MUHAMMAD HALEEM, ACTG. C. J.-This appeal by special leave arises from the order of the former High Court of West Pakistan, Karachi Bench, Karachi, dated 5-9-1965, by which Income-tax Application No. 37 of 1965 was dismissed.
2. Briefly stated, the facts are that the appellant manufactures and sells sweetmeats and fruit products. It also deals in ghee, and that prior to the charge year 1957-58, the accounting period commenced on 1st of April, and ended on 31st of March. The appellant, however, for the charge year 1956-57 changed the accounting period and closed the accounts on 30th June, 1957, instead of 31st of March, 1957. The Income-tax Officer did not allow this change in the accounting period and computed the income of the whole period of 15 months, i. e. From 1-4-1956 to 30-6-1957 and treated 4/5th as the income of the charge year 1957-58, and 1/5th as the income of the next charge year. The method of computation of its division into two parts and the assignment of the two parts to the current and succeeding charge year in the ratio of 4/5th and 1/5th continued up to the charge year 1959-60. The period of first six months of the appellant's business in respect of the charge year 1959-60 was prior to the promulgation of Martial Law Regulation No. 43 and the later six months were subsequent to the promulgation of that Regulation. The appellant filed return pursuant to the Martial Law Regula--tion, but the method of computation of income adopted by the Income-tax Officer for earlier charge years was followed also in respect of the charge year 1959-60. Being aggrieved by the method of computation of income and assess--ment made on that basis, the appellant preferred an appeal to the Income-tax Appellate Tribunal, Karachi Bench, Karachi (hereinafter referred to as the Tribunal), which was dismissed on 19-5-1964. The appellant next filed an apple--cation under section 66(t) of the Income-tax Act before the Tribunal with a prayer for a reference of as many as ten question s formulated therein to the High Court for its opinion. Question No. 2, which is the subject-matter of the appeal is formulated as under:- "Whether in the facts and circumstances of the case, were not the Income-tax Officer and the Tribunal bound to accept the computed income allocated for the period from 1-4-1958 to 30-6- 1958 by the Income-tax Officer who completed the assessment for assessment year 1958-59?"
The Tribunal, while refusing to refer this question amongst others, held:- "From the above quotation it is abundantly clear that it was never the assessee's case before the Tribunal at the time of arguments that income for the period from 1-4-1958 to 30-6-1958 had already been computed by the assessing Officer while framing assessment for the charge period 1958-59, and, therefore, no fresh computation of income could be made for this period. It was of course there in the grounds of appeal but which was never stressed before the Tribunal. When a matter is not set up before the Tribunal and is not discussed in its order no question relating to that matter can be said to arise from the order. Question No. 2 in the circumstances as these thus does not arise from the Tribunal's order."
The appellant thereupon filed an application before the High Court under section 66(I) of the Income-tax Act with a prayer that the Tribunal be directed to refer to this Court those questions, which the Tribunal had refused to refer.
3. At the stage of arguments, the counsel for the appellant confined his case to Question No. 2 and three others and abandoned the rest. The High Court refused to give a direction for the reasons given as under: "Additionally, there is a simpler more effective reply which has been given by the Income-tax Appellate Tribunal. It is that this objection was not raised at the time of the hearing of the appeal by the Tribunal. Counsel for the applicant says that the objection was included in the grounds of appeal to the Tribunal; therefore, it can be said to arise from the order of the Tribunal for purposes of section 66 of the Income-tax Act, 1922. This view was taken by Chagla, C. J. And according to Kanga it found favour with the High Court of Nagpur, but the Madras, Calcutta, Patna and Punjab High Courts have taken the contrary view. We feel that in view of the language of the law it will not be sound to take the view that an objection which was contained in the grounds of an appeal preferred to the Tribunal but neither agitated during the hearing nor mentioned in the order can be said to be an objection arising from the order of the Tribunal. In consequence we think that the Tribunal has rightly declined to refer the second question to this Court."
4: Leave was granted to consider whether the income for the period from 1-4-1958 to 30-6-1958, which had already been computed by the Income-tax Officer while making the assessment for the charge year 1958-59, should again be the subject-matter of fresh computation for the said period in the context of the fact that this point was specifically taken as a ground in the memorandum of appeal before the Tribunal.
5. The question simpliciter is as to whether the question of law taken in the memorandum of appeal but not pressed can be said to arise from the order of the Tribunal for the purposes of section 66 of the Income-tax Act. Learned counsel for the appellant conceded that this ground was not urged for consideration before the Tribunal, but nonetheless his submission was that it must be assumed to have arisen from the order of the Tribunal by implication; and for this proposition, his main reliance was on Hunza-Asian Textile & Woollen Mills Ltd. v. Commissioner of Sales Tax, Rawalpindi ((1974) 29 Taxation I) and Walayat Flour Mills, Lyallpur v. Commissioner of Income-tax, Rawal--pindi ((1974) 29 Taxation 31).
6. In the first case, while the reference application under section 17(1) of the Sales Tax Act was pending in the High Court for its opinion, two additional questions of law were raised through two miscellaneous applica--tions. An objection was raised in that case that the petitioner should not be permitted to raise any new question of law not raised before and not dealt with by the Income- tax Appellate Tribunal in its order. While dealing with this objection, the Division Bench considered a wealth of case-law for and against the proposition and those which need mention here are: "Raja Bahadur Sir Rajender Narayan Bhanji Deo v. Commissioner of Income-tax, Bihar & Orissa AIR 1940 P C 158; Gurmukh Singh v. Commissioner of Income-tax Lahore AIR 1944 Lah. 352; Madanlal Dharnidharka v. Commissioner of Income-tax, Bombay City (1948) I T R 227 and Scindia Steam Navigation Co. Ltd., Bombay v. Commissioner of Income-tax, Bombay City, Bombay AIR 1955 Bom.
280."
7. The last-mentioned case went up in appeal to the Supreme Court of India and the majority judgment construed section 66(1) of the Income-tax Act as under:-
(a) that the power of the Tribunal to make a reference and the right of the litigant to require it must be sought within the four corners of section 66(1);
(b) that the jurisdiction of the High Court to hear the reference is limited to questions which are properly referred to it under section 66(1); and
(c) that such jurisdiction is purely advisory and extends only to questions referred to it.
And further on the question as to whether section '66(1) should be liberally construed, the majority judgment held as under:-
(1) When a question is raised before the Tribunal and is dealt with by it, it is clearly one arising out of its order.
(2) When a question of law is raised before the Tribunal but the Tribunal fails to deal with it, it must be deemed to have been dealt with by it and is, therefore, one arising out of its order.
(3) When a question is not raised before the Tribunal but the Tribunal deals with it that will also be a question arising out of its order.
(4) When a question of law is neither raised before a Tribunal nor considered by it, it will not be question arising out of its order notwithstanding that it may arise on the findings given by it.
8. The Division Bench, however, went further and held that a liberal meaning should be given to the expression "arising out of the order of such Court" in agreement with the minority opinion in that case. Accordingly, it was of the opinion that a new plea could be allowed to be raised if it was implicit in or covered by the question of law referred to it for its opinion and no additional facts were necessary for its disposal. The Division Bench also held that a question of law may still "arise" out of the order although it was not actually raised before it having regard to the meaning of the word "arising out of the order of the Tribunal, which has a wider import and connotation than the word "raised" before the Tribunal, and that there was no justification in cutting down its amplitude.
9. In the second case the objection before the Tribunal was that the question as framed did not arise out of the Tribunal's order as it was neither raised before nor discussed by the Tribunal. This objection was overruled on the basis of minority opinion in Commissioner of Income-tax, Bombay v. Scindia Steam Navigation Co. Ltd. ((1961) 42 1 T R 589(1961) 4 Tax. 103s), as the Division Bench felt that it was not bound by the majority opinion. In holding so, the Division Bench did not seem to rely on the cases decided by the Courts in Pakistan, such as Abdul Ghani & Co. v. Commissioner of Income-tax (PLD 1962 Kar. 635 ), Odeon Cirema v. Commissioner of Income-tax (PLD 1971 Lah.
632) and Muhammad Idrees Barry & Co. v. Commissioner of Income-tax (P L L 1959 SC (Pak.) 202).
10. In T. D. Kumar & Brothers (P.) Ltd. v. Commissioner of Income-tax Calcutta ((1967) 63 1 T R 67), the Supreme Court of India` followed the minority opinion in the case of Scindia Steam Navigation Co.
Ltd. And held that only a question which has been raised or decided before the Tribunal that could be held to arise out of its order and as for the question which had not been raised before the Tribunal, argued or decided by the Tribunal, reference under section 66(2) of the Income-tax Act, 1922, could not be asked for. The same view was taken by the Supreme Court of India in Seth Pushalal Mansinghka (Pvt.) Ltd. v. Commissioner of Income-tax. Delhi, Rajesthan and Madhya Pradesh ((1967) 661 T R 159 ).
11. There is, therefore, a preponderance of view as held by the High Court in favour of the proposition that expression "arising out of such order" in section 66(1) of the Income-tax Act does not include within its concept a question of law which was not raised, argued or decided by the Tribunal. This Court in PLD 1959 SC (Pak.) 202 has not given any wider import to the expression and has confined it to a question of law which dealt with by the Tribunal. This in our view would not include a question of law which was neither raised nor dealt with by the Tribunal.
12. Concluding thus, we are not inclined to agree with the opinion of the Division Bench in (1974) 29 Taxation 31 which has followed the minority view of the Supreme Court of India in the case of Scindia Steam Navigation Co. Ltd. Which itself did not find favour in the subsequent cases decided by the Supreme Court of India. Even on the general principle, where a ground is taken but not pressed, it should be regarded as having been abandoned for all intents and purposes.
Accordingly, the contention of the learned counsel for the petitioner has no merit. Appeal fails which is dismissed.