely as an agent . of thelicensces hoth at the time of th.e clearance through the customs and subsequent th{!reto. The firm entered into a contract with M/s. faha- laxmi Cotton Mills on 20-3-1964. According to the" respondent, by the contract entered into with the mills, the quantity of cotton agreed to be supp; ied to the mills was pecified as also its quality and places from where it ""' to be imported. The price was fixed on C.l.F. Cochirr. term. Payment was to be made by the mills to the firm against the. document. The other conditio; r.tS governing the contract were laid down on the reverse of the contract form, the most important clauses in ihc contiact \Vere that the C!Ontract was C.I.F. in nature notwithstand- ing anything to the contrary mentioned i; n the contract. . The price was subject to variation depending . upon the import duty, . freight rate,. iiisurancc premium and exchange rate. Jt was further provided by th.e l\:IiHs that the contract_ was irrevocable and that any differences betwee; n the parties had to be resolved through arbitration etc._ The question_ was \Vhether thi! sales made to the mills affeCted in this Country occasioned the import. The Sales Tax Officer, as wellas the Appellate Assistant' CoirJmissioner, held that the sales in question were intra-state sales and' therefore, the assessee was liable to tax. ·

On appeal, the Sales Tax Tribunal held that the assessee's case fell" within s. 5(2) of the Central Sales Tax Act, read with Art. 286 of the Constitution and -the Hi.!dl Court on revision, affirmed the decision ofthe Tribunal.·· Before this Court it was contended by the appellant that the. sales were intra-state sales . and as Mb, the assessee was liable totax:.

Dsmissing th.e_ ae?ls,_ ·. . ·

 . HeLD : The present case falls within the. rule laid down. by . this Court in K. G. Khosla & Co. v. Deputy Commissioner of Co1nmerciat

Taxes, (1966] 3 S.C.R. 352, wherein it was held that the saies in question occas; oned the import and as such it was exempt under s. S (2) of the Central Sales Tax Act, 1956 which says, "A sale or purchase -Of goods shall be deemed to take place in the course of the import of goods into the territory of India only if the sale or purchase either occasions such import or is eJfected by a transfer of documents of title to the goods before the goods have crossed the customs frontiers of India." f887GJ

Coffee Board, Bangalore v. Joint CorrlJriercial Tax Officer, Madras <1mi An<>ther (1970] 3 S.C.R. 147, referred to aod distinguished.

CIVIL APPELLATE JURISDICTION : Civil Appeal Nos. 1889 to 1891 of 1970.

Appeals by certificates from the judgment and order dated c October 28, 1969 of the Kerala High Court at Emakulam in T.R.C. Nos. 40, 41 and 42 of 1968.

Civil Appeals Nos. 1892 to 1896 of 1970

Appeals by certificates from the judgment and order dated October 28, 1969 of the Kerala High Court at Emakulam in o T.R.C. Nos. 43, 44, 45, 47 and 48 of 1968.

Civil Appe.al No. 1897 of 1970.

Appeals by certificates from the judgment and order dated October 28, 1969 of the Kerala High Court at Ernakulam in 'T.R.C. No. 46 of 1968.

Civil Appeals Nos. 1898 to 1900 of 1970.

Appeals by certificates from the judgment and order dated 'October 28, 1969 of the Kerala High Court at Ernakulam in

T.R.C. Nos. 52, 53 and 54 of 1968.

V. A. Sayed Mohammed and A. G. Pudissery, for the appel- F Jan ts (in all the appeals).

G. B. Pai, PC. Bhartari, 0. C. Mathur and Ravinder Narain, for the respondent (in C.A. Nos. 1889-1891 and. 1897/70).

T. A. Ramachandran and K. /ayaram, for the respondent (in C.A. Nos. 1892-1896/70). 'G Ram Phal Bansal, S. P. Pande and Ganpat Rai, for the respondent (in C.A. Nos. 1898-1900/70).

The Judgment of the Court was delivered by

HEGDE J.-In these appeals by certificate a common question of la~ arises for decision and that question is whether "?e H sales effected by the respondent with wh!ch we are concerneil m :these cases occasioned import of Egyptian celtton. The Sales

DY. COMMR. AGR!C. INCOME TAX v. KOTAK & co. (Hegdc, J.) 885

Tax Officer as well as the Appellate Assistant Commissioner, rejecting the contention of the assessee came to the conclusion that the sales in question were intra-state sales. But, on appeal, the Sales Tax Tribunal held that the assessee's case fall within S. 5(2) of the Central Sales Tax Act 1'956 read with Article 286 of the Constitution. The High Court on revision affirmed the decision of the Tribunal. In support of its conclusion the High Court observed thus :

"One of the conditions in the contract is that the goods imported should not under any circumstances, be diverted from its determined destination, i.e., the mills.

Secondly, the relative shipping documents were issued by the foreign seller in the names of the respective mills and not in the name of the assessee-firm.

Again, the import licences issued to the mills auth01ise the mills to import the goods; and on the reverse of these licences is stated that the goods for the import of which the licences were granted

>hould be the property of the licensees at the time of clearance through the customs.

Still further, the letters of authorisation issued by the Government authorising the assessec-firm to import the cotton show that the assessee had to do it purely as an agent of the licensees and the imported goods would be the property of the licensees both at the time: of the clearance through the customs and subsequent thereto."

The material facts of the case are fully set out in the judgment of the Appellate Tribunal and are as follows :

"The facts of the case here are not in dispute and the only point that has to be considered here is as to whether the sales are in the course of import. The assessee firm submitted before the Sales Tax Officer a detailed note in regard to the procedure in this matter. According to them the firm is engaged in the supply of foreign cO'tton to textile mills among other places in South India on the basis of the import licences issued to the mills authorising import of foreign cotton by them. The details in regard to the procedure contained in the nO'te submitted by the firm are found from page 37 onwards in the assessment files. It is stated that the firm supplies cotton to the mills on the basis of specific written contracts. Under the import control regulations, import licences are necessary for import of foreign cotton and they are issued to only actual iusers like the mills. The appellant firm and the similar concerns are not given import licences. The mills make enquiries with the firm as regards the quality of cotton they required, the period during which they would be supplied, the price and other particulars and on getting thee enquiries the appellant firm contacts the foreign suppliers in Egypt, Sudan or America for acertaining whether they could supply the cotton required. l! the offers received are found acceptable the appellant firm enters into contract wrth the various mills concerned and im!Uediately thereafter accept the offer made by the foreign suppliers. The suppl} of such foreign cotton to M/s. Mahalakshmi Textiles Mills Ltd .. one of the mills to whom supply was made by the firm is detailed in the said note and it is stated that the supply made to the other mills also .are under similar circumstances.

According to the appellant, .after receiving enquiries from the mills the firm con-· tacts the American Suppliers in New York. The foreign supplie!· agreed to supply the quantfty at the price agreed upon. lhereatter the firm entered into a contract with the mills dated 20-3-1964. that the import licence issued in favour of the mills was made availabae to the firm for utilisation of the contract that the letter authorrty issued auhorising the firm to import cotton was also issued. that the bill of lading obtained by the foreign supplier on shipment of the goods was also obtained by the firm and the cotton is thu' sent on to India. The contention of the appellant is that under the contract entered into with the mills the quantity oE cotton agreed to be supplied to the mills is specified as also its quality and places from where it was to be imported.

The price was fixed on C.I.F. Cochin tenns. Payment was to be made by the mills to the firm against the document.

The other conditions governing the contract are laid down on the reverse of the contract form.

The most important clauses in the contract re that the contract was C.I. F. in nature, notwithstanding anything to the contrary mentioned in the contract, the price was subject to variation depending upon the import duty, freight rate, insurance premium and exchange rate, that it was specifically provided that the sale was subject to import licence to be provided by the mills. that the contract was irrevocable and that any difference between the parties had to be resolved through the arbitration machinery provided in the contract itself, that under the Import control regulations, the importer is the mill. the auhorisation and the import licence are issued to the mills only, that even under the letter of authority although the firm was au1horised to ill}port the goods the mills remained the importer and they were liable as importer. that the particulars necessary for inclusion in the bill of lading are furnished by the Jinn to the foreign suppliers before the shipment is effected, that after the goods were shipped at the foreign Port the bill of Jading is forwarded along with the invoice and other connected documents of title through their Bank to India. that these documents are received "ty the firm after due payment of the value to the Agent Bank. that after receiving 1his document. information is given to the mill when they made the payment in accordance with the contract, that thereafter the goods wer~ cleared and delivered to the mills by clearing agents at Cochin :and forwarded to the mills".

DY. COMMR. AGRIC. INCOME TAX v. KOTAK & co. (Hegde, J.) 887

In another portion of its Order the tribunal stated that "the goods could not in any circums•tances be diverted from its determined destination, once it is shipped from the foreign country."

The facts set out by the Tribunal, quoted above, are stated by the Tribunal as admitted facts.

Hence we cannot go into the correctness of those facts.

Dr. Sayed Mohammed, the learned counsel for the department con•tended tthat the observation of the High Court that "one of the conditions in the contract is that 1he goods imported should not in any circumstance be diverted from its determined destination, i.e., the mills" is incorrect as there is no such term in the contract entered into betwe.en the respondents and the mills. This submission, though in a technical sense may be correct, has really no substance because, as could seen from the letter of authority issued by the Government that, one of the conditioos of the lel!ter of authority was, to quote the words of that letter 'The person or firm in whose favour it has been issued, will act purely as an agent of the licensee and tire

goods imported will be the property of the licence-holder both at the time of clearance through the Customs and subsequent thereto.

The licence-holder will have to ensure that the goods on importation will be delivered to him and shall not be disposed of otherwise.

The licensee shall not cause or permit the holder of the letter of authority to dispose of the goods."

This clause must be read as a part of the contract entered into between the respondents and the mills. Even ii this clause had not been there, there would have been no difficulty in coming to the conclusion that the respondents were precluded from selling the goods to anybody other than the mills to whom the users import licence had been granted.

From the facts set out abcwe it is obvious that the respondents could not have sold the goods to anybody other than the licence-holders.

From the facts set out a\J!Jve it is clear that this case clearly falls within the rule laid down by this Court in K. G. Khos/a & Co.

v. Deputy Commissioner of Commercial Taxes( 1).

The appellant therein, imported certain goods from Belgium in order to fulfil contracts with certain buyers in India. The question arose whether the sales effected in this country occasioned the import.

This Court came to the conclusion that the sales in question occasioned the import and as such it is exempt under Sec. 5 (2) of the Central Sales Tax Act, 1956, which says•• "A sale or purchase of goods shall be deemed to take place in the course of the im; mrt of the goods into the territory of India only if 1he sale or purchase either occasions such import or is effected by a transfer of documents of title to the goods before the goods have crossed the cutoms frontiers of India".

(1) [1966] J -S. C. R. 352

Dr. Sayed Mohammed tried to distinguish Khosla's case from the pr!:Sfnt case on the plea that in Khosla's case there. was only one sale whereas in the present case there were two sales.

We are unable to accept this contention as correct. From the facts set out above, it is clear that the facts of this case are similar to those found in Khosla's case.

Reliance was placed by Dr. Sayed Mohammed on the decision of this Court in Coffee Board, Bangalore v. Joint Commercial Tax Officer, Madras and Another(').

The facts of that case briefly stated, are as follows :

The Coffee Board auctioned certain quantities of coffee f0r the purpose of being sold in foreign countries. The purchasers of those lots were required to expol't that quantity of coffee to one or the other of the foreign countries mentioned in the sale notice. They were precluded ; from selling the same iuside India.

The question arose whether the purchases made by them occasioned export.

This Court came to the conclusion that the purchases in question were purchases for the purpose of export and the same did not occasion export. This Court did not differ from the view taken in Khosla's case.

On the other hand it distinguished that decision.

Hence the rule laid down in the Coffee Board's case is inapplicable to the present case.

For the reasons mentioned above these appeals fail and they are dismissed with costs.

There are four sets of respondents.

Hence four hearing fees-One set of hearing fee for each set of respondents.

s.c.

Appeals dismissed.

(!) [1970] 3 S. C. R. 147.

S. HEGDE

H. R. KHANNA, JJ.

Tax Act 1956

S. 5(2)

Art. 286

M/s. faha- laxmi Cotton Mills

s. 5(2)

Central Sales Tax Act

Art. 286

(1966] 3 S.C.R. 352

Central Sales Tax Act, 1956

India

(1970] 3 S.C.R. 147

CIVIL APPELLATE JURISDICTION

V. A. Sayed Mohammed

A. G. Pudissery

G. B. Pai

C. Mathur

Ravinder Narain

T. A. Ramachandran

K. /ayaram

G Ram Phal Bansal

S. P. Pande

Ganpat Rai

HEGDE

S. 5(2)

Central Sales Tax Act

Article 286

South India

Egypt

Sudan

America

Mahalakshmi Textiles Mills Ltd

New York

C.I.F. Cochin

Cochin

Sayed Mohammed

Belgium

Sec. 5

Central Sales Tax Act, 1956

Khosla

[1970] 3 S. C. R. 147


COMMISSIONER OF INCOME TAX, WEST BENGAL,

CALCUTTA

M/S. HANTAPARA TEA CO., LTD., CALCUTTA

April 3, 1973

[K. S. HEGDE AND H. R. KHANNA. JJ.]

Jnco111e-te1x-Assessee's agricultural produce used in assessee's bUsiness-Mc.rket value of p1oduce if deductible expenditure for purposes of i11con1etµx.

For the assessment year 1961-62 the assessee-a tea company, was assessed to income-tax under r. 24 of the Income-tax Rules on its profits as per its Profit and Loss Account with c.ertai:a modifications.

In the expenses debited in its accounts only the expenses for 1aising thtch. bamboo, fuel etc .. grown in the tea estate and u.ed 1n the tea business \vere included.

The assessee contended that .the mark.et value of the agriC'ultural produce grown in the tea estate a:nd utilised by the assessec in the tea business, which had been assessed at lOOo/o to Ctgricultural income-tax, must he taken into considration in the computation of tile allo\vable expenditure.

The Appel1ate Assistant Commissioner, the, Tribunal and the High Court, on reference, held in favour of the

ass, zsse~.

Di .. n1issing the appeal to this Vourt,

HELD : In the matter of computing the agricultural income it was not necessary that the agricultural produce should be sold and profit of gain made from such sale, before it is considered as agricultural income.

It is sufficient if the assessee gets any benefit from the produce, and \Vhat is to be taxed is the markt value of the benefit received by the assl.!Ssce and not the costs incurred by the assessee for raisitig the agricultural produce in. question. If the assessee has to pay agricultural i.ncom.e-tax on the market value of the agricltural produce raised in hi-. est?te and used in his tea business, it stands to reason, that while determining the deductible expenditure incurred for the purpose of his business, the same rule, namely, the market value of the produce used for the tea business should be taken into consideration, because, in terms of money, what he expended was the market value of the produce used in conneclion with his business.

The fact that he used his own goods is immaterial.

[891F-H]

Dooc.rs Tea Co. Ltd. v. Conunissioner of Agricultural" Incon1e-tax, West Bengal, [1962] XLIV I.T.R. 6, referred to.

CIVIL APPELLATE JURISDICTION : Civil Appeal No. 79 of 1970.

Appeal by special leave from the judgment and order dated February 26, 1969 of the Calcutta High Court in Income->tax Reference No. 37 of 1965.

H N. D. Karkhanis and S. P. Nayar, for the appellant.

V. S. Desai, T. A. Ramachandran and D. N. Gupta, for the respondent. 9-L797Sap, CI/73

The Judgment of the Court was delivered by

HEGDE, J.-This is an appeal by special leave.

It relates to !he assessment of the assessee for the; assessment year 1961-62, for which the relevant previous year was the calendar year 1960.

The assessee is a Tea Company, Upto the assessment year \950-51 the Agricultural Income-tax Officer was accepting th~ computation of the total income from the growth, manufacture and sale of tea made by the Income Tax Officer and taking 60 per

cent of the income dete1mined as the agricu)tural income under Rule 24 of the Income-tax Rules.

On and from the assessment year 1951-52 the agricultural income-tax authorities !tarted talcing

the market value of !hatch, bamboo and fuel etc. grown in the tea estate and used in the tea business as 100 per cent aiJ:icultural income and aHer deducting the cost of cultivation thereof, taxed the whole cJ the resulting income on the basis of the market value of those articles.

So, from that assessment year the computation of the total income from tea by the Income-tax authorities was varied by the Agricultural Income-Tax Officer and the assessee had to pay on a total income which was more than the income disclosed in the Profit and Loss Account.

For the assessment year 1961-62, the assessee company was assessed to Income-tax under Rule 34 of the Incometax Rules, on Its proms as per its Prom ana Loss Accounr witn certain mocftfications, by the Income-tax Officer. In the expenses debited in Its accounts, only the expenses for raising thatch, bomboo, fuel etc. grown in the tea estate and useq in the tea business were included.

Before the Appellate Assistant Commissioner, the asse; see raised the contention that the market value of agricultural produce grown in the tea estate and utilised biy the assessee in the 19a business, which had been assessed at 100 per cent to agriculimal income-tax, must be talcen into consideration in lhe computation ot allowable expenditure. In support of that contention reliance was placed on the decision of this Court in the case of Dooars Tea Co. Ltd. v. Commissioner of Agricultural Income-tax, West Bengal('). The Appellate Assistant Commissioner accepted that contention and directed the Income-tax Officer to modify the assessment accordingly. In appeal by the Revenue the finding of the Appellate Assistant Commissioner w.s accepted by the Tribunal.

Thereafter at lhe instance of the Revenue the following question was re{erred to the High Court for its opinion :

"Whether, on the fact& and in the circumstances of lhe case, the Tribunal wa~ right in holding that the

(I) [1962] XLlV I. T. R. 601.

C.I.T. v. HANTAPARA TEA CO, LTD. (Hegde, J.) 891

A decision of the Supreme Court in Dooars Tea Co. Ltd. ( 1962) 44 I.T.R. 6, was applicable to the computation

c~ the assessee's total income under the provisions of the Indian Income-tax Act, 1972 and in directing the Income-tax Officer to make a fresh assessment according: to law in the light of the aforesaid decision of the B Supreme Court."

The High Court answered that question in the aflinnativc :ind in fa\'our of the asses see.

Hence this appeal by lhe Revenue.

!t i, true that, 1he questi0n formulated by 1.hc Tribunu! does not accur"tely bring out the real contention between the parties.

The real con!entioa between the parties is whether the assessee is entitled to. the market value of the agrici.:1turl produce grown by it but utilised for the purpose of tea business.

Dooars Tea Co's. case related to the levy of agricultural income-tax.

Ti1e .facts of that case are as follows :

The assessee, who is a tea grower, grew in its estate hJmboo, thatched grass, fuel timber etc. and utilised tlle same for tea business.

At the time of the assessee's assessment under the Bengal 'Agricultural Income-tax Act the assessee contended that only the cost of growing the produce in question should be taken into consideration and r.ot its market value as the same was used for the purpose of assessee's tea business.

This contention was rejected by the Revenue and this Court upheld the decision of the Revenue.

This Court came to the conclusion that the agricultural income should be computed on the basis of the market value of bamboos, thatched grass and fuel timber etc. in accordance with rule 4(2) of the Bengal Agricultural Income-tax Rules.

The ratio of that decision is that in the matter of computing the agricultural income it was not necessary that 'the agricultural produce should be sold and profit or gain made from such sale before it is considered as agricultural income.

It is sufficient if the assessee gets any benefit from the same, and what is to be taxed is the market value of the benefit received by the assessee and not !he costs incurred by the assessee for raising the agricultural produce in question. lf the assessee has to pay agricultural income-tax on the market value of the agricuitural produce raised in his estate and used in his tea business it stands to reason that while determining the deductible

expenditure incurred for the purpos<: of his business, the same rule viz. the market value of the produce used for the tea business should be taken into consideration, because in terms of money what he expended was the market value of the produce used in connection with his business. The fact that he used his own goods is immaterial.

Now, tµrning back to the question referred to the High Court, even though the question is not properly framed, the question is sufficiently wide to decide the real point in issue. The later part of the question covers the point that calls for decision. In that view there is no need either to reframe the question or to direct th.e Tribunal tosubmit a separate statement of case.

For the reasons mentioned above this appeal fails and the same is dismissed with costs.

V.P.S.

Appeal dismissed.

HANTAPARA TEA CO., LTD., CALCUTTA

April 3, 1973

K. S. HEGDE

H. R. KHANNA

CIVIL APPELLATE JURISDICTION

Calcutta High Court

H N. D. Karkhanis

S. P. Nayar

V. S. Desai

T. A. Ramachandran

D. N. Gupta

HEGDE

Supreme Court

Indian Income-tax Act, 1972

Dooars Tea Co

Agricultural Income-tax Act


RAMPRAKASH v.

MOHAMMAD ALI KHAN (DEAD) THROUGH L.R'S April 4, 1973

(J. M. SHELAT, ACTING C.J.,

S. N. DWIVEDI AND

Y. V. CHANDRACHUD, JJ.J

U. P. Zamindari AbolitiOfl and Land Reforms Act 19SO, s. 18(1}- .Land held by an Intermediary as an Intermediary's grove 011 the date

immediately preceding the date of vesting deemed to be settled by th• State Government with such intermediary-Eorlkr right• are extinguith. ed-Res Judicat<>-No res judicata when issue in earlier decision w"" different.

In February 1946, H lea<:ed his share in a grove iJi Uttar Pradesh to the appellant and sold to him the trees standing thereon. Similarly A, a widow, leased her share and that of her minor children in the grove and sold the standing trees to the appellant. Subseqllllntly the proprietary right of some other co-sharers in the grove was sold to one M. The appellal>t instituted a suit sometime in 1946 against M and others for injunction and alternatively for possession over the grove.

Sometime in 1947 M and others also instiu.ted a rival suit for caiu:ellation of the aforesaid leases on the contention that under s. 246 of the U. P. Tenancy Ac:t the executiOID of a lease by some of the cosharers •only, was invalid. The trial coort dismissed the appellanfs suit and >decreed M's suit. The lower appellate court granted a decree in fuvour

of the appellant for joint possession over the share of H and A in the grove land. It was held that the lea•e executed by A ao guardian of the minors was invalid.

M filed two appeals in the Allahabad High Court. Duritog the peodency of the appeals M died and his legal representatives were brought on record. The appeal filed by M in his own suit was dismissed by a Single Judge of the High Court. The appeal filed by M in .the appellant's suit was heard by another single Judge, and was allowed with respect to the lease of grove land and dis missed as regards the sale of the trees, It was held that ofter the commencement of the U. P. Zamindari Abolition and Land Reforms Act the appellant had no subsisting interest in the land. The appellant was granted special leave to appeal to this Court.

Dismissing the appeal,

HELD : (i) As the grove in dispute was an intermediary's grove M and others who were intermediaries on the relevant date becJame its bhumidars. 1be lessee of an intermediary's grove land is not an intermediary because he does not fall within the cletinitiOID of the word

'.intermeiary', _No othr provision of the Act gives him any kind of mterest ID the rntermedrary's grove land. 1be appellant got no right in :the grove land in dispute.

[895EJ

f!ana Sheo Ambar Singh v, Allal!Gbad Bank Ltd, Allahabad, {1962] 2 S.C.R. 441 and lamshed lahan Begam and others v. Lakhan Lal and others, [1970] 2 S.C.R, 566, relied on.

(ii) Tiie dismissat of M's other appeal by the High Coun coo1d not operate as rer judicata in the present appeal because the questions at issue in the two appeals were different. [8950]

C!v1L APPELLATE JURISDICTION : Civil Appeal No. 1860 of 1967.

Appeal by special leave from the judgment and order dated Augmt 8, 1967 of the Allahabad High Court in Special Appeal

]\;~_ ::350 of 1953.

IC. P. Gupta, for the appellant.

J.P. Gopal and Sobhag Mal Jain, for respondents Nos. 1 to 7.

The Judgment of the Court was delivered by

Dw1vEDI, J.-In this appeal the bone of contention is a certain zamindari grove. The grove belonged to a number of co-sharers.

But in a partition it fell to the share of one Sakhawat Ali and one Hafiz Ali. On Femruary 16, 1946 Hafiz Ali executed a composite document of lease and sale in favour of the appellant, Ram Praknsh.

He let out his share in the grove land and sold his share in the standing trees to Ram Prakash. On the same day another similar document was executed in favour of the appellant by Smt.

Abbj'.lsi, widow of Sakhawat Ali.

She executed the document for self and as guardian of her minor son, s and daughters.

The document was in respect of her share and her childrens share.

Subsequent to the execution of those documents the proprietary right of some other co-sharers (presumay some successors of Sakhawat Ali) in the grove land was sold to one Mohammad Ali.

The ppellant instiluted a suit some time in 1946 against Mohammad Ali and others for injunc<tion and alternatively for possession over the grove.

Some time in 194 7 Mohammad Ali and others also ; nstituted a rival suit for cancellation of the aforesaid leases.

Their ase was that the leases were invalid as section 246 of the U.P. Tenancy Act prohibited the execution of a lease by some of 1he co-sharers only. The two suits were tried together. The trial

court dismissed the suit of the appellant and decreed the other suit. Two appeals were preferred against the decree of the trial court.

The lower appellate court granted a decree in favour of the appellant for joint possession over the share of Hafiz Ali .and Smt. Abbasi in the grove land. It was held that the lease executed by Smt. Abbasi as guardian of the minors was invalid.

So no decree was passed in respect of their shares. The other appeal was disposed of on the same terms.

Mohammad Ali then filed two second appeals in the Allahabad High Court. They were numbered 2350 and 2351 of 1953. Second appeal No. 2350 of 1953 was filed against the decree passed in the appellant's suit; second arpeal Xo. 2351 of 1953 was filed against the decree in his own suit.

During the pendency of the appeals, Mohammad Ali died and his legal representatives were brought on record.

Second appeal No. 2351 of 1953 was dismissed by a learned Judge of the lUgh Court . Second Appeal No. 2350 of 1953 came up for

RAM PRAKASH V. M.A. KHAN (Dwivedi, !.) 895

hearing before another learned Judge.

The appeal was allowed with respect to the lease of grove land and' dismissed ss regards the sale 0£ trees.

Hence this appeal b!Y special leave.

We agree with the learned Judge that after the commencement of the U.P. Zamindari Abolition and Land Refonns Act (hereinafter referred to as the Act), the appellant has no subsisting interest in the grove land.

Section l!f(l) of the Act provides that all lands in possession or held or deemed to be held by an intermediary as an intermediary's grove on the date immediately preceding the date of vesting shall be deemed to be settled by the State Government with such intermediary.

Section 2( 12) of the Act defines an intem1ediary as "a proprietor, under-proprietor, sub-proprietor, thekedar, permanent lessee in Avadh, permanent tenure-holder of an estate or part thereof." Section 2 ( 13) defines "intermediary's grove" as grove land held or occupied by an intermediary as such.

As the grove in dispute was an intermediary's grove Mohammad Ali and others, who were intennediaries on the relevant date, became its bhumidars. The lessee of an intermediary's grove land is not an inermediary because he does not fall within the definition of the word "intermediary".

Ni;> other provision of the Act gives him any kind of interest in the intermediary's grove land. Accord'

i.j)gly, the appellant gets no right in the grove land in dispute.

The scheme of the Act is to createl new rights .in place of old rights. The old rights are dead and gone after the commencement of the Act. (vide Rana Shea Ambar Singh v. Allahabad Bank Ltd., Allahabad(1) and Jamshed Jahan Begam and others v.

Lakhan Lal and others(2 ).

The decision of the High Court in second appeal No. 2351 of 1953 cannot operate as res judicata in this appeal. Second appeal No. 2351 of 1953 arose out of the suit instituted by Mohammad Ali and others. That suit was for cancellation of the leases on the ground that they were made in contravention of the provisions of s. 246 of the U.P. Tenancy Act. The question whether the Zamindari Abolition and Land Reforms Act gave any rights to the appellant in the grove land in dispute could not be and was in fact not considered in that appeal.

In that appeal the material

(1) [1962] 2 S. C. R. 441.

(2) [1970] 2 S. C. R. 566.

issue was whether the le.ases were void. The argument on 'behalf of Mohammad Ali and others in second appeal No. 2350 of 1953 now is thalt assuming that the leases are valid, the lessee has no subsisting right in the grove land after the enforcement of the Act.

As the grove is land covered by the Act; it will be governed by the provisions of the Act and not by the provisions of the Transfer of Property Act.

We have already held that the appellant's lessee rights came to an end on die commencement of the Act.

And the Act conferred on him no new rights. In the result, there is no force in this appeal. It is dismissed with costs.

G.C.

Appeal dismissed.

RAMPRAKASH

MOHAMMAD ALI KHAN (DEAD) THROUGH L.R

M. SHELAT

S. N. DWIVEDI

Y. V. CHANDRACHUD, JJ

Allahabad High Court

1962] 2 S.C.R. 441

IC. P. Gupta

J.P. Gopal

Sobhag Mal Jain

Sakhawat Ali

Hafiz Ali

Femruary 16, 1946

Hafiz Ali

Ram Praknsh

Ram Prakash

Abbj'.lsi

Mohammad Ali

Mohammad Ali

section 246

Abbasi

Section 2( 12)

Avadh

Section 2

s. 246

[1962] 2 S. C. R. 441

[1970] 2 S. C. R. 566

Mohammad Ali

Transfer of Property Act


CONTROLLER OF ESTATES DUTY,

ANDHRA PRADESH HYDERABAD v.

KANCHARLA KESA YA RAO

April 4; 1973

[K, S. HEGDE AND H. R. KHANNA, JJ.]

Estate Du~ Act, 1953, Ss. 7 and 24-Partition-Allomen! to , widw bl meonbr of a Hindu undivided family property for life t11ne in lieu of her share-If liable to estate duty on her death,

A partition was effected among the members of a Hindu undivided family by a registered partition deed.

Under that deed, the widow of one of the members, who had a right to inherit her husband's share in the non-agricultural properties as well as the right to be maintained from out of the family income, gave up those rights, and i; n lieu thereof, the other members of the family allottc-<l to her share 25 acres of land to be enjoyed by her during her life time.

On her death. her interest in the land ceased and passed on to the other members of the former joint family as provided in the partition deed.

Therefore, the authorities under the Estate Duty Act, 1953, proceeded to levy estate duty under s. 7 of the Ac~ on the property allotted to her.

On the questicm whether the arrangement in the partition dead could be considered a 'disposition' within the meaning of s. 24 of the Act, and therefore the value of the land allotted was exompt from estate duty, the High Court, on reference, held in favour of the assessee.

Allowing the appeal too this Court,

HELD : A partition of a Hindu undivided family is a mere adjustment of rights.

It cannot be considered to be a tra'tlSfer and therefore, cannot be a disposition within the meaning of s. 24 of the Act.

Hence, the case fell under s. 7 of the Act.

[900C]

Co1nmissioner of Jncometax, Gujarat v. Keshevlal Lallubhai Patel. 55 I.T.R. 637 and Commissioner of Gift Tax, Madras v. N. S. Gettj Cherti<r, 82 I.T.R. 599; 605, followed.

CIVIL APPELLATE JURISDICTION. ; Civil Appeal No. 107 of 1970.

Appeal by certificate from the judgment and order dated December 24, 1968 of the Andhra Pradesh High Court at Hyderabad in Case Referred No. 28 of 1965.

G. C. Sharma, S. P. Nayar and R. N. Sachthey, for the appellant.

G. S. Rama Rao, for the respondent.

The Judgment of the Coun was_ delivered 1Jy

HEGDE, J.-This is an appeal by certificate. It is directed againsit the decision of the Andhra Pradesh High Court in a reference under section 64(1) of the Esta1e Duty Act, 1953 (to

be hereinafter referred to as the 'Act').

The question of law referred to the High Court was :

"Whether the value of 25 acres of wet land is exempt from levy of estate duty under section 24 of Estate Duty Act, 1953 ?"

The material facts of the case, as can be gathered from the case stated are these - One Venkataramayya died in April, 1940 leaving behind him his widow and two sons, who constituted a Hindu undivided family.

One of his sons, namely, Chandrasekhara Rao died in the year 1941, leaving behind him six minor sons and a widow.

Subsequently, a partition was effected between the member:; oi the family on 16.6-1943 by a registered partition deed.

Under that deed Kotamma, the widow of Venkataramayya, who had a right to inherit her husband's share in the non-agricultural properties as well as the righ.t to be maintain~ from out of the family income, gave up her right both in the non-agricultural properties, except the right to reside in a portion of the family house as well as her right to be maintained out of the family income. At the sanle time the other members of th11 family allotted to her 25 acres of wet !and, which she was to enjoy during her life-time and the same was to devolve after her death on the Other members of the former family as per the stipulations in the partition deed.

She was not entitled to alienate the property allotted to her share.

Kotamma died on April 9, 1958.

The authorities under the 'Act' proceeded to levy estate duty on the value of the property allotted to Kotamma under the partition deed dat<:d 16-6-1943 under .sectipn 7 of the Act. The accountable per5ons contended that the estate in question is not liable to pay estate duty as it came within the scope of section 24 of the Act. The departmental

authorities, including the Tribunal,' rejec11ed that contention.

Thereafter, at the instance of the Revenue, the question set out above was referred to the High Court.

The High Court has answered that question in the affirmative and in favour of the assessee.

The Revenue has come up in appeal to this Court.

The only question for consideration is whether the facts of the present case fall within the scope of section 24 of the Act.

Section 7 (1) of the Act says :

"7 (1) Interests ceasing on death.--Subject to the provisions of this section, property in which the deceased or any other person had an interest ceasing on the death of the deceased shall bl! deemed to pass on the deceased' s death to the extent to which a benefit accrues or arises by the cesser of such interest, including, in particular,

a coparcenary interest in the joint family property of a

Hindu family governed by the Mitakshara, Marumakkattayam or Aliyasantana law."

The remaining portions of that section are not relevant for our present purposes.

There is no dispute that when Kotamma died her interest in B the wet land ceased and that it passed on to the other members of the former joint family as provided in the partition deed.

Hence prima-facie the prese:it case comes under section 7 of the Act. Only queslion is whether the arrangement made under the partition deed can be considered as 'disposition' within the meaning of that expression in Section 24 or the Act. Now let us turn to c section 24(1). That section reads :

"24(1) Property reverting to disponu.-Where by a disposition of any property an interest is conferred on ; my person o'!her than the disponer for the life of such person or determinable on his death, the remainder being conferred upon the disponer absolutely, and such D person enters into possession of the interest and thenceforward retains possession of it, then, on the death of such person, the property shall not be deemed to pass by reason only of its reverter to the disponer in his lifetime."

The remaining portion of this section is also not necegsary for our E present uurposes.

It was urged on behalf of the Revenue by Mr. Sharma, its learned counsel, that section 24 is wholly inapplicable to the facts of the present case. He contended that on the facts of this case there was no 'disposition'. He further contended that under the teirns of the partition deed, the property did not revert wholly F to the disponers. According to him it partly reverted to the disponers and partly to the widow of Chandrasekhara Rao, who cannot be considered as one or the disponers.

Mr. Rama Rao, learned counsel for the assessee, on the other hand, contended that undet the partition cleed, there was a 'disposition' in favour of Kotarnma and on her death the property G reverted back to all the disponers. As we are in agreement with the contention of Mr. Sharma on the first point, namely, that there was no' 'disposition' under the partition deed, we do not think it necessary to go into other contention.

We are unable to accept the contention of Mr. Rama Rao that H under the partition deed there was 'disposition'. According to him, the true nature of the transanctions entered into under the partition deed were that Kotamma gave up all her rights in the family properties, including her right to maintenance unilaterally, but at

the same time the qther memijlrs of the family voluntarily gave .her 25 acres of wet land to be enjoyed by her during her life-time.

For this contention of his he placed reliance on the terms of the partition deed. In a matter like this we are not merely to look the form in which the deed is drawn up. We are to find out the true natµre of the transaction.

Froni the facts set out above it is absolutely clear that under the partition deed Kotarruna gave up her rights to the extent mentioned earlier and in lieu thereof the other members of the family allotted to her share 25 acres of wet land to be enjoyed by her durin, g her life-time. It was an adjustment o.f rights. The contention of Mr. Rama Rao that there was 'disposHion' under the partition deed-the contention which has appealed to the High Court-appears to us to be an erroneous one. A partition is not a transfer in a strict sense. It is an adjustment of the rights of the various members of the family.

In Commissioner of Income-Tax, Gujarat v. Keshavlal Lallubhai, Patel(') this Court quoted with the approval a passage from the decision of the Madras High Court in Gutta Radhakrishnayya v.

Gutta Sarasamma. (2 ) That passage reads thus :

"Partition is really a process in and by which a joint enjoyment is transformed into an enjoyment in severality.

Each one of the sharers had an antecedent title and_, therefore, no conveyance is involved in the process, as a conferment on a new title is not necessary."

This Court had to consider the meaning of the word 'disposition' occurring in section 2(xxiv) of the Gift Tax Act.

That section defined the expression 'transfer of property' thus :

"2. (xxiv) "trans.fer of property" means any disposition, conveyance, assistant, settlement, delivery, payment or other alienation of property and, without limiting the generality of the foregoing, includes---

(a)

(b)

(c)

the creation of a trust in property;

the grant or creation of any 'lease, mortgage, charge, easement, licence, power, partnership interest in property;

the exercise of a power of appointment of property vested in ; my person, not the owner of the property, to determine its disposition in favour of any person other than the donee of the power; and

{ d) any transaction entered into by any person with H intent thereby to diminish directly or indirectly

( I) SS I. T. R. 637.

(2) I. L. R. [19SI] Mad. 007.

the value of his own property and to increase the value of the property of any other person."

The question for consideration in that case was, inter-a/ia, whether a partition is a 'disposition'. Dealing with this question this Court. in Commissioner of Gift Tax, Madras v. M. S. Getti Chattiar(1) observed :

"A reading of this section clearly goes to show that the words "disposition", "conveyance", "assignment", "settlement", "delivery" and "paymene• are used as some of the modes of transfer of property. The dictionary gives various meanings for those words but those meanings do not help us. We have to understand the meaning of those words in the context in which they are used.

Words in the section of a statute are not to be interpreted by having those words in one hand and the dictionary in the other. In spelling oat the meaning of the words in a section, one must take into consideration the setting in which those tenns are used and 1he purpose that they are intended to serve. If so understood, it is clear that 1he word "disposition", in the context, means giving away or giving up by a person of something which was his own, "conveyance" means trans.fer of ownership, "assignment" means the transfer of the claim, right or property to another, "settlement" means settling the property, right or claim--<:onveyance or disposition of propeny for the benefit of another, "delivery" contemplated therein is the delivery of one's property to another for no consideration and "payment" implies gift of money by someone to-another. We do not think that a partition in a Hindu undivided family can be considered either as "disposition" or "conveyance'' or "assignmen.1." or "settlement" or "delivery" or "payment" or "alienation" within meaning of those words in section 2(XXIV)."

We see no reason why we should not place the same interpretation on the word 'disposi1ion' in section 24 of the Act.

For the reasons mentioned above this appeal is allowed. The answer given by the High Court to the question referred to it is vacated and in its place we answer that question in the negative and in favour of the Revenue. The respondent shall pay the costs of the appellant in this Court.

V.P.S.

Appeal allowed:

(1) 82 I. T. R. 599, 605.

KANCHARLA KESA YA RAO

April 4; 1973

S. HEGDE

H. R. KHANNA, JJ.

Ss. 7 and 24

Estate Duty Act, 1953

s. 7

s. 24

s. 24

s. 7

G. C. Sharma

S. P. Nayar

R. N. Sachthey

G. S. Rama Rao

1Jy

HEGDE

section 64(1)

Duty Act, 1953

section 24

Estate Duty Act, 1953

Venkataramayya

Chandrasekhara Rao

Kotamma

April 9, 1958

section 24

section 24

Section 7

section 7

Section 24

section 24(1)

Sharma

section 24

Rama Rao

Kotarnma

Kotarruna

Madras High Court

section 2(xxiv)

section 2(XXIV)

section 24


COMMISSIONER OF INCOME-TAX WEST BENGAL-II,

CALCUITA v .

M/S. BIRLA GWALIOR (PVT.) LTD.

April 4, 1973 . .

[K. S. HEGDE .AND H. R. KHANNA, JJ.J Indian Income Tax Act 1922--S. 10(2) (xv)-Whether an amount ·.foregone b; y the assessee as Managing Agency _Conunission and an an1ount foregone cs office allowance lVas allowable as Revenue Expendlture.

These are all connected appeals. The a55cssee-rcspondent was the . .managipg agent of two companies N. & G. As Managing Agent of N Campany, it was entitled to receive a commission of 12~% on the net profits of the Managed Company together with a sum of Rs. 18,000/ • . as office allowance.

In the case of G company, the assessee was entitled to get an allowan<'Je of Rs. 30,000/- in "'ddition to its agreed commission. In all these appeals,. certain questions were submitted by . the Tribunal to the High Court. In Civil' Appeal No. 242 of 1970 only one question was submitted and in the other two cases, i .. e., Civil Appeal 'No. 243 and 244 of 1970, two questions we.ro submitted.

In the first appeal, the question submitted was whether on the facts and circumstances of the case, a certain sum said to have beien foregqne . by the assessce as managing agency commission was allowable :.as revenue expenditure. Similar questions were called for, for the remaining two assessment years as well and in addition, one ; more question \V'aS submitted as to whether certain .sum, said to have beien 'foregone by the assessce as. office allowanc'e was allowable as revenue

iexpcnditure under th(( Jome Tax Act. The assessment years \\'ere !954-55, !955-56 and !956-57.

The. High Court came to the conclusion that it is not necessary to answer the common question referred to in all these appeals because it was academic; but the question relating to the office allowance vas answered in favour of the assessec. In the relevant ac1cou.inting years, the asscssee gave up the managing agency commission from both tlw managed companies.

It alo gave up the office allowance due from G. Company. The "ccounting years of both the asscssee company as \Vcll as the managed companies \Vere the financial year. The commissiori. was given up by the asscssee company after the ~.nd of the fin-ancial year, but before the acounts of the managed c, ompany were made up. The accounts of the managed companies. were made up some time during the end of September of the year following the respective accounting years.

But in the case of office allowance, the same was given up even before the end of the finii.n- " cial years. , !Jn the bash. o~ these facts, the I. T. 0. s well as the Appellate Ass1sta:nt 1 Coo:nm1ss1oner held that the dcduc~1ons claimed were not allowable. As regards the commission, .they came to the conclusion that the same having accrued at the end of each of the financial years, the agency giving up the same subsequent to these dates,- docs not bring the case under s. 10(1) of the Income-tax Act. So for as tho offico allowanc~ was concerned, they caffie to the conclusion that there was 110 justification for giving up the sanw. The Income Tax Appellate

I "

L .

"' (

I ..

C.I.T. v. BIRLA GWALIOR PVT. LTD.' (llegde, J.) 903

Tribunal differed from this vie~ and held that to the 'extent the commission was give)tl up, the asscssee company had no Income at al!· In other words, the commission that was, given up caIUiot be cons1ckred as the real income of the assessee company. Therefore, it i3 an all'Ow

4 able expenditure under s. 10(2)(xv). As regards the office allowance the Tribunal held that the same was allowable deduction under s/ 10(2) ()<.!').

The Tri, bunal further held that the comm1ss10n as well as th!'! cffic.e allowance were given tip by the asscssee on the ground of commercial expediency. The High Court agreed with this view takqo by the Tribunal.

Dismissing the appeal, HELD : (i) As regards office allowance, following C.I.T.

Bombay North v. Chandulal Keshavlal & Co., 38 I.T.R. 601 the Tribunal was fully justified in coming to the conclusion that the expenditure incurred came within the scope of s. 10(2) (xv). The only contention advanced by the appellant was that the allowance was paid to meet certain expenses i!O'Curred by the asscS:Seei company.

Therefore, the . assessec could not have given up the same.

This c.'.ontenti'On makes no difference in law.

The ratio of the decision of this Court in Cham/u .. la/'s case completely covers the point under corrsidcration .. IL906B]

(ii) The question regarding giving up of the commission, no due date was fixed for the payment of th., commission under the managing agency agreements. The conimission receivable could have been ascertained only after the managed company made up its acpunts. The assessce had given up the commission even before the managed company made up its accDunts. -Hence, the fact that the assesscc company was maintaining its accounts on the basis of mercantile system cannot lead to. the conclusion that the commission ac.rued to 'it by the end of the relevant

acoou!t'Aing year. It was the real income of the -assessee company that was liable to tax and the real income could not be arrived at without

taking into account the amount given up by the assessee. Therefore, in the present case, the contention of the revenue. that a surrender of

the commiss'icn under the provisions mentioned in the agreement were not dcductable for the purposes of Income Tax, cannot be sustained. [906 Fl .

Poona Electric Supply Co. Ltd. v.

Conunissioner of . lnco111e-tax, Bombay City !, 57

I.T.R. 521 TI. M. Kas/iiparek/J & Co. Ltd. v.

Comnu"ssioner of lncon1e-tax, Bo1nbay North, Kutch & Saurashtra. 39 I.T.R .. 706, referred to. The question whether the -giv.en up commission comes under s. 10(2) (xv) depended on whether. the income had really accrued or not.

It is not a hypothetical accrual of income that has got to be taken into cionsidration but the real accrual of the income.

In the present case, since there was no re"al accrual of Income, .the assessee \Vas not liable to tax for this amount.

CIVIL APPELLATE JURISDICTION : Civil. Appeal Nos. 2.42 to 244 (NT) of 1970. ·

Appeals by certificate from the judgment . and order dated April 22, and 23, 1969 of the Calcutta High Court in Income-tax Reference Nos. 187, 188 & 189 of 1963.

S. T. Desai, B. B. Ahuja, S. P. Nayar and R. N. Sachthev, for the appelJant (in C.A. No. 242). '

B B. Ahuja, S. P. Nayar and R. N. Sachthey, for the appellant A (in C.A. Nos. 243-244). ·

D. Srn, Leila Seth, U. K. Khaitan and B. P. Maheshwari, for the respondent.

The Judgment of the Court was delivered by

HEGDE, J.-These are connected appeals by certificate. They relate to respondent's assessment for the assessment years 1954-55, 1955-56 and 1956-57. The previous financial years are the relevant accounting year$.

In all these appeals, as directed' by the High Court of Calcutta under S.66(2) of the Indian Income Tax Act, 1922, certain questions were subjnitted by the Tribunal.

In the first case i.e.

Civil Appeal No. 242 of 1970 enly one question was submilted and in the other two cases i.e., Civil Appeals Nos. 243 and 244 of 1970, two questions were submitted.

The question submitted in the first case is as follows :

"Whether on the facts in !he circumstances 0: the case the sum of Rs. 1, 11, 779 said to have been foregone by the assessee as Managing Agency commission was allowable as a revenue expenditure under S. 10(2)

(xv) of the Indian Income-tax Act, 1922 for the assessment year 1954-55" ?

Similar qestions were called for the remaining two assessment years as well. But, in addition, one more question, namely :

"Whether on the facts and in the circumstances of the case the sum of Rs. 30,000 said to have been foregone by the assessee as office allowance receivable from Gwalior Rayon and Silk Manufacturing Co. Ltd. w1s allowable as a revenue expenditure under Section 10(2)

(xv) of the Indian Income Tax Act, 1922 for the. assessment years, 1955-56 and 1956-57, was called for." At the hearing, the High Court came to the conclusion that it is not necessary to answer the common quesion referred to in all these three appeals as the same was academic but the question relating to the office allowance was an•wered in favour of the assessee following the decision of this Court in Commissioner of Income tax Bombay North v. Chand!tlal Keshavlal & Co. ( 1 ) The material facts of the case may now be stated. The assessee -respondent is the managing agent of the National Bearing Co.

Ltd. and Gwalior Rayon and Silk Manufacturing Co. As managing agent of the former company it was entitled to receive a commission of 12t per cent on the net profits of the managed company together with a sum of Rs. 18,000 as office allowance. In the

(1, JS J.T.Jl.. 601.

case of Gwalior Rayon and Milk Manufacturing Co. the assessee was entitled to get an office allowance of Rs. 3{),000 per year, in addition to the agreed managing agency commission.

In the relevant accounting years the assessee gave up the qJ.anaging agency commission due from both the managed companies. It also gave up 'the office allowance due from Gwalior Rayon and Silk Manufacturing company.

The accounting )ears of both the assessee company as well as the managed companies were the financial years.

In the agreement entered into between the assessee company and the managed companies no date for payment of the managing agency commission appears to have . been stipulated.

The commission was given up by the assessee com.parry after the end of the financial year but before the accounts of the managed Co. were made up. The accounts of the managed companies appear to have been made up somewhere during the end of September of the year following the respective accounting years. But, in the case of office allowance the same was given up even before the end of the financial year. On the basis of these facts the Incometax Officer as well as !he Appellate Assistant Commissioner came to the conclusion that the deductions claimed were not allowable.

As regards the commission, they came to the conclusion that the same having accrued at the end of each of the financial years, the assessee giving up the same subsequent to those dates does not bring the case under S. ! 0 (1) of the Act and no case was made out under S.10(2) (xv). So far as the office allowance i; concerned they came to the conclusion 1hat there was no justification for giving up the same.

The Income-tax Appellate Tribunal differed from the view taken by the Income-tax Officer and the Appellate Assistant Commissioner. Dealing with the question of commission it came to the conclusion that to the extent the commission was given up the assessee company earned no income at all. In other words the commission that was given up cannot be considered as-the real income of the assessee company. It further came to the conclusion that under any circumstance it is an allowable expenditure under S. 10(2) (xv). As regards the office allowance, the Tribunai was of the opinion that the same was an allowable deduction under S. 10(2)(xv). The Tribunal held that the commission as well as the office allowance were given up by the assessee on the ground of commercial expediency. The High Court agreed with the view taken by the Tribunal.

We will first take up the question relating to the office allowance. According to the finding of the Tribunal the assessec com pany gave up !he office allowance on the ground of cort1mcrcial expediency. It opined that the managed company's financial position was not sound during the relevant accounting years and it l0-L797SL•P C.T.173

was necessary for the assessee company to give up the office allowance in order 'to stabilise the jinances of the managed company.

The Tribunal further came to the conclusion that because o.f the sacrifices made by the assessee company, the finances of the managed company improved susequently, as a result of which the assessee company was able to earn more profits in the later years. This is a finding of fact. That finding was binding on the High Court.

On the basis of that finding the Tribunal was fully justified in coming to the conclusion that the expenditure incurrel" came within the scope of S. J0(2)(xv). That conclusion is supported by the decision of this Court in Chandulal's case (supra).

The only contention advanced in this Court in respect of the office allowance was that it was paid to meet certain expenses incurred by the assessee company; consequently the assessee could not have given up the same.

We do not know whether the office allowance was paid solely for that purpose or whether it was partly as reinuneration and partly to meet the expenditure incurred.

In either case it makes no difference in law.

The ratio of the decision of this Court in Chandulal's case completely covers the point under consideration.

Now turning to !he question regarding giving up of the commission, as mentioned earlier, the assessee was maintaining its accounts on the basis of mercantile system.

Its acounting year was the financial year.

It gave up the commission after the .end of the financial year.

On the basis of these facts it was contended on half of the Revenue that the commission had accrued betore it was given up.

Hence it cannot be said that the assessee had not earned the commission in question.

Therefore, the assessee's case cannot be considered under S.10( 1).

We are unable to accept this contention as correct.

As mentioned earlier no due date was fixed for the payment of the commission under the managing agency agreements.

The commission receivable could have been ascertained only after the managed company made up its accounts.

The assessee had given up the commission even before the managed company made up its accounts. Hence !he mere fact that the assessee company was maintaining its accounts on the basis of mercantile system cannot lead to the conclusion that the commission had accrued to it by the end of the relevant accounting year.

This is also the view taken by the Bombay High Court in H. M. Kashiparekh & Co. Ltd. v. Commissioner of Income-tax, Bombay North, Kutch & Saurashtra. (') The facts of that case are somewhat similar to the facts of the present case.

Therein the assessee which maintained its accounts on mercantile system was the managing agent of a. paper mill company.

Under the managing agency

(1) 39 I. T. R. 706.

agreement it was under a duty to forego upto one-thirds of its commission where the profits of the managed company were not sufficient to pay a dividend of 6 per cent.

For the accounting year ending March 31, 1950, the assessee earned a commission of Rs. 1,17,644, that as a result of the resolutions passed by the managed company and the assessee company the assessee gave up a sum of Rs. 97 ,000 in December, 1950. The Appellate Assistant Commissioner held that the maximum amount the assessee was bound to forego was only Rs. 39,215 and included the balance of the amount foregone, viz., Rs. 57,785/- in the taxable income.

The Appellate Tribunal, however, found that the sum of Rs. 57, 785 was. also given up for reasons of commercial expediency.

Affirming the decision of. the Tribunal the High Court held that it was the real income of the assessee company for the accounting year that was liable to tax and that the real income could not be arrived a:t without taking into account the amount foregone by the assessee.

In ascertaining the real income the fact that the assessed followed the mercantile system of accounting did not have any bearing. The accrual of the commission, the making of the accounts, the legal obligation to give up part of the commission, and the foregoing of the commission at the time of the making of the accounts were not disjointed facts : there was a dovetailing about them which could not bJl ignored.

The real income of the assessee was Rs. 27,644 and the amount of Rs. 97,000 foregone by the assessee could not be included in the real income of the assessee for the accounting year.

Rejecting the contention that merely because the assessee maintained its accounts on the basis of mercantile system, the income must be held to have accrued at the end of the accounting year, the High Court observed "even so, (the failure to produce account books) we shall proceed on the footing that, the assessee company having following the mercantile system of account, there must have been entries made in its books in the accounting year in respect of the amount of the commission.

In our judgment, we would not be justified in attaching any particular importance in this case to the fact that the company followed the mercantile system of account.

That would not have any particular bearing in applying the principle of real income to the facts of this case." This decision was cited with approval by this Court in Poona Electric Supply Co. Ltd. v. Comrni>sioner of Income-tax, Bombay city I.('') Dealing with that decision this is what this Court observed : "The conceot of 'real income' is also expounded in the decision of the Bombay High Court in H. M. Kashiparekh & Co. Ltd. v. Commissioner of Income-tax (supra). There, under the managing agency agreement the managing agent was under a duty to forego up to one-third of

(1) l7 I. T. R. Sil.

its commission where the profits of the managed company were A not sufficient to pay a dividend of 6 per cent. The contention of the revenue that such surrender of the commission under the provisions mentioned in th~ agreement was not deductible for the purpose of income-tax was negatived. The principle has been succintly stated in the head-note thus :

"The principle of real income is not to be so subordinated as to amount vir'tually to a negation of it when a surrender or concession or rebate in respect of managing agency commission is made, agreed to or given on grounds of commercial expediency, simply because it takes place some time after the dos~ of an accounting year.

In examining any transaction and situation of this nature the court would have more regard to the reality and speciality of the situation rather than the purely theoretical or doctrinaire aspect of it. It will lay greater emphasis on the business aspect of the matter viewed as a whole when that can be done without disregarding statutory language".

Mr. S. T. Desai, learned counsel appearing for the Revenue contended that the facts of this case are governed by the rule laid down by this Court in Morvi Industries Ltd. v. Commissioner of Income-tax (Central), Calcutta(').

We do not think thatsubmission is correct.· Facts of that case are :-The assessee, which was the managing agen1 of its subsidiary company, maintained its accounts on the mercantile system.

It was .entitled to receive an office allowance of Rs. 1,000 per month, a commission of 12t per cent, of the ne1 profits of the managed company and an additional commission of 1 t per cent on all purchases of cotton and sales of cloth and yarn.

In the accounting years ended on December 31. 1954 and December 31, 1955, the managed Company suffered losses and the assessee earned only commission on -the sale of cloth and yarn for the two years. The total amounts, including the office a\lowancc which the assessee was entitled to receive were Rs. 50,719 and Rs, 13.963 for the two years. Under clause 2 ( e) of the managing agency agreement the commission was due to the assessee on December 31, 1954 and December 31, 1955, respectively, and it was payable immediately after the annual accounts of the managed company was passed in general meetings, which were held on November 24, 1955, and July 21, 1956, respectively. By resolutions of its board of directors dated respectively, April 4, 1955, and June 19, 1956 [i.e., after the

co1;;111ission had become due but before it had become payable in terms of clause 2 (2) ], the assessee relinquished its commission on sales and office allowance because the managed company had been suffering heavy losses in the past years. The Tribunal held

(,) 82 I. T. R. 835.

that the relinquishment J:W the assessee of its remuneration after it had become .4ue was of no effect; and also rejected its claim that the amounts relinquished were allowable under section 10(2) (xv) of the Income-tax Act, 1922, because, as a result of the relinquishment, the financial position of the managed company did not become stronger while that of the assessee-company became weaker and, therefore, the relinquishment was not for the benefit of 1he assessee.

On a. reference the High Court agreed with the view taken by the Tribunal. On appeal this Court affirmed the decision of the High Court.

AS seen from the facts of that case the commission given up had accrued on the 31st December, 1954 and 31st December, 1955, respectively, and the assessee purported to give up that commission several months thereafter.

Further, the Tribunal in that case had come to the conclusion that the assessee did not 2ive up 1he amounts in quesion for commercial expediency.

This Court came to the conclusion that the amounts in question were due at the 31st December, 1955 and 1956, though payable at a later date. Consequently, those amounts had accrued long before they were given up and the giving up of the same did not come within the scope of section I 0 (I ) . It is true that in the course of the judgment emphasis was also placed on the fact that the assessee was mintaining its accounts on the basis of mercantile system, but it was not on that basis alone that this Court came to the conclusion that the income in queston accrued on 3 lst Decemher, 1955 and 31st December, 1956.

In arriving at the conclusicin that the income in question accrued on the 31st December, 1955 and 31st December, 1956, this Court primarily took into consideration the terms of the agreement.

In the course of the judgment delivered by one of us, Khanna, J., passage from the judgment of this Court in Commissioner of Income Tax Bombay City Iv. Messrs.

Shoorji Valiabhadas and Co.( 1 ) was quoted in support of the conclusion reached by this Court. That passage reads thus :

"Income-tax is a levy on income.

Though the Income-tax A-ct 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-ke"ping, an entry is made about a 'hypothetical inr:ome'. which doer not materialise.

Where income has, in fact, been received and is subsequently given up in such circumstances that it remams the income of the recipient, even though given up, the tax may be payable.

Where, however, the income can be said not to /1ave resulted at all, there is obviomly neither accrual nor receim of income, even though an entry to that effect might, in certain

(I) 46 I. T. R. 144.

circumstances, have been made in the books of account" (emphasis supplied). Hence it is clear that this Court in Morvi Industries' case did emphasise the fact that the real question for decision was whc; ther the income had really accrued or not. It is not a hypothetical accrual of income that has got to be taken into consideration but the real accrual of the income.

In addition to the contentions taken earlier, Mr. Desai also took objection to the way in which the High Court disposed of these cases. It may be noted that the High Court came to the conclusion that the findings reached b(y the Tribunal were findings of fact and, therefore, it would not be proper for the High Court to interfere with the same but Sltrangely enough, at an earlier stage the High Court called for the questions referred to earlier, under S. 66 ( 2) . If the questions raised are concluded by the facts found by the Tribunal the High Court was not justified in calling for

those questions.

Futher when the High Court issued the rule on the applications made by the Revenue, the assessee not only objected to the prayer made by the Revenue, but also submitted that in case the Court was pleased to direct the Tribunal to Stalce a case, It may also be pleased to direct the Tn1*mal to submit the question "whether the commission given up can be considered as real income coming within the scope of S. l 0(1) ?" But, the High Court rejected that prayer but merely called upon the Tribtlnal to submit the questions set out earlier. 'J'he High Court has now come to the conclusion that the COffiil!ission given up by the assessee cannot be considered as it real income. It is undoubtedly true that there are certain incongruities in the procedure adopted by the High Court but the final conclusion reached by the High Court is, in our opinion, correct in law. Therefore, the High Court was justified in refusing to answer the first question in all the three cases.

In the result these appealli fail and they are dismissed with costs; one set of hearing fee.

s.c.

Appeals dismissed_

COMMISSIONER OF INCOME-TAX WEST BENGAL-II, CALCUTTA

M/S. BIRLA GWALIOR (PVT.) LTD

April 4, 1973

K. S. HEGDE

H. R. KHANNA, JJ

Indian Income Tax Act 1922

S. 10(2)

Jome Tax Act

s. 10(1)

Income-tax Act

BIRLA GWALIOR PVT. LTD

"' (

I ..

C.I.T. v. BIRLA GWALIOR PVT.

s. 10(2)(xv)

s. 10(2)

s. 10(2)

S. T. Desai

B. B. Ahuja

S. P. Nayar

R. N. Sachthev

B B. Ahuja

R. N. Sachthey

D. Srn

Leila Seth

U. K. Khaitan

B. P. Maheshwari

HEGDE

High Court of Calcutta

Indian Income Tax Act, 1922

S. 10(2)

Indian Income-tax Act, 1922

Section 10(2)

Indian Income Tax Act, 1922

S. 10(2)

S. 10(2)(xv)

Chandulal

S.10( 1)

Bombay High Court

March 31, 1950

December 31. 1954

December 31, 1955

clause 2

December 31, 1954

November 24, 1955

July 21, 1956

April 4, 1955

June 19, 1956

clause 2

section 10(2)

Income-tax Act, 1922

31st December, 1954 and

31st December, 1955

31st December, 1956

Khanna

Morvi Industries

Desai

S. 66


RAM NARAIN

STATE OF UTTAR PRADESH April 5, 1973 [K. K. MATHEW AND I. D. DuA, JJ,] Indian Evidence Act, 1872, s. 45-Han_dwriting Expert-Sole testimony for conviction--Courts below comparing handwriting for theniselves and c.greeing with Expert-No illegality in conviction--Sente, nce-Lapse of tin1e-Sentence reduced to period already undergone.

The appellant was convicted of an offence under s. 384 read with s. 511 Indian Penal Code.

The conviotion was solely based <>.ti the conclusion that the two anonymous letters dema:nding ransom for the kidn•pped boy had been written by him. The appellant having categorically denied his authorship of those letters a handwriting expert was produced in support of t~ prosecution case, and believing the expert testimony the three cpurts below agreed in co!t?Victing the appellant.

In this Court the sole question for consideration was as to the legality and propriety of the appeUant's conviction on the uncorroborated testimony of the handwriting expert. It was urged by the appellant Iha: it was not safe to record a findi$lg about a person's handriting merely on the basis of comparison because the opinion of the handwriting expert is not conclusive.

Dismissing the appeal.

HELD : (i) The legal position enundiated in Fakhruddin's case cannot be said to be inconsistent with the ratio of ftnyone of the earlier decisions to which reference has been made therein. [916A] Fakhruddin v. State of Madh, va Pradesh, A.LR. 1967 S.C. 1326, Ram Chandra v. State of U. P., A.LR. 1957 S.C. 381, Ishwari Prasad Misra v. Mohammad Isa, A.LR. 1963 S.C. 1728 and Sha.lhi Kumar Banerjee, v. Subodh Kumar Banerjee, A.I.R. 1964

S.C. 529, referred to. lt is no douPt true that the opinion of a hand-writing expert givtti in evidence is no less fallible than any other expert opin'ion adduced in evidence with the result that such evidence has to be received with great caution.

But this opinion evidepce wh'ich is relevant may be worthy of acceptance if there is internal or external evidence relating to the document in question supporting the view expressed by the expert.

If after comparison of the disputed and the admitted writings by the Court itself when the Presiding Officer is familiar with the language, it is considered safe to accept the opinion of the expert, then the condusion so arrived at cannot be assa'iled on special leave on the mere ground that comparison of handwriting is genera11y considered as hazardous and inconclusive.

In the present case the Trial Magistrate, the Sessions 111<18" who

hard the •ppeal and the , High. our! themselve. co01pared the writing with the help of the experts opm1on and came to the conclusion that the disputed handwriting tallied with tho specime, n handwriting of the appellant.

There was, therefore no ground for interference by this Court with the appellant's conviction. [9!6B]

(ii) Though a large number of factors fall for consideration in determining the appropriate sentence the broad object of punishment 9ll

SUPREME COURT REPORTS [1973] 3 S.C.ll.

of an accused found guilty in progressive civilized societies is to impress on the guHty party that commission of crime does not pay and that it is both against his individu-al interest and also against the larger interest of the soclety to which he belongs. The 'e:ntence to be appropriate should, therefore, be neither too harsh nor too lenient.

The sentence Jf rigorous imprisonment for one year imposed in the present case \vould not in the normal course be considered to be too harsh but considerable time had elapsed since the commissio, o of crime and the appellant had been on bail granted by this Court since January, 1970.

T-o send him back to jail after so many years would be somewhat harsh. c9 l 7B]

[Sentence reduced to period already undergone with fine.] CRIMINAL APPELLATE JURISDICTION : Criminal Appeal o. 6 of 1970.

Appeal by special leave from the judgment and order dated October 10, 1969 of the Allahabad High Court in Criminal Rev.

No. 2093 of 1967.

J. P. Goyal and R. K. Bhatt, for the appellant.

0. P. Rana, for the respondent.

The Judgment of the Court was delivered by DuA, J. : This appeal by special leave is directed against the judgment and order of a learned Single Judge of the Allahabad High Court dated October 6, 1969 dismissing the appellant's revision from the order of a II Temporary Sessions Judge, Kanpur dated November 8, 1967 dismissing his appeal from his conviction by a learned Magistrate under ss. 384/511 I.P.C. and sentence of rigorous imprisonment for one year.

On August 15,1964, Mannu, a boy about 5 years old, was found missing from the house of the appellant's relation Shri Gajendra Natth (P.W. 19), an Excise Inspector, residing in Mohalla Ashok Nagar, Kanpur within the jurisdiction of police station Sisamau the following day.

A report was lodged at the police station Sisamau about this fact and a notice was also published in the newspapers and hand-bills were distributed announcing a reward of Rs. 501/- for anyone who furnished the clue of 1he missing child's whereabouts. A post-card (Ext. Ka-1) bearing post office seals dated 21-8-1964 and later an inland letter (Ext. Ka-2) bearing the date October 21, 1964 were received by Gajendra Nath demanding, in the first letter a ransom of Rs. 1,000/-, and in the second a ransom of Rs. 5,000/- for the return of the boy.

In December, 1964, a trainee of. the local I.T.I., Kanpur, Yashpal Singh by name, after reading the announcement of the reward.. made attempts to trace the whereabouts of the missing child.

Having found a clue, he gave the necessary information to the father of the child regarding his whereabouts.

Thereupon, on January 11, 1965 the child was recovered by Rahasbehari, the grand-father of the child, from

the house of Ganga Bux Singh and Chandrabushan Singh in village Pandeypur District Kanpur. The investigation of the case revealed that the appellant, Ram Narain, was also responsible for kidnapping and wrongfully confining the said child and that it was be who had sent the two anonymous letters (Exts. Ka-1 and K-2) demanding ransom. All the three persons were prosecuted under ss. 363, 468 and 384/511, I.P.C.

The trial court convicted Ganga Bux Singh and Chandrabusban Singh under s. 368, I.P.C.' and Ram Narain appellant under ss. 384/511, I.P.C.

On appeals by the convicted persons, the learned II Temporary Sessions Judge, Kanpur, came to the conclusion that the offence under s. 368, I.P.C. had not en established beyond reasonable doubt with the result that Ganga Bux Singh and Chandrabushan were acquitted.

The appellant, Ram Narain's conviction for an offence under ss. 384/511, I.P.C. was, however, upheld. This conviction was solely based on the conclusion that the two anonymous letters had been written by him.

The appellant having categorically denied bis authorship of those letters, Shri R. A. Gregory, a hand-writing expert was produced in support of the presecution case. Believing his testimony that the appallant was the writer of those two letters, all the three courts below have agreed in convicting the appellant.

The short question raised before us relates to the legality and .properiety of the appellant's conviction on the uncorroborated testimony of the hand-writting expert. The High Court relied in support of the appellant's conviction on the decision of this Court in Fakhruddin v. State of Madhya Pradesh ( 1) in w!Jich after referring to four of its earlier decisions in, (i) Ram Chandra v.

State of U.P.( 2 ) (ii) lshwari Prasad Misra v. Mohammad lsa( 3 )

(iii) Shashi Kumar Banerjee v. Subodh Kumar Banerjee(') (iv) State of Gujarat v.

Chhotalal Patni(') this Court rejected the contention that the Court dealing with the authorship of a writing could not observe for itself the similarity and differences between the admitted and the disputed hand-writings to verify whether or not the conclusi.ons of the hand-writing expert were proper.

Then, after refernng to ss. 45, 47 and 73 of the Indian Evidence Act, this Court observed :-

"Both under S. 45 and S. 4 7 the evidence is an opinion, in the former by a scientific comparison and in the latter on the basis of familliari1y resulting from frequent observations and experience. In either case the Court must satisfy itself by such means as are open that the opinion my be acted upon. One such means open to the Court 1s to apply its own observation to the

(f) A. I. R. 1967 S. C. 1326.

(3) A. l. R. 1963 S. C. 1728.

(5) [1967]

(2) A. I. R. 1957 S. C. 381.

(4) A. I. R. 1964 S. C. 529.

I S. C. R. 249

admitted or proved writings and to compare them with the disputed one, not to become an handwritin~ expert but to verify the premises of the expert in the one case an to appraise the value of the opinion in the other case.

This comparison depends on an analysis of the characteristics in the admitted or proved wd'tings and the finding cf the same characteristics in large measure in the disputed writing. In this way the opinion of the deponent whether expert or other is sub.iected to scrutiny and although relevant to start with becomes probative.

Where an expert's opinion is giv.en, the Court must see for itself and with the assistance of the expert come to its own conclusion whether it can safely be held that the 1wo writings are by the same person. This is not to say that the Court must play the role of an expert but to say that the Court may accent the fact proved only when it has satisfied itself on its own observation that it is safe to accept the opinion whether of the expert or other witness.

Therefore, to satisfy ourselves whether the testimony of the handwriting expert is acceptable or not, we sent for the record and compared the disputd writings with some comparable material.

There were two such writings which were claimed as standard. One was a register maintained at the office of the Association in which there was a signature in three places in Hindi which purported to be that of Fakhruddin (Exhibit

P-56).

The other was a writing which Fakhruddin made to the dictation of the Police Officer in Jail (Ex.P.61).

These were, of course, not admitted by Fakhruddin and the question had to be first decided which of the two or bO'!h could be said to be approved &tandard material.

Mr.

Kohli urged that Ex. P-56 could not be so treated as there was no proof that the signatures were made by Fakhruddin. In this submission Mr. Kohli is right. The evidence of Tahir Ali, P.W.14 which has been relied upon is not definite on this point. He does not say that the signatures were of Fakhruddin who was the accused in the case. He only says that the persons whose signatures were made in the register, signed it and this leaves the matr at large.

There is, however, proof that the other wntmg was made r/y Fakhruddin the appellant.

The Sub-Inspector, P.W. 33 took the precaution of having two "'.itnesses P.Ws. Nos. 16 and 27.

Of these P.W. 16 dtC~ not identify the appellant as the writer but the other

P.W. 27 did.

Exhibit P-61, therefore, furnishes the necessary comparative material."

According to the appellant's learned counsel, the High Court has not properly understood the principle of law laid down by this Court in its various decisions.

Our avtention was invited B to Chhota Lal Patni's case (supra) where it is observed :-

"A Court is competent to compare th\: disputed writing of a person with others which are admitted or proved to be his writings. It may not be . safe for a Court to record a finding about a person's writing in a certain document merely on the basis of comparison, but a Court can itself compare the writings in order to appreciate properly the other evidence produced before rt in that regard. The opinion of a handwriting expert is also relevant in view of s. 45 of the Evidence Act, but that too is not conclusive. It has also been held that the sole evidence of a handwriting expert is not normally sufficient for recording a definite fin.ding about the writing being of a certain person or not. It follows that it is not essential that the handwriting expert must be examined in a case to prove or disprove the disputed writing. It was therefore not right for the learned Judge to consider it unsafe to rely upon the evidence of the complainant in a case like this, i.e., in a case in which no handwriting expert had been examined in support of his statement." ·

It was emphasised by the appellant's learned counsel that according to this decision it is not safe to record a finding about a person's writing merely on the basis of comparison because the opinion of a hand-whiting expert is not conclusive and his evidence is normally insufficient for recording a definite finding about the writing being of a certain person or not.

Indeed the l\l'Pellant's contention was that in Fakhruddin's case (supra) though reference was made to this decision, its ratio was not properly appreciated and the decision in Fakhruddin (supra) is not in conformity with this earlier decision. We are uable to agree wth this submission.

Reference was also made by the appellant's counsel to Shashi Kumar (supra) where it is observed that the expert evidence as to' hand-writing is opinion evidence and it can rarely, if ever, take

the place of subl>tantive evidence and therefore before acting on it the courts usually look for corroboration either by direct or circumstantial evidence.

In Shashi Kumar (supra), it may be pointed out, this Court found all the probabilities against the expert opinion and the direct testimony of two witnesses accepted by this Court also wholly inconsistent with that opinion.

In our view, the legal position enunciated in Fakhruddin (supra) cannot be said to be inconsistent with the ratio of any one of 'the earlier decisions to which refrence has been made therein How it is no doubt true that the opinion of a hand-writing expert given . in evidence is no less fallible than any other expert opfrtion

adduced in evidence with the result that such evidence has to be received with great caution. But this opinion evidence, which is relevant, may be worthy of acceptance if there is internal or external evidence relating to the document in question supportin.~ the view expressed lzy the expert. If after comparison of the disputed and the admitted writings by the Court itself, when the Presiding Officer is familiar with that language, it is considered safe to accept the opinion of the expert then the conclusion so arrived at cannot be assailed on special leave on the mere ground that comparison hand-writing is generally considered as hazardous and inclusive and that the opinion of the hand-writing expert has to be received with considerable caution. The ques•tion

in each case falls for determination on the appreciation of evidence and unless some serious infirmity or gave failure of justice i; shown, this Court would normally refrain from re-appraising the matter on appeal by special leave, Tiie Triaf Court in this case agreeing with the principle of law enunciated by this Court compared the relevant documents and arrived at the conclusion that they have all been written in one hand.

The learned II Temporary Sessions Judge on appeal, after referring to the comparison of the disputed and specimen writings by the Trial Magistrate. himself compared those writings with the help of the expert's opinion and his report and came to a definite conclusion "that the disputed hand-writings tally with the specimen hand-writing". In the High Court also the learned Single Judge, a.f'ter referring to the decision in FakhruddJn (supra), observed as follows :-

"I have myself made a comparison of the specimen writing of the applicant with the writing contained in the two letters.

I have not the least doubt that the writing in the post-card and he writing in the admitted writing of the applicant are the same. Thus. I have no reason to differ from the finding recorded by the courts below." No serious attempt was made on behalf of ihe appellant to find fault with the approach of the three courts below.

There is. therefore, no !!fOUnd made out for interference by this Court with the appellant's conviction. Unfortunately, the record i; not before us otherwise we would have also tried to examine for ourselves the disputed and the soecimen hand-writings.

How ever, in view of the concurrent decisions of the three courts beiow, we did not consider it necessary to adjourn the hearing of th.is case to have the documents before us for our examination.

The next question is one of sentence which is always a matter of some difficulty. It generally poses a complex problem which requires a working compromise between the coQipetin.e; views based on reformative, deterrent and retributive theories of punishments. Though a large number of factors fall for consideration in determining the appropriate sentence; the broad object of punishment. of an accused found guilty in progressive civilized societies is to impress on the guilty party that commission of crimes does not pay and that it is both against his individual interest and also against the larger interest ot the society to which he belongs.

The. sentence to appropriate should, therefore, be neither too harsh nor too lenient.

In the casein hand the imposition of rigorous imprisonment for one yea{ upheld by the appellate and the revisional courts may not have been considered by us in the nomal course to be too harsh calling for interference under Article 136 of the Constitution. The difficulty now posed is !hat the . appellant is on bail and he has serve.!l out only one

month's sentence.

He was originally sentenced by the trial Court on April 17, 1967 for the offence committed as far back as 1964.

The proceeding against him have lasted fq_r more than 8 years.

He was released on bail by this Court in January, 1970. 'l'o send him back to jail now after the lapse of so many years for serving out the remaining period of sentence seems to us on the facts and circumstances of this case to bj:l somewhat harsh. The offence of attempted exortion undoubtedly reflects to some extent anti-social deparvity of mind but the attempt did not succeed. We, therefore, consider that on the facts and circumstances of this case the ends of substantial justice would be amply met ii we now reduce the sentence of imprisonment to that already undergone but also impose fine of Rs. 700/- and in default of payment of fine direct

that he undergoes rigorous imprisonment for a period of three months.

We order accordingly. The appeal is thus accepted in part as just stated. ·

G.C.

Appeal allowed in part.

RAM NARAIN

STATE OF UTTAR PRADESH

April 5, 1973

K. K. MATHEW

I. D. DuA, JJ

Indian Evidence Act, 1872

s. 45

s. 384

s. 511

Indian Penal Code

Fakhruddin

Allahabad High Court

R. K. Bhatt

P. Rana

DuA

ss. 384

I.P.C

Mannu

Gajendra Natth

Kanpur

October 21, 1964

Gajendra Nath

Yashpal Singh

January 11, 1965

Rahasbehari

Ganga Bux Singh

Chandrabushan Singh

Pandeypur District

Ram Narain

ss. 363, 468 and 384

I.P.C

Ganga Bux Singh

Chandrabusban Singh

s. 368

I.P.C

ss. 384

I.P.C

II Temporary Sessions Judge, Kanpur

s. 368

I.P.C

Chandrabushan

ss. 384

I.P.C

R. A. Gregory

ss. 45, 47 and 73

Indian Evidence Act

S. 45

S. 4

Kohli

Tahir Ali

Chhota Lal Patni

s. 45

Shashi Kumar

FakhruddJn

Article 136

April 17, 1967