ORDER <NAME>, Ag. C.J. and <NAME>, J.

1. This is a Letters Patent Appeal arising out of an. execution proceeding. A simple money decree was passed on 10th February 1915. On 21st March 1923, an application which was in accordance with law had bean file 1 for execution praying for attachment an 1 sale an 1 in the alternative for the arrest of the judgment-debtor. In the course of the execution proceeding the parties appear to have come to terms, the judgment-debtor agreeing to pay the decretal amount in instalments extending over several years, the last date being 15th January 1928. All the instalments except the last one were paid. On 10th January 1928, the judgment-debtor sent Rs. 57-3 0 by money order which was refused by the decree-holder who appears to have claimed Rs. 222 in all.

2. The decree-holder filed an application for execution on loth January 1928, for recovery of the balance claimed by attachment and sale of the property of the judgment-debtor He admitted that; the last application for execution was for the arrest of the judgment-debtor which had been struck off on 2nd August 1923 on a compromise having been entered into between the parties for the payment of the amount by instalments.

3. An objection was taken that the application was barred by Section 48, Civil P.C. The Court of first instance held that the conduct of the judgment debtor amounted to fraud which saved limitation. The lower appellate Court was inclined to the view that when the compromise was entered into the judgment-debtor honestly intended to pay an 1 has proved his bona fides by paying eight instalments. It did not find that 1 here was fraud committed by him. It however held that the original execution case was still pending and the Court had the right to reopen it at any time and pass fresh orders.

4. On appeal to this Court a learned Judge of this Court relying on the case of <CITATION> A.I.R. 1922 All. 145 thought that the action of the judgment-debtor in putting off the decree-holder from executing his decree at once should be taken as fraud if the result thereof is to bar the execution of the decree under the 12 years' rule. He has also pointed out that the subsequent order referred to in Section 48, clause (l)(b) can only be passed within six months of the passing of the decree under Article 175 , Lim. Act.

5. The first question that; arises in this case is whether a compromise can ha validly entered into in an execution proceeding and to be treated as a decree capable of execution.

6. Another question is whether the conduct of the judgment-debtor who originally intended to abide by the compromise can be said to amount to fraud because the result of his default is to bar an execution. The third question is whether when anew relief is claimed in an application it can be treated as one for revival.

7. Another question may be whether the subsequent order referred to in Section 48, Sub-Section (l)(b) can apply to an order accepting such a compromise in an execution proceeding irrespective of any plea of limitation.

8. As these are substantial questions of law of some importance, we direct that this appeal may be laid before the Chief Justice for the consultation of a higher Bench.

JUDGMENT <NAME>, J.

8. This is a judgment-debtor's appeal arising out of an execution proceeding. A decree for money was passed on 10th February 1915. While an application for execution ; dated 21st March 1928 was pending and a warrant for the arrest of the judgment-debtor had been issued, the parties entered into a compromise and a written application was filed in <ORG> on 29th August 1923 signed both by the judgment-debtor and the decree holder.

9. They agreed that the decretal amount should be paid in nine instalments spread over four years. The eighth instalment was to be paid on 15th July 1927 and the whole of the balance duo under the decree was to be paid as the ninth instalment on 15th January 1928, The <ORG> ordered that the parties had come to a compromise and the warrant be concelled. The judgment debtor paid all the first instalments in due time. On 10th January 1928 he sent a money order for Rs. 57-3 0 which was refused by the decree-holder on 16th January 1928 with the endorsement that it was short. On the same date the decree-holder filed the present application for execution claiming Rs. 222. The judgment-debtor objected that the application was not according to law and that it was time barred. The first <ORG> held that the conduct of the judgment-debtor amounted to a fraud and the limitation was saved by Section 48(2) Civil P.C. The District Judge was inclined to the view that the judgment-debtor honestly intended to pay the money and had proved his bona fides by paying eight instalments. He however held that the execution file had not been completed in 1923 and was still pending and must have been pending until the amount was paid off in full. He accordingly overruled the objection. On appeal to the High <ORG> a learned Judge of this <ORG> hold that the present application could not be treated as a revival of the previous application because the earlier application was based on the original decree and was for the arrest of the judgment-debtor while the latter one was based on the agreement of 1923 and was for execution by attachment. Belying on the authority of <NAME> v. <NAME> [1918] 40 All. 198 he further held that a subsequent order within the meaning of Section 48 (l)(b) can be passed by the <ORG> only within six months of the passing of the decree under Article 175 , Lim. Act and not after. He however held that the decree holder was entitled to a cessation of the period of limitation on the ground of fraud. <NAME> relied on <CITATION> A.I.R. 1931 All. 31 for the view that fraud in Section 48 should not be interpreted in a narrow, sense, and held that any action of the judgment-debtor which puts off the decree-holder from executing his decree at once should be taken as fraud if the result thereof is to bar the execution of the decree under the 12 years rule. On this finding he dismissed the appeal <CITATION> A.I.R. 1931 All. 31 The Letters Patent appeal came up for disposal before a Bench of which I was a member. The case was referred to a larger Beach because it involved questions of law of some importance. One of the questions mentioned in the referring order was whether when a new relief is claimed in an application for execution it can be treated as one for the revival of a previous application.

10. The appeal as an appeal must fail on a ground which was neither brought to the notice of the learned single judge of this Court nor was it suggested before the Bench which referred the case to us nor has it been pressed before us on behalf of the respondent. That ground is that no appeal lay to <ORG> at all and consequently we can not interfere with the decree of the District Judge in this Letters Patent Appeal. As the point involves a question of jurisdiction it can be taken up in the Letters Patent Appeal even for the first time.

11. The original decree was one for profits passed by <ORG>. Under Section 177 of the old Tenancy Act of 1901 appeals were allowed from decrees only and not from orders. The controversy was set at rest by the pronouncement of <ORG> in <NAME> v. <NAME> [1906] 28 All. 753 where it was held that an order passed in execution by <ORG> was not a decree within the meaning of Section 2, Civil P. C. and that no appeal lay from it to the District Judge.

12. Although the decree in this case was passed in 1915 the present application for execution and the order thereon were made after the coming into force of the new Tenancy Act. A right of appeal from an order in execution has been conferred by Section 248(3) and the appeal lies to the <ORG> which can hear an appeal from the decree in the suit. But that section is under the heading "appeals from order" and its language also makes it clear that the order under Section 47, Civil P.C. is merely an order and not a decree. Whether it be treated as laying down a rule of procedure or conferring a substantive right of appeal the new Act applied. The appeal accordingly lay to the District Judge. But Section 249 provides that no appeal shall lie from any order passed in appeal. Accordingly no second appeal lay to the High <ORG> from the order passed by the District Judge in the execution appeal before him. The single Judge of this <ORG> could not but dismiss the appeal before him. Accordingly we have no power to interfere with the order passed by the District Judge on appeal.

13. It is however urged before us that the appeal should be treated as a revision. There was room for argument under the old Tenancy Act that a civil revision could be entertained from an order passed by the District Judge even in a revenue appeal. Such a view is not now possible under the new Tenancy Act. It was pointed out by a Bench of which I was a member in <CITATION> A.I.R. 1929 All. 735 that under Section 264, Tenancy Act only selected provisions of the Civil Procedure Code are made applicable to cases under this Act and list 1, Schedule 2, clearly excludes the provisions of Section 115, Civil P.C. Both Section 264 and the heading in list 1, Schedule 2, show that Section 115' is not applicable to suits and other proceedings under this Act. As provisions for appeals are to be found in the Act itself there can be no doubt that the appeal before the District Judge was a proceeding under the Act. This conclusion is further strengthened by the language of Section 230 under which the exception is confined to "appeal or revision as provided in this Act." It is therefore quite clear that Section 115, Civil P.C. is wholly inapplicable to revenue cases, and has been entirely replaced by Section 253 of the Act. <ORG> has no power of revision outside the scope of the latter section.

14. As pointed out in <NAME> case A.I.R.1929 All. 735, <ORG> can call for the record of only a <ORG>, and revise the order of such <ORG>. According to the definition of "<ORG>" in Section 3 (12) of the Act read with Section 4(6), Land revenue Act, the District Judge cannot be a <ORG>. It follows that <ORG> has no power to revise orders passed by a District Judge however ultra vires, irregular or illegal it may be. This is an unfortunate result calling for the attention of the legislature. There seems to be no good reason why the legislature, should not allow a revision from an order of the District Judge passed in a revenue appeal. It was observed in <NAME> case A.I.R.1929 All. 735 that if the order passed by the trial Court is open to objection it can be revised. The learned advocate for the respondent contends that it would be anomalous to allow revision from the order of the original <ORG> which has been affirmed by the District Judge, when <ORG> has no power to interfere with the order of the District Judge. But such an anomaly has not stood in the way of permitting revisions under Section 115, Civil P.C: <CITATION> 8 All. 111 and <CITATION>  39 mad. 195 Section 253 allows a revision from an original <ORG> only where an appeal lies to the District Judge, and therefore contemplates a case where an appeal might have been actually filed. Indeed, if the contrary view were upheld, the result for all practical purposes may be to nullify the provisions of the section, for <ORG> may very well decline to entertain a revision when a remedy by way of appeal to the District Judge is open and may feel helpless when such an appeal has been filed and disposed of. In cases where <ORG> acted with illegality or material irregularity and the District Judge in appeal rectified that mistake, <ORG> would in the exercise of its discretion refuse to interfere. If the order of the District Judge proceeds on grounds which do not appeal to <ORG>, it may in spite of that order set aside the order of <ORG> if it is open to any one of the three objections mentioned in the section. It therefore seems to me that a revision from the order of the Assistant Collector lies if there has been a want of jurisdiction, a failure to exercise jurisdiction or illegality or material irregularity irrespective of the question whether an appeal has been filed before the District Judge.

15. This civil revision would have been ordinarily cognizable by a single Judge, but we also have jurisdiction to interfere in revision suo moto. The attention of <NAME>, J., was not called to the fact that no appeal lay to him, and that he might interfere in revision. This is therefore not a case where a single Judge has in his discretion declined to interfere, but one where he has not at all considered the matter. There is accordingly nothing to prevent us from interfering.

16. As will be pointed out later <ORG> failed to record any finding that there was any fraud of the judgment-debtor which prevented the execution of the decree at some time within 12 years immediately before the present application for execution and yet applied Section 43(2)(a) to the case. The failure to apply its mind to the provisions of that section and to record a finding required by that section was a material irregularity because the section prohibits the making of any order upon the application unless the conditions laid down in it are fulfilled. The District Judge on the other hand made out a new case that the old execution proceeding was still pending.

17. The decree-holder in his present application admitted that the previous application of 1923 was for the arrest of the judgment-debtor and had been struck off. In the present application his prayer was for attachment and public sale of the property of the judgment-debtor and not for his arrest. <ORG> did not suggest that the previous application also was for attachment and sale. Nor was there any such suggestion in the judgment of the District Judge. As a matter of fact the record of the execution proceedings of 1923 does not appear to have been sent for in the District Judge's Court. Similarly that previous record was not before the single Judge of this Court. It was taken for granted before the learned Judge that the previous application of 1923 was only for the arrest of the judgment-debtor. Indeed, he emphasized this fact and made it the basis of his decision. Even before the Bench which heard this appeal first there was no suggestion that the prayers in the earlier and the later applications were substantially the same. As mentioned above one of the questions which the Bench considered would arise in the case was:

whether when a new relief is claimed the present application can be treated as one for revival of the old one.

18. After dictating the order, the Bench, by way of precaution, directed that the old execution record should be sent for. On its arrival it was discovered that the original application dated 29th August 1923 was for the attachment and public sale of the property of the judgment-debtor and in case the decretal amount could not be realized in that way for his arrest. But the record further disclosed that the decree-holder did not file any list pi the properties of the judgment-debtor which lie wanted to get attached, nor deposited the expenses for such attachment. He deposited only the expenses for the issue of a. warrant which the Court ordered to be issued. According to his own application the occasion for arrest would have arisen only when the decretal amount could not be realized in the other way. It is possible to argue that the record gives an indication of the prayer for attachment having been abandcned by the decree-holder and the relief confined to arrest, as admitted by the decree-holder in his present application. In the present execution proceeding, a list of the properties of the judgment-debtor was filed which had not been mentioned in the proceedings of 1923. It seems to have been conceded all along that (he previous application was for arrest only. I am therefore of opinion that the decree-holder should not now be allowed to raise a new question of fact that there had been no abandonment of the relief for attachment which, question had not been raised before the single Judge of this Court.

19. The present application for execution asks for attachment and tale of the judgment-debtor's property, and now properties have been specified which were never mentioned before. The application is not now for the arrest of the judgment-debtor. It does not purport to be an application for a revival of the previous application and there is no suggestion in it that the previous application is still pending. On the other hand it is admitted that that application was struck off. The present application is based on the fact of the compromise for the payment of instilment. Although a decree-holder need not be tied down to the form of his application, the circumstances mentioned above make it quite clear that the present application, which asks for a new relief cannot be treated as an application for the revival or continuation of the pre vious execution proceeding. When the character of the present application it different from that of the previous one it can hardly be treated as a continuation. I find it most difficult to hold that the conduct of the judgment-debtor amounted to fraud. The proposition that any action of the judgment-debtor which puts off the decree-holder from executing his decree at once must be taken as fraud if the result thereof is to bar the execution of the decree under the 12 years' rule is much too broadly stated. In the present case the terms of the compromise were known to both the parties and the decree-holder was in a position to find out their legal consequences. There was no concealment of any fact, nor any misrepresentation on the part of the judgment-debtor. Indeed, the fact that the judgment-debtor paid the eighth instalment even alter the expiry of 12 years and at tempts 1 to pay the ninth instalment also shows that he had no intention in 192 to stop payment as soon as 12 years expired. I think the District Judge was right in not accepting <ORG> view that his conduct amounted to fraud. Section 48(2)(a) is therefore inapplicable.

20. The learned Assistant Collector has remarked that the parties filed a compromise and on the strength of that compromise the decree-holder agreed to accept the moneys by instalments:

Now when the last date of payment Is over the judgment-debtor tikes up the plea of limitation which means a fraud on his part.

21. But the plea of limitation was taken after the expiry of the period of limitation, and the mere taking of such a plea cannot be a fraud. <ORG> did not record any definite finding that at the time of the compromise the judgment-debtor had the dishonest intention of pleading limitation after the 12 years had expired. As pointed out above such an inference was impossible.

22. The learned advocate for the decree-holder supports the decree of the learned Judge of this <ORG> on the ground that there was a subsequent order for the payment of money at certain dates within the meaning of Section 48(1)(b) The learned single Judge of this <ORG> has naturally followed the <ORG> ruling in <NAME> v. <NAME> [1918] 40 All. 198 where it was laid down that a subsequent order directing payment of money in Section 48(l)(b) means a subsequent order made by the <ORG> which male the decree an l acting as that <ORG> and not an order of a <ORG> executing the decree. The learned Judges added that in all probability the section contemplates orders made under Order 20, Rule 11. They could not have intended to say that a subsequent order in Section 48 is confined to orders passed under the lastmentioned rule. Section 48 contains the substantive provision of the Cole whereas Order 20 It. 11, can be altered by High <ORG>s and other similar provisions can also be added in. the rules. Furthermore the lastmentionel rule applies only to decree for payment of money, whereas Section 48(1)(b) covers decrees for tho delivery of properties also. Section 48 is accordingly of a. wider scope and there is no reason to confine it to the particular 'orders passed under Order 20, Rule 11. The view taken in <NAME> case [1918] 40 All. 198 that Section 48 contemplates a subsequent order passed by the original <ORG> and not the execution <ORG> has been followed by other <ORG>s as well.

23. On the other hand in numerous cases a compromise between the decree holder and the judgment-debtor entered into in the course of execution proceedings which was duly recorded has been enforced and various efforts have been made to find a legal basis for upholding it.

23. <ORG> in <NAME> v. Tirmmal Hanumant A.I.R. 1925 Bom. 503 expressly dissented from the view taken in <NAME>'s case [1918] 40 All. 198 and held that the expression any subsequent order" cannot be limited to orders passed by the Court which passed the decree but means any order made by a competent Court. In one sense this view is sound because the words "subsequent order" are general in their meaning. As will be shown later, the fallacy lies in the supposition that; an execution Court is competent to pass every kind of order provided it is based on a compromise between the decree-holder and the judgment-debtor.

24. In some cases the <ORG> have gone so far as to hold that the original decree can be altogether supersede! by a new arrangement entered into in the execution department enabling the decree-holder to execute the substituted decree; <NAME> v. <NAME>, A. I. B. 1929 Gal. 687. I would say with great respect that such a position is utterly untenable. The original decree cannot be altered or varied by the parties even with the sanction of the <ORG>. In the absence of interference in appeal, revision, review or under Section 152, Civil P.C. the original decree becomes final and the <ORG> itself is functus office. As provided in Order 20, Rule 3 the judgment cannot afterwards be altered or added to and as directed in Rule 6 thedecree must agree with the judgment. In Debt liai v. <NAME> [1881] 3 All. 585 a Full Bench of this High <ORG> laid down that a decree altered by agreement of parties cannot be executed as a new decree and the acquiescence of the judgment-debtor in such execution cannot stop him from objection to further execution of it. The function of an execution <ORG> is to execute the decree as it finds it and not to substitute a new decree there for even though the substitution may be with the consent of the parties. Such an agreement may be a binding contract between the parties enforceable by a separate suit but it cannot take the place of the original decree and become itself capable of execution.

25. In other cases it has been suggested that a compromise can be entertained in the course of execution proceedings much in the same manner as in a regular suit and authority for it has been sought for in <NAME> v. <NAME> [1889] 11 All. 228: vide <CITATION> A.I.R. 1927 Nag. 31 and <NAME> v. <NAME>, A.I.R. 1929 Gal. 687. But the Allahabad case was based on an interpretation of Sections 375 and 647 of the old Code, and reference was also made to Section 257-A of the Code of 1882, for which there is no corresponding provision in the new Code, The general observations made by the learned Judge were in the nature of an obiter dictum. In view of the opinion expressed by their Lordships of <ORG> in <NAME> v. <NAME> All.106 the explanation added by Act 6 of 1892 to Section 647 of the old Code has been deleted from the present Section 141. Now Order 23, Rule 4 makes Rule 3 of that order inapplicable to execution proceedings and there is therefore no obligation on an execution Court to record a compromise as it would have to do in a pending suit. It is not correct to say as was done in <CITATION> A.I.R.1921 Pat. 107 that the word "suit" in Order 23 Rule 3 was used in a broad sense as including not only the stages of suit to its termination by the decree of the first Court but as including its appellate stage and proceedings in execution of the decree made in the suit.

26. In that case a compromise was entered into in the proceedings relating to the setting aside of a sale. Without holding that the word "suit" includes an execution proceeding Order 23, Rule 3 might well have been applied with the help of Section 141, Civil P.C. In like manner Section 107(2) would apply to proceedings in appeal.

27. The line of reasoning adopted in some cases is that a compromise in an execution <ORG>; is in the nature of an adjustment within the meaning of Order 21,rule 2, and that, if certified, it can be enforced by <ORG>. But an adjustment within the meaning of that rule should be a transaction which extinguishes the; decree as such in whole or in part and; results in its total or partial satisfaction. A transaction by which parties agree to vary the mode by which the reliefs granted by the decree are to be realized in execution or vary the time when the decree becomes executable would really be a transaction attempting to vary the terms of the decree ; Mallamvia v. Ven-kappa [1885] 8 Mad. 277 and <CITATION>  28 I.C. 376 followed in <NAME> v. Ali Raja Chaudhri, A.I.R. 1928 Cal. 527. The adjustment referred to in Order 21, Rule 2, is one which completely or partially extinguishes the decree and cannot mean a compromise to give effect to the terms of which a new decree at variance with the original decree would have to be created, which will again have to be executed. An execution <ORG> has no power to alter or vary the decree under: execution, and to substitute a new decree; for it. A mere consent of the parties, cannot confer such a jurisdiction - on the; execution <ORG>.

28. Another line of reasoning adopted in some other cases is that a compromise for the payment of the decretal amount by instalment or for delivery of property is not at all a variation of the decree for money, but merely fixes a mode of satisfaction. It has therefore been assumed that where the parties agree, <ORG> has an inherent power to accept such a compromise and pass a new decree in terms of it. But the original decree which fixes no deferred date for payment or for delivery of property is. executable immediately. Where the compromise fixes new dates for payment or delivery it undoubtedly alters the time of satisfaction and therefore varies the-decree. It is not a mere case of postponement of execution which the <ORG> under special circumstances recognized by the Code of Civil Procedure can order. It is in effect the substitution of a new decree in place of the old decree which new decree will itself become capable of execution.

29. It is quite obvious that the legislature does not contemplate the prolongation of execution proceedings by successive compromises of this type being entered into at long intervals. Authority has conferred by. Order 20, Rule 11, Civil P.C., for directing payment by instalments. But unless passed at the time of the passing of the decree such, an order can be passed only on the application of the judgment-debtor with the consent of the decree-holder. Article 175 , Lira. Act, places a limitation on the period during which such an application can be made, which must be within six months of the decree. It is the duty of <ORG> not to entertain any such application for the payment of the amount of the decree by instalment, if made after the expiry of that period, even though the decree-holder is agreeable to it. Had the legislature intended that the <ORG> has always an inherent power to accept a compromise of this kind entered into between the parties, the short period of limitation would not have been prescribed.

30. In some cases the difficulty has been attempted to be got over by the supposition that where the decree directs that money be recoverable only on some failure, it is open to the plaintiff to ask the <ORG> for a declaration that the failure has taken place and for an order directing payment in consequence : <CITATION> A.I.R.1926 Mad. 20 But where the decree is self-contained, the mere fact that the contingency mentioned in it has occurred subsequently would not justify the making of a fresh executable order by the <ORG>, which had become functus officio, after the passing of the decree. Without such a fresh declaratory order, the execution <ORG> is competent to execute the decree when such contingency has happened.

31. In other cases the enforcement of a compromise between the parties has been based on the principle of estoppel. No doubt a judgment debtor can in certain circumstances be estopped from going behind his own agreement. But no one can contract himself out of the statute of limitation. Estoppel cannot be pleaded against a statutory bar of limitation. Similarly, as the Code by Section 48 prohibits the <ORG> from making any order upon an application presented. after the expiration of 12 years, the statutory obligation of the <ORG> cannot be got rid of on account of any private contract to the contrary. It will be the duty of the <ORG> to ignore the private agreement and to give effect to the statute. As was pointed out by <ORG> in <CITATION>  3 All. 585 the agreement may give rise to a separate suit, but cannot stop the judgment-debtor from objecting to the further execution of the decree. In the words of Sir <NAME> in <NAME> v. <NAME> 13 W.L.R. 101 quoted in liaghunath <CITATION>  13 I.C. 88:

a man may bind himself not to execute a decree within a certain period, but be cannot, by binding himself not to execute the decree for a certain period add to the time which the law allows him to execute it.

32. On the contrary, in some cases it has been suggested that if an order purporting to have been passed under Section 210 corresponding to Order 20, Rule 11, has been passed on an application filed more than six months after the decree it cannot be treated as an order under that section:.

inasmuch as the <ORG> on that date had no jurisdiction to pass an order under that section more than six months having elapsed from the date of the decree : Banarsi Das v. Ramzan A. I. B. 1924 hah. 342.

33. I am not sure whether the learned single Judge of this <ORG> has not taken the same view when remarking that "a subsequent order for payment by instalment can be passed by the <ORG> which gave the decree within six months and not after.

34. The correct position appears to be that although the <ORG> should not entertain an application for payment of the decretal money by instalment under Order 20, Rule 11, if made after the expiry of six months from the" date of the decree ( Art. 175 ), the order if actually passed on such a time barred application is not a nullity. Just as a decree passed in a suit which was time barred is binding on the parties, and the question of limitation is by implication deemed to have been decided against the defendant, so an order for payment by instalment is binding on the judgment-debtor. It must be assumed that the <ORG> by oversight decided the question of limitation wrongly. But a wrong decision, whether express or implied on a question of limitation doe& not oust the jurisdiction. Limitation on a question of procedure and not one of jurisdiction : <NAME> v. <NAME> 26 All. 522 The <ORG>; was seised of the case and was competent to pass orders on the application.

35.The mere fact that it overlooked the bar of limitation or acted wrongly in not applying it, would not make the order without jurisdiction. Po long as it has not been set aside, the order is binding on the judgment-debtor, and cannot be challenged by him on the ground that it was passed on a time-barred application. When the <ORG> prevents the judgment-debtor from impugning such an order it is not giving effect to any contract to get out of the law of limitation, but is enforcing the principle of res judicata against him. When the decree-holder takes advantage of such an order he is not trying to extend the period fixed in Section 48 by any contract between the parties, but he is merely urging that there is in existence a subsequent order binding on the parties, although it so happens that that order had been passed on a time barred application without any objection. A somewhat similar, though not exactly the same, view was expressed in <NAME> v. <NAME> [1904] 26 All.522 when reversing the judgment of the single Judge mentioned above. It is no doubt the duty of the <ORG> to see that no such order is passed when the application is beyond time. But when such an order ha^ been passed and remains unreversed, the judgment-debtor cannot be allowed to ignore it.

36 Although.the words in Section 48, Civil P.C., live more general, the order under Order 20, Rule 11, Civil P.C., can be passed by the original <ORG> only. Where the execution <ORG> happens to be the same <ORG> which made the decree, one need not be too technical in insisting that the order must have been pissed by the original <ORG> acting as such and not acting in the execution department. What is essential is that the intention must have boon to pass an order under Order 20, Rule 11 on the application of the judgment-debtor and with the consent of the decree-holder. Where the <ORG>s are not different, it would hardly matter how the <ORG> actually describes, itself, but the order must be intended to be an order under that rule. On the other hand, if an execution <ORG> merely records a compromise entered into between the parties, it does not necessarily pass an order of its own. "Order" is defined in Section 2 (14), as the formal expression of any decision by a civil <ORG> which is not a decree. It must therefore be the formal expression of a decision i.e., an adjudication between the parties, and not merely a mechanical recording of something which the parties want to be noted. The order must be intended to be one passed by the <ORG> imposing an obigation capable of enforcement by that <ORG>. We have therefore to see whether the <ORG> intended to make any order under Order 20, It. 11 and made one.

37. As pointed out above, when the compromise was filed in 1923, the <ORG> merely ordered that the warrant should be cancelled. The record appears to have been consigned to the record room. If the decree-holder's relief had by that time been confined to one for arrest only, that prayer was obviously disallowed, at any rate for the time being. There can also be no doubt that the <ORG> took cognizance of the original compromise which had been filed and allowed it to be placed on the record. In that sense it tacitly accepted it and even acted upon it; but in my opinion such an order was not made under Order 20, Rule 11 and cannot be treated as a subsequent order made by the <ORG> itself directing the payment of the decretal amount by instalment within the meaning of Section 48(1)(b). The decree-holder is therefore not entitled to count 12 years from this date.

38. As the operative portion of the judgment of <NAME>, J., was correct, I would dismiss the appeal ; but in the exercise of my revisional jurisdiction, I would set aside the order of the Assistant Collector on the ground of material irregularity, and dismiss the application for execution for the reasons given above.

Mukerji, J.

39. The facts involved-in this case briefly are these : a suit for profits was decreed in favour of the respondent <NAME> and against the appellant <NAME> in 1915, by <ORG>. After, some applications for execution had been made from time to time, an application was made on 21sfc March 1923. The prayer was that the property of the judgment debtor was to be attached and in case it was not found possible to realize the money in that way, he might be arrested. No list of properties to be attached was filed with the application, nor was it stated that the moveable property in the possession of the judgment-debtor, as pointed out by the decree-holder on the spot, should be attached. Instead of attachment of property warrants for arrest of the judgment-debtor were issued from time to time, and ultimately parties agreed, on 29th August 1923, that the whole of the decretal amount then due should be paid by the judgment-debtor in several six monthly instalments of certain fixed amounts and that on 15th January 1928 the judgment-debtor should pay up the balance of the decretal amount. When this compromise was filed the Assistant Collector executing the decree passed the following order:

Parties have come to a compromise. Warrant may be cancelled.

40. The instalments wore regularly paid, and on 10th January 1928 the judgment-debtor sent by money order a sum of Rs. 57-3-0 to the decree-holder as the balance of the amount due to the latter. The decree-holder refused to accept this amount on the ground which was correct, that it was insufficient and the day after the expiry of the date fixed for payment he made an application for execution. This application was presented on 16th January 1928 and prayed that the amount due might be realized by attachment and sale of property.

41. The judgment-debtor thereupon pleaded limitation as contained in Section 48, Civil P.C.

42. The learned Assistant Collector held that the judgment-debtor by raising the plea of limitation was guilty of fraud and that on that account the decree-holder's application was taken out of the purview of the 12 years' rule of limitation. He accordingly dismissed the objection and allowed 1 the execution to proceed.

43. The judgment-debtor appealed to the District Judge. The appellate Court did not agree with the Court of first instance as to its view of fraud but held that the application for execution made in 1928 might be treated as a continuation of the application of 1923 and that the latter must be deemed to have boon still pending. The District Judge accordingly dismissed the appeal, and thereupon the judgment-debtor filed a second appeal, to this Court.

44. The appeal came before <NAME>, J., and that learned Judge dismissed the appeal holding that, although the District Judge was not right in treating the application of 1923 as still pending, the case falls within the exception created in the case of fraud on the part of the judgment debtor. The learned Judge on the case of <NAME> v. Sv.roj Eunuar A.I.R. 1922 All. 145 and said:

Any action of thee judgment-debtor which puts off the decree-holder from executing his decree at once should be taken as head if the result thereof is to bar the execution of the decree under the 12 3 ears' rule By making an agreement he (judgment-debtor) derived an advantage and when he is not prepared to fulfil the agreement his conduct amounted to fraud.

45. The second appeal was dismissed and the present Letters Patent appeal has been filed by the judgment-debtor. At the outset, it seems to be clear to me that no second appeal lay to <ORG>, as the case arose out of a suit for profits heard by <ORG>. The Agra Tenancy Act, 1926 by Section 249 disallows' an appeal from an appellate order. By Section 248, Agra Tenancy Laws, an appeal to the District Judge is allowed in the case of an execution of a decree for profits, but by Section 249 no further appeal is allowed. By Section 264, Tenancy Act, 1926, the Civil Procedure Code is to apply to <ORG> with certain exceptions, and one of the exceptions is provisions inconsistent with anything in this Act, so far as the inconsistency extends. To allow a second appeal from the order of the District Judge in this case, on the ground that the order passed by the District Judge was a decree within the meaning of Section 2, Civil P.C, would be inconsistent with the clear provision of Section 249. I bold therefore that no second appeal lay to this Court. The learned Counsel for the appellant has asked us to take up the matter in revision.

46. The revisional jurisdiction of this Court over <ORG> is conferred by Section 253, Tenancy Act. It says that in cases where an appeal lay to the District Judge, <ORG> may call for the record of any suit which has been decided by a subordinate <ORG> and in such cases may pass such orders as it thinks fit. In this case an appeal did lie to the District Judge and therefore where a case falls within any of Clauses (a)(b) and (c), Section 253, a revision would be maintainable.

47. On behalf of the respondent it was argued that the order of the Assistant Collector having been confirmed by the District Judge, unless we are able to set aside the order of the District Judge also, we are not competent to interfere with the order of the Assistant Collector.

48. It does appear that <ORG> has no jurisdiction to interfere in revision with the order of a District Judge passed by him in a revenue matter, on appeal. This is due no doubt to an oversight, but the fact is there. Section 264, Tenancy Act, made Section 115, Civil P.C., inapplicable to "all suits and other proceedings" under the Tenancy Act and therefore an appellate order of the District Judge is exempted from the operation of Section 115, Civil P. C. This was held to be the case in <CITATION> A.I.R. 1926 All. 398 and also in <CITATION> A.I.R.1929 All. 735 The result is that where a Revenue Court passes a right order and on appeal the District Judge passes a wrong order, and the District Judge's Order is otherwise capable of being revised by this Court, the District Judge's order cannot be touched.

49. It however does not follow that because the District Judge's order cannot be touched in revision the order of the sub-ordinate <ORG> cannot be touched simply because it has been affirmed by the District Judge on appeal. Section 253, Tenancy Act, does not say that to enable <ORG> to interfere, it is necessary that there should be no appeal from the order of the <ORG>. All that is needed is that the matter before the <ORG> should be appealable to the District Judge.

50. In numerous cases decided by this Court it has been held that <ORG> could interfere with the order of the first Court, although the same may have been affirmed by the lower appellate Court, in the exercise of <ORG>'s revisional powers under Section 525 of the old Act and Section 115 of the new Act of 1908 (Civil Procedure Code ). One of these cases is a Full Bench decision of this Court and will be found reported in <CITATION> liai  8 All. 111 . Another case and a more recent one is <NAME> v. Bam Bliarose A.I.R.1925 All. 182 I hold that a revision is maintainable.

51. The next question is whether the matter before us is a fit one in which we should interfere; in other words, whether the case falls within any of Clauses (a),(b) and (c), Section 253 , Tenancy Act. In my opinion the case falls under Clause (c). The learned Assistant Collector has not found as a fact that at any time prior to the lapse of 12 years from the date of the decree the judgment-debtor by fraud prevented the execution of the decree. If he had found on evidence however flimsy that such was the case, there would have-been no case for <ORG> for interference. But what the Assistant Collector found was that the very act of, raising the plea of limitation was a fraud on the part of the judgment-debtor. If it was, that act was committed more than 12 years after the date of the decree. There can therefore be no doubt that the Assistant Collector acted with material irregularity in the exercise of his jurisdiction and therefore his order is liable to revision.

52. Now I come to the question whether the compromise which was entered into by the parties on 29th August 1923 was in the nature of a subsequent order" within the meaning of Clause (b), Section 48 , Civil P. C. By Section 48 no application for execution shall be entertainable by a <ORG> executing a decree, if it was made more than 12 years after the date of the decree or more than 12 years after the date fixed for payment by the decree or by any subsequent order.

53. But before I take up this question I would like to say one word about an argument which prevailed before the learned District Judge and which was. reiterated before us. The question is whether the application of the decree-holder made on 16th January 1928 can in any way be treated as a continuation of the previous application of 29th August 1923. I have already pointed out that the previous application, although it was for attachment of property and arrest, did not contain any list of property to be attached and was continued and prosecuted as an application for arrest. No less than four warrants for arrest were issued one after another and that on the filing of the compromise, the proceedings were allowed to be dropped. In his present application, dated 16th January 1928 the decree-holder stated that his previous application of 29th August 1923 was one for the arrest of the judgment-debtor. This was a correct statement of the circumstances, and it is not right on his part now to say that he made a misstatement of fact.

54. Before going back to the question what is meant by a "subsequent order" as the expression is to be found in Section 48 , I might dispose of another small point, namely, whether we are to treat or not the order of 29th August 1923 as an order accepting the compromise and thereby directing payment of money on certain dates. On this point I am of opinion that, although the learned Assistant Collector does not in so many terms say that the judgment-debtor is to pay the decretal amount on the date fixed in the compromise, yet when he accepted the compromise and cancelled the warrant, he tacitly, at any rate, directed that the terms of the compromise should be carried out.

55. Now I go back to the interpretation of the expression "subsequent order."

56. The principal question that arises is whether an order, passed by an execution <ORG> as such, by which it accepts, as in the present case, a compromise and directs that the terms of the compromise should be carried out and orders the judgment-debtor to pay the decretal amount on the dates fixed, amounts to or not a subsequent order within the meaning of Section 48 . On principle it is abundantly clear that an execution <ORG> cannot go behind the decree and cannot alter it. By the provisions of Order 20, Rule 3, a judgment, when once pronounced and signed, cannot be afterwards altered or added to except as provided by Section 152 or on review. The action of the executing <ORG> cannot come within the provision of Order 20,Rule 3 and therefore it is not competent to alter the terms of a decree. Where the decree says that a certain sum of money is to be paid at once, it will not be open to an executing <ORG> to say that the decretal amount shall be paid in a different way, i.e., by instalments and on dates convenient to the judgment-debtor. Even whore the decree-holder and the judgment-debtor come to terms, neither of thorn has the power to so contract as to supersede the rule of limitation or to extend it. The judgment-debtor, in the case of a contract otherwise valid, may be estopped. I do not decide that he is estopped from pleading that he is not bound by the compromise. But where the result of a compromise is that the limitation provided by the law is extended, it is open to the judgment-debtor to plead that the decree-holder's application is barred by limitation. This was held in <CITATION> [1851-54]5 M.I.A.43 : see observations at p.70.

57. On general principles therefore an executing <ORG> as such cannot make an order which would operate as a "subsequent order directing payment of the decretal amount on a certain date."

58. One illustration of a " subsequent order" mentioned in Section 48 will be found in the provision of Order 20, Rule 11, sub-Rule (2) by which, after the passing of a decree for payment of money, the <ORG>, on the application of the judgment-debtor and with the consent of the decree-holder, may direct the payment of the decretal amount by instalments. But for the purpose of such an order, the parties must go to the <ORG> which passed the decree and within six months of the making of the decree, as provided by Article 175 , Schedule 1, Lim. Act. It may be that where the parties approach the <ORG> which passed the decree after six months and the delay is overlooked by the parties and the <ORG> and then an order as contemplated by Order 20, Rule 11, is passed and is not set aside on appeal the order will be binding on the parties on the ground of res judicata; but that is not the case here. In this case it cannot be pretended that the parties were approaching the <ORG> to exercise its powers under Order 20, Rule 11, Civil P.C., even if we assume that the Assistant Collector's <ORG> was the very <ORG> which had made the decree for profits in 1915.

59. I am of opinion therefore that on principle the subsequent order must be an order made by the <ORG> which passed the decree and not an order made in the course of execution.

60. The view taken by me is the view that has always been held in this Court with some exceptions which were due to the existence in the Code of Civil 33rocedure of 1882, a section, namely, 257 (a), and to the fact that at one time execution applications were treated as miscellaneous applications to which rules as to trial of suits applied. But Section 257 (a) is no longer the law, and Order 23, Rule 4 clearly states that the rule as to withdrawal and adjustment of suits does not apply to proceedings in execution of a decree or order. The decision of Mali mood, <NAME> in <NAME> v. <NAME> All. 228 is one of the few exceptions I have in mind. On the other hand, the cases in <NAME> v. <NAME>  3 All. 585 and <CITATION>  40 All. 198 show that the view taken by me was the view that prevailed in this Court.

61. No useful purpose will be served by examining the cases decided by other Courts, but it will be enough to examine two oases which were decided after the pissing o£ the Civil Procedure Code, 1908.

62. One of these cases is <CITATION> , A.I.R, 1929 Cal. 687. With all respect I am unable to agree with the view laid down in the case. It seems to have been held there that by a compromise entered into in the execution department a decree is substituted for the original decree, and the so called substituted decree may be executed as if it were the decree originally passed.

63. The second case is <CITATION> a.i.r. 1925 Bom. 503 In this case the learned Judges do not give sufficiently convincing reasons for holding that an order passed by an execution Court may be a subsequent order within the moaning of Section 48 , Civil P.C.

64. Before leaving the case, I might notice the last argument of the learned Counsel for the respondent, namely, in the case of a decree directing delivery of property what would be a subsequent order within the meaniug of Section 48 , if it be not an order made in the execution department. For reasons already given, I am clear that an order made in the execution of a decree cannot be a subsequent order within the meaning of Section 48 . Section 151 , Civil P.C., allows the <ORG> to make such orders as may be necessary in the ends of justice, and it is conceivable that there may be a case in which, in the exercise of its inherent jurisdiction as recognize: by the said Section 151 , a <ORG> may direct a certain property to be delivered at a date other than the date already fixed by the decree passed. Then again the <ORG> is always entitled and authorized to correct clerical and arithmetical mistakes in judgments and decrees, and a decree when properly corrected may fix a date for delivery of property other than the date originally contained in the decree. These are possible cases that occur to me now and there may be other cases.

65. In the result, I would set aside the judgment of <NAME>, J., on the ground that; he had no jurisdiction to hear the appeal, upholding his decree dismissing the appeal to <ORG>, take up the case in revision and setting aside the order of execution passed on the respondent's application of 16th January 1928, would direct the said application to stand dismissed. In the circumstances of the case, I would direct that the parties should pay their own costs throughout.

Boys, <NAME>

66. I have had the advantage of seeing the judgment of my brother <NAME>, J., and as I am in practical agreement with him, it is not necessary for me to discuss every point. The facts are very fully set out in the judgment of my brother, and there is only one further fact to which I shall have to refer later.

67. On the first point that no appeal lay to this Court I agree. On the next point as to whether a power of revision is limited to Section 253 , Tenancy Act, or whether we can also act under Section 115 , Civil P.C., T agree that our powers are limited to Section 253 . This is not a conclusion which can he regarded as satisfactory, but the difficulty arises from the wording of Section 253 , an oversight by the legislature. To apply Section 253 literally and excluding Section 115 , Civil P.C., involves three undesirable results:

68. Firstly, treating the section literally, it is applicable to all cases where an appeal lies to the District Judge, whether an. appeal has actually been filed or not. Where an appeal has in fact been filed, the section give us no power to revise the order of the District Judge, but does give <ORG> power to revise the order of the subordinate <ORG>, in this case <ORG>. If we exercise that power and find ground within Clauses (a), (b) or (c) to set aside the order of the subordinate <ORG>, we cannot set aside the order of the District Judge in appeal. If has to be left in the air and assumed to be a nullity by implication. While this is unsatisfactory, it cannot perhaps be said to do much harm.

69. Secondly, where the trial <ORG> was wrong within the meaning of Clauses (a)(b) or (c), Section 253 , but the District Judge deciding the case on different grounds was right his reasoning being unassailable. Here logically the subordinate <ORG>'s order being the only one which we could consiler, and being one which ought to be set aside, it cannot be set aside without also automatically rendering the order of the District Judge a nullify. This difficulty might be avoided by refusing to exercise the revisional power, which is discretionary. But this could hardly be regarded as a satisfactory solution.

70. The third difficulty that arises is more serious. A case can easily be imagined where the subordinate <ORG> was absolutely right and its decision has been set aside in appeal-the District Judge being hopelessly wrong. We can, on the hypothesis we are considering, set aside the order of the trial Court; but it is right and does not require to be set aside, while we cannot touch the order of the District Judge though it is very wrong, wrong actually within Clauses (a)(b) or (c), Section 258 .

71. I have endeavoured to state these difficulties in their degrees of increasing gravity. Taken as a whole, the result, in my view, should be to incline the <ORG> strongly, if there was room for the view, to hold that power with it to act under Section 115 , Civil P. C, but that power is excluded by Section 264 and Schedule 2, list 1, Tenancy Act, for it is impossible, without undue straining of language, to hold that an appeal" is not a "proceeding." No other view therefore is possible than that our revisional power is restricted to Section 253 , Tenancy Act, and further it is clear that we have power to revise under Section 253 the order of the Assistant Collector, an if we did so revise it, the order of the District Judge in appeal can only be treated as a nullity.

72. As to whether there are grounds for our interference, 1 agree with my brother that the Assistant Collector did not in fact find that any fraud was committed within the period of 12 years. It is clear that the point did not occur to him. He uses the phrase:

The decree-holder never knew that the judgment-debtor will in the end take such a plea.

73. The words "never knew" clearly refer to the point of time at which the compromise was being entered into. The words "will in the end take such a plea" clearly refer to a point of time after the lapse of the 12 years. No other view, then, is possible but that he did not in fact find fraud to have been committed before the lapse of 12 years.

74. As to the order of the Assistant Collector of 29th August 1923, which states that a compromise has been arrived at and the warrant may be cancelled, I would hold that this did not amount to an order substituting the compromise for the rights which the decree-holder had under the decree standing by itself. The order is itself ambiguous, and I think that as we shall be holding in this case that <ORG> has no power to vary the terms of the decree, we should not assume that the Assistant Collector was passing an order which he had no power to pass, unless his action is capable of no other interpretation. In the present case the essential thing, so far as he was concerned, was that he was been asked to withdraw the warrant;. It may well, have been his attitude, and the subordinate <ORG> have not too much time for debating refinements:

Very well, if you both say you have compromised I am prepared to withdraw the warrant.

75. I do not think that the facts or the language of the order justify us in holding that lie considered himself to be substituting, or can be held to have substituted, the compromise for the decree. I think therefore that he did not pass any order, and the question whether he would have power to pass such an order so as to extend the period of limitation under Section 48 , Civil P.C., does not arise. But I would add that if it be treated as an order, I agree that <ORG> has no power to pass such an order.

76. There is only one further point to which 1 need briefly, refer, and that is the question whether the proceeding of 16th January 1928, was merely a continuation of the original application of March J923, or whether that application had finally terminated on 29th August 1923, and the application of 16th January 1928 was an entirely new proceeding. I should be disposed to hold that the second was a continuation of the first application, and I would not hold the decree-holder too literally bound by the phraseology of the application of 16th January 1928. But it is unnecessary for me to consider this point further because while it has been urged before us, it does not appear to have been ever hinted at by the decree-holder at any earlier stage of the proceedings. I agree with the order proposed by <NAME>, J.

77. We dismissthe appeal, but in the exercise of our revisional jurisdiction we set aside the order of the Assistant Collector dated 24thFebruary 1928, and dismiss the application for execution. In the circumstances of this case we direct that the parties should bear their own costs throughout.


JUDGMENT <NAME>, J.

1. The learned judge set out the statement of the case which ran as follows] - The assessee is a public limited company which owns tea. Coffee and rubber plantations. The assessee further manufactures plastic bags and polythene pipes that are used for spraying, etc. The assessment year is 1966-67 for which the corresponding account year is the year ended March 31, 1966.

2. The assessee claimed a deduction of an amount equal to 8% of the profits which were attributable in respect of an activity mentioned in The 5th Schedule to section 80E of the Income-tax Act.

3. The profits attributable to the business of tea plantation amounted to Rs. 1,18,214. On this amount the assessee claimed a deduction equal to 8%. The relief claimed by the assessee worked out to Rs. 9,457. As against this the Income-tax Officer, however, allowed only a sum of Rs. 5,608. The relief as claimed by the assessee and the relief admissible as per Income-tax Officer is as unde :

Item Appellant's Working ------------------------------------------------------------------- Rs. Tea income liable to charge 1,18,214 Les : Relief under section 80E @ 8% 9,457 ---------- 1,08,757 Les : Loss in plastic business 48,105 ---------- Rs. 60,652 ---------- The Income-tax officer's working is as unde : ------------------------------------------------------------------- Item Income-tax Officer's Working ------------------------------------------------------------------- Rs. Tea income liable to charge 1,18,214 Les : Loss in plastic business 48,105 ------------ Balance 70,109 Les : Relief under section 80E @ 8% 5,608 ------------ 64,501 ------------ In so arriving at the amount of relief the Income-tax Officer has deducted from the tea business profit of Rs. 1,18,214, the amount of Rs. 48,105 which was the loss incurred by the assessee in its plastic manufacturing business.

4. The assessee felt aggrieved by the order of the Income-tax officer and took up the matter in appeal before the Appellate Assistant Commissioner. It was, inter alia, contended that under section 80E the assessee was entitled to a deduction at the rate of 8% from the profits and gains of an activity specified in the list in the 5th schedule. The said deduction is not on the total income as determined, but is restricted to the profit which is attributable to the activity as specified in the 5th Schedule. Reliance in this context was placed on the decision of <ORG> in the case of <NAME> case their Lordships were concerned with the dividend that was declared by a company which was entitled for a relief under section 15C on the shareholder's assessment. He thus considered that the ration of the ratio of the decision was not applicable to the facts of the present case, in his view the nearest case in point was that of <ORG>, decided by <ORG> which appear at page 134 and which are as unde :

"Apparently, by enacting section 15C the legislature has not prescribed for exclusion of a percentage from the head of profits of a new industrial undertaking in the computation of total income but has merely provided a partial exemption from payment of tax by newly established undertakings and, in the natural sequence of computation of tax, the amount of losses carried forward is liable to be deducted out of the income of the year of account and it is only after the question of tax is ascertained, exemption from payment to the prescribed extend will be given by the taxing authorities."

5. The Appellate Assistant Commissioner considered that section 80E(1) specifically provided that before allowance was made under this section the total income should be computed as in accordance with the other provisions of the Act. The total income, according to him, is computed by aggregating the profits and losses of different businesses carried on by an assessee. Section 80E(1) , in his opinion, provides, as it does. That every allowance has to be made first and thereafter the allowances under section 80E(1) are taken into consideration. In that view of the matter, he confirmed the order of the Income-tax Officer.

6. The assessee came up in further appeal before <ORG>. It was contended that deduction under section 80E at 8% of the profits and gains attributable to the manufacturing business should have been accorded. The Income-tax Officer's action in deducting from the income attributable to an activity specified in the 5th Schedule of a loss from another activity not mentioned therein could not be justified on any grounds. It was further contended that for the purpose of deduction under section 80E profit of the tea business as determined under the Income-tax Act should have been considered and not the net income after setting off the losses from another business.

7. <ORG> examined the position. In this context it referred to the provisions of section 80E which are in the following term :

"80E. Deduction in respect of profits and gains from specified industries in the case of certain companies. - (1) In the case of a company to which this section applies, where the total income (as computed in accordance with the other provisions of this Act) includes any profits and gains attributable to the business of generation or distribution of electricity or any other from of power or of construction, manufacture or production of any one or more of the articles or things specified in the list in the Fifth Schedule, there shall be allowed a deduction from such profits and gains of an amount equal to eight per cent. thereof, in computing the total income of the company."

In the opinion of <ORG> the opening words of this section provide for the computation of the assessee's total income in accordance with the various provisions of the Act. The section further postulates that if such a total income includes any profits and gains attributable to the business of generation or distribution of electricity or any other form of power or of construction, manufacture or production of any one or more of the articles or things specified in the list in 5th Schedule, there shall be allowed a deduction from such profits and gains of an amount equal to 8% thereof in computing the total income of the company. In the opinion of <ORG> the words "such profits" refer to the profits and gains attributable to the activities enumerated in the section itself and specified in the list provided in the 5th Schedule annexed to the Act. A reading of the section clearly pointed to this interpretation.

8. The decision relied upon by the learned departmental representative was distinguished on the ground that it was in connection with the operation of a provision which did not create such a differentiation. Section 15C of the Indian Income-tax Act, 1922, and section 80E , in the opinion of <ORG>, had no similar connotation. It affirmed the fact that in computing the total income liable to tax various factors have to be taken into consideration. In the ordinary course, in computing the total income the losses arising t an assessee from another business have to be given allowance for. As, in this case, the section itself provided for relief in respect of activities enumerated in the section and the Schedule annexed thereto, the deduction of an allowance of 8% was provided from the profits of the very same activity. It accordingly was of the opinion that deduction had to be made on such profits which were attributable to such an activity. In that view of the matter, <ORG> held that the assessee was entitled to a relief of Rs. 9,457 and not Rs. 5,608 as accorded to it by the Income-tax Officer.

9. From the aforesaid order of <ORG>, the following question of law arise :

"Whether, on the facts and in the circumstances of the case, the <ORG> was justified in holding that for the purpose of allowing a deduction under section 80E of the Income-tax Act, 1961, the words 'such profits' occurring in that section mean 'the profits and gains attributable to an activity as specified in the 5th Schedule' before deducting any loss incurred in any business activity ?"

10. This is a reference under section 256(1) of the Income-tax Act, 1961, hereinafter called "the Act". In relates to the assessment year 1966-67.

11. The assessee is a limited company which owns tea, cuffed and rubber plantations from which it derived income during the relevant accounting year. It also carries on the business of manufacture of plastic bags and polythene pipes used for spraying, etc. The assessee derived an income of Rs. 1,18,214 from the tea plantation industry which is a "priority industry" entitled to the benefits of section 80E of the Act as it stood during the relevant assessment yea. The <ORG> incurred a loss of Rs. 48,105 from its business of manufacture of plastic bag's and polythene pipes. Section 80E of the Act as it stood at the relevant period allowed to an assessee a deduction of 8 per cent. of the profits and gains attributable to the priority industry, accordingly, the assessee claimed a deduction of Rs. 9,457 computing the deduction at 8 per cent. on the aforesaid profit of Rs. 1,18,214. According to the Income-tax officer, the loss of Rs. 48,105 has to be deducted for the profit or Rs. 1,18,214, and the deduction at 8 per cent. has to be computed on the balance some of Rs. 70,109 only which works out at Rs. 5,608.

12. Appeal preferred by the assessee to the Appellate Assistant Commissioner was unsuccessful. Then a second appeal was taken before <ORG>, Bangalore Bench, in I.T.A. No. 15079 of 1967-68. The <ORG> agreed with the contention of the assessee and allowed the deduction of Rs. 9,457 under section 80E of the Act. Then the department obtained a reference to this court of the following question of la :

"Whether, on the facts and in the circumstances of the case, the <ORG> was justified in holding that for the purpose of allowing a deduction under section 80E of Income-tax Act, 1961, the words 'such profits' occurring in that section mean 'the profits an gains attributable to activity as specified in the 5th Schedule' before deducting any loss incurred in any business activity ?"

13. Sri <NAME>, learned counsel for the department, conceded, and in our opinion rightly, that the decision of <ORG> in <CITATION> ., on which strong reliance was placed by the department before the <ORG>, has no relevance to the facts of the present case. The learned counsel on both sides submitted that there is no decision of any court on the question before us. The answer to the question rests on the interpretation of subsection (1) of section 80E which was introduced by the Finance Act of 1966. The said section has now been replaced by section 80-I . Sub-section (1) of section 80E reads thu :

"80E. Deduction in respect of profits an gains from specified industries in the case of certain companies. - (1) In the case of a company to which this section applies, where the total income (as computed in accordance with the other provisions of their Act) includes any profits and gains attributable to the business of generation or distribution of electricity or any other from job power of the articles or things specified in the list in the Fifth Schedule, there shall be allowed a deduction form such profits and gains of an amount equal to eight percent. thereof, in computing the total income of the company."

14. Briefly state, the argument of <NAME> was that the effect of this provision it that the deduction under section 80E will be allowed from the profit from the specified priority industries as computed after allowing all the deduction admissible in computing the business income under sections 30 to 43 of the Act, and also after giving effect to the relevant provisions for set-off or carry-forward of loss contained in Chapter VI of the Act. According to him, the first stage is the computation of the "total income" in accordance with the provisions of the Act. "Total income" has been defended in section 2(45) . Section 4 which is the charging section leaves tax off the "total income" of the previous year of every person, section 5 states the scope of total income. Section 14 classifies all income in under one head. Section 28 states what all income falls under the head "profits any gains of business or profession". Section 28 states what the income falls under the head "profits and gains of business or profession". Section 29 accordance with the provisions contained in sections 30 to 43A . Sections 70 to 72 provide for set-off of loss or carry-forward of loss. Section 80E is found in Chapter VI-A under the head "other deductions" to be made in computing the "total income".

15. <NAME> invited our attentions to paragraph 27 of Circular No. 4-P (LXXVI-61) of 1966 dated July 21, 1966, issued by <ORG>. It read :

(27). It will be observed that the deduction under section 80E referred to above is allowable in computing the profits and gains from the specified priority industries INCLUDED IN THE TOTAL INCOME 'AS COMPUTED IN ACCORDANCE WITH THE OTHER PROVISIONS' of the Income-tax Act . The effect of this provision is that the deduction under section 80E will be allowed from the profits from the specified priority industries, as computed AFTER allowing all the deductions admissible in computing the business income under sections 30 to 43 of the Income-tax Act, and also after giving effect to the relevant provisions for set-off or carry-forward of loss, Contained in Chapter VI of that Act. The business income of a company may consist of profits from the specified priority industriest as well as profits from other business activities, and the company may also have a loss in the same previous year under a head of income other than 'profits and gins of business or profession' or a business loss carried forward from earlier years and eligible for set-off against the business profits of that previous year. In such a case, a question may arise as to whether the loss of the relevant previous year under a head other than 'Profits and gains of business or profession' or the business loss carried forward from earlier years should be set off on a proportionate basis, both against the profits from the specified priority industries and the profits from other business activities. If the loss is set often a proportionate basis the quantum of the deduction available in respect of the former profits under section 80E of the Income-tax Act may be reduced to the disadvantage of the company. The Income-tax Act does not, however, provide for the set-off of losses on a proportionate basis against income from different types or categories of business activities. It will, therefor, be permissible for the company to claim that the loss should be set off, in the first instance, against its business profits other than profits from the specified priority industrious and as to the balance, if any, against its profits form the specified priority industries."

16. We are unable to agree with the views of <ORG> that the effect of the provision is that the deduction under section 80E will be allowed from the profits from the specified priority industries, as computed after allowing all the deductions admissible in computing the business income under section 30 to 43 of the Act. If that was the intention the legislature, sub-section (1) of section 80E would have stated that the deduction shall be made after allowing all the deductions admissible in computing the business income index sections 30 to 43 of the Act. On the contrary, the sub-section states that the deduction shall be allowed from the profits and gains of the priority industry of an amount equal to 8 per cent. thereof in computing the total income of the company.

17. The first pre-requisite condition in order to entitle the assessee to the benefits of section 80E is that income as computed in accordance with the provisions of the Act should include any profits and gains attributable to the business of a priority industry. The quantum of deductions 8 per cent. of the profits and gains attributable to the business of a priority industry and the deduction has to be made in the process of computing the total income of the company.

18. If the contention of <NAME> were to be accepted, in the illustration given in paragraph 27 of the circular referred to above, it would be open to the assessing authority to deduct the whole of the loss from the profits and gains of the business from the specified priority industry and the assessee cannot insist that the loss should be set off in the first instance against its business profits other than the profits from specified priority industries.

19. The language of the provision is clear and the view taken by the <ORG>, in our opinion, is right. Accordingly, we answer the question referred in the affirmative and against the department. The assessee is entitled to the costs of this reference.

20. Advocate's fee, Rs. 250.

21. Question answered in the affirmative.


PETITIONER: <ORG> Vs. RESPONDENT: THE COMMISSIONER OF INCOME-TAX,WEST BENGAL DATE OF JUDGMENT: 16/03/1959 BENCH: <NAME>, M. BENCH: <NAME>, M. SINHA, BHUVNESHWAR P. KAPUR, J.L. CITATION: 1959 AIR 771 1959 SCR Supl. (2) 355 CITATOR INFO : D 1960 SC1016 (16,18) R 1961 SC1233 (7,10) F 1975 SC2016 (13,21) ACT: Income-tax-Company carrying on business in England and India-Refund of excess Profits tax paid in England-If can be taxed in India-Indian Finance Act, 1946, s. 11(4). HEADNOTE: The appellant carried on business in England and in India. For the previous years it paid excess profits tax in both countries and it obtained deduction of the amounts so paid from its profits and gains for the purposes of the Indian Income-tax Act . In the assessment year 1947-48 it obtained a repayment of RS. 2,31,009 out of the excess profits tax paid in England. The Income-tax authorities acting under S. 11(14) , Indian Finance Act 1946, included this amount received in England in the taxable profits of the appellant. The appellant contended that the repayment not being within the taxable territory it could not be taxed. Held, that the amount received as repayment of the excess profits tax was rightly taxed. Under S. 11(14) the amount of repayment was deemed to be 'income' for purposes of the Indian Income-tax Act and that ' income ' was to be treated as the income for the previous year during which the repayment was made. Section 11(14) created a liability irrespective of the considerations arising from the general provisions of the income-tax law. The distinction between incomes within and without taxable territories was made unnecessary by S. 11(14) . <ORG> v. <NAME>, (1924) 9 Tax Cas. 92; <ORG> v. <NAME>, (1926) " Tax Cas. 217 and Kirke's Trustees v. <ORG>, (1926) 11 Tax Cas. 323, applied. JUDGMENT:

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 265 of 1956. Appeal from the judgment and order dated August 26, 1954, of <ORG> in Income-tax Reference No. 107 of 1952.

<NAME>, <NAME> and <NAME>, for the appellants.

<NAME>, Solicitor-General of India, <NAME>, <NAME> and <NAME>, for the respondent.

1959. March 16. The Judgment of the Court was delivered by <ORG>, Calcutta (hereinafter called the <ORG>) is a <ORG> incorporated in the United Kingdom. Its head office is also there. It, however, does business in India also. In some of the previous years, the <ORG> was required to pay excess profits tax both in England and in India. When it did so, it obtained deduction of the amounts from its profits and gains for purposes of the Indian lncome-tax Act, under s.12(2) of the Indian Excess Profits Tax Act. In the assessment year 1947-1948 which corresponded to the accounting year of the <ORG> ending on October 31, 1946, 'it obtained a repayment of Rs. 2,31,009 out of the excess profits tax paid in England. This was under s. 28(1) of 4 & 5, Geo. VI, Ch. 30. For purposes of the levy of the Indian Income-tax, this sum was included in the taxable profits of the <ORG> by the Income-tax Officer. He purported to act under s. 11(14) of the Indian Finance Act, 1946 (hereinafter called the Act). The income of the <ORG> in India was held to be Rs. 6,34,937 (including the sum of Rs. 2,31,009) while the in-' come outside the taxable territory was held to be Rs. 4,29,620. Applying s. 4A(c)(b) of the Indian Income-tax Act, the Income-tax Officer assessed the <ORG> on its total world income.

The appeals of the <ORG> - made successively to the Appellate Assistant Commissioner and <ORG> were dismissed. The <ORG>, however, referred the following questions of law to <ORG> at Calcutta under s. 66 of the Indian Income-tax Act:

"(1) Whether on the above facts and circumstances of this case the <ORG> was right in holding that the sum of Rs. 2,31,009 was income of the assessee during the assessment year under consideration and was liable to be assessed under the Indian Income-tax Act ? and (2)If so, whether this amount could not be taken into consideration for determining the residence of the assessee under s. 4A(c)(b) of the Indian Income-tax Act ? " This reference was heard by <NAME>, C. J., and <NAME>, J., who by their judgment dated August 26, 1954, answered the first question in the affirmative and the second in the negative. They, however, granted a certificate under s. 66A of the Indian Income-tax Act, read with Art. 135 of the Constitution to appeal to this Court. No appeal has been filed on behalf of the <ORG>, and the second of the two questions must be taken to be finally settled in this case. The contentions of the <ORG> in this appeal, thus, concern only the first question, and they are two: It was said firstly that s. 11(14) of the Finance Act could not be made applicable to the assessment year 1947-1948, because the provision was not incorporated in the Indian Income-tax Act or repeated in the subsequent Finance Act s. This argument was not seriously pressed before us, and beyond mentioning it, Mr. <NAME> for the <ORG> did not choose to elaborate it. We think that Mr. <NAME> has been quite correct in not pursuing the matter. The section framed as it is, does apply to subsequent assessment years just as it did to the assessment for 1946-1947, and prima facie, it was not necessary to follow one of the two courses detailed above. Since the point was not pressed before us, we need not give our reasons here.

It was said nextly that <ORG> was in error in construing s. 11(14) of the Finance Act as a provision which created a liability proprio vigore, as if it was a charging section. It was contended that the repayment was not within the taxable territory, and in view of the answer to the second question as to the applicability of s. 4A(c)(b) , there could be no tax upon it. On behalf of the <ORG> it was argued that the sub-section created a charge by itself and the fiction therein created being sufficient and clear, it was not necessary to consider where the income arose.

Section 11(14) of the Finance Act reads as follows: " Where under the provisions of sub-section (2) of section 12 of the Excess Profits Tax Act, 1940 (XV of 1940), excess profits tax payable under the law in force in the United Kingdom has been deducted in computing for the purposes of income-tax and supertax the profits and gains of any business, the amount of any repayment under sub-section (1) of Section 28 of the Finance Act, 1941, (4 & 5, Geo. 6, c. 30), as amended by Section 37 of the Finance Act, 1942 (5 & 6, Geo 6, c. 21), in respect of those profits, shall be deemed to be income for the purposes of the Indian Income- tax Act, 1922, and shall, for the purpose of assessment to income-tax and super-tax, be treated as income of the previous year during which the repayment is made." This section may be compared with R. 4(1) of the Rules which are applicable to cases 1 and 11 of sch. D of the Income-tax Act, 1918 (8 & 9, Geo. V, c. 40):

" Where any person has paid excess profits duty, the amount so paid shall be allowed as a deduction in computing the profits or gains of the year which included the end of the accounting period in respect of which the excess profits duty has been paid; but where any person has received repayment of any amount previously paid by him by way of excess profits duty, the amount repaid shall be treated as profit for the _year in which the repayment is received." The English rule above quoted deals first with the deduction of the amount paid as excess profits duty from the profits or gains of the year which includes the end of the accounting period in respect of which the excess profits duty has been paid a matter dealt with in s. 12(2) of, the Indian Excess Profits Tax Act, and next with the assessability to tax of the amount repaid from the excess profits duty previously charged -a matter dealt with in sub- ss. (11) and (14) of s. 11 of the Finance Act. The object and purpose of the legislation in each case is the same, and though the two provisions are not ipsissima verbal they are substantially in the same words and also in pari materia. The concluding words of the English rule " the amount repaid shall be treated as profits of the year in which the repayment is received ", and which have been interpreted by <ORG> may specially be compared with the concluding words of sub-s. (14) of s. 11 of the Finance Act, which run: " any repayment...... shall, for the purposes of assessment- to income-tax and super-tax, be treated as the income of the previous year during which the repayment is made." There can be no doubt that the intention underlying the two provisions is the same, and the language is substantially similar.

Now, the English rule was interpreted by the English Courts to create a liability irrespective of considerations arising from the general provisions of the income-tax law. In <ORG> v. <NAME> (1), the assessee company which had gone into voluntary liquidation in 1904 was carried on by the liquidator till 1921 when the business was sold to another company which took it over on October 5, 1921, and the business of the appellant company then ceased. The income-tax assessment for the year 192122 was apportioned between the two companies and inasmuch as the assessee company had suffered a loss, it was reduced to nil in its case. The assessee company then received pound, 7,224 and pound, 1,150 in 1952 after it had ceased to carry on business as repayments of excess profits duty, and this income was assessed under R. 4(1) above mentioned. The question was whether this was right.

The case was considered by the Lords of <ORG>, and they are their opinion against the assessee firm. The Lord President (<NAME>) with whom Lords <NAME>, <NAME> and <NAME> agreed (Lord <NAME> dubitans) explained the two parts of the rule as follows:

" The principle is obvious. It is that if a taxpayer has made profits assessable (directly, or indirectly through the operation of the three years' average) to income tax, and

-the <ORG> takes a share of those profits in the name of Excess Profits Duty, it is only fair that the profits actually assessed to Income Tax should suffer some corresponding deduction..........."

(1)(1924) 9 Tax Cas. 92, 98.

The problem which arose in the case of repayment of Excess Profits Duty was different. Nobody knew or could know how soon, or how late, repayment might fall to be made; nor whether the business whose profits were assessed to Excess Profits Duty would be in the same hands when repayment (if any) came to be made. By that time the business might have ceased to be in existence. Repayment might therefore have to be made to a person who was not carrying on the original business. The original trader might have given up business, died, and an executor might have come in his place. The solution provided for all these cases is that contained in the second part of the paragraph, according to which the amount repaid to any person is to be I treated as profit for the year in which the repayment is received.' It is obvious that the amount of the former trading profits so repaid could not actually be trading profits for such year. None the less, the amount repaid is to be treated as if it were that which-in fact-it is not, and cannot be. The amount repaid consists of trading profits which reach the taxpayer out of their proper time. However belated his fruition of them, they have not lost their original character as trading profits. In my opinion, this is what explains the position of paragraph (1) of Rule 4 as part of the Rules under Cases I and 11 of Schedule D, which are concerned with the profits of trades and vocations. That some artificial rule should be formulated was in the circumstances inevitable, and the highly artificial character of the rule adopted is shown by the words in which it is expressed-, the amount repaid shall be treated as profit for the year in which the repayment is received. In short, the amount repaid is deemed to be something that it is not, and could not in the actual circumstances possibly be. Nor is this in any way unreasonable or contrary to what might be expected, if regard be had to the subject-matter. For, as has been seen, the Excess Profits Duty was itself a part of the trading profits computed by methods familiar under the Income Tax Act . It was not merely a part of something which entered into the computation of profit; it was actual computed profit. And, but for the disparity between the ' accounting period' and the three years' average, it would have been directly assessable to Income Tax." A similar view was taken in <ORG> by Lord <NAME>, M. R., <NAME>, L. J., and <NAME>, J. (<NAME>, L. J., dubitans) in A. & W. Nesbitt Ltd. v. <NAME> (1). There too, the assessee company after suffering losses in the accounting period May 1 to November 25, 1920, went into liquidation and ceased to trade. On April 22, 1924, the repayment of Excess Profits Duty took place, and this was assessed to income-tax. The Master of the Rolls described the amount received as repayment in these words: " But in respect of what is that payment made ? It is not a legacy, it is not a sum which has fallen from the skies ; it, is a sum which is repaid because there was too large a sum paid by the <ORG> to the Revenue Authorities over the whole period during which Excess Profits Duty was paid, and that sum means and is intended to represent a repayment of a sum which was paid by them in respect of the duty charged upon the excess profits of their trading. It comes back, therefore, not having lost its character but being still the repayment of a sum-too much, it is true,-but a sum taken out of the profits which were made by the <ORG> in the course of its trading, profits which at the time they were made were subject to Income Tax and subject to Excess Profits Duty, and that is the character of the repayment that has been made."

Dealing with the rule, the Master of the Rolls observed : "I have pointed out, this is a case where the Company has received payment of an amount previously paid by way of Excess Profits Duty and having that characteristic attaching to it; and we are told by the Statute that when such a sum is repaid it is to be treated as a profit for the year in which the repayment is received. It is said it may be treated as a (1) (1926) 11 Tax Cas. 211. 217, 218.

profit; but it ought not to be treated as an assessable profit. The answer, to my mind, is that it is paid back not by way of a sum which has no origin or ancestry ; it is a sum which represents a repayment of the amount previously paid by that company in the form of Excess profits duty upon their trading. If it is to have that character and is to be treated as such a profit, although it be a repayment of sums paid in respect of profits, it is to be treated as a profit for the year in which the repayment is received. The word ' treated' indicates that it is to be deemed to be something which in fact it is not, or whether it is so or not it is to be treated as a profit, and therefore it is, to my mind, impossible to discuss the question of whether or not difficulties may arise or whether it may be criticised as financially not quite sound that it should be treated in this method in that particular year; but we are told by the Statute that it is to be treated as a profit for-the year in which the repayment is received."

In a case similar on facts as the ones cited above (<NAME>'s Trustees v. <ORG> (1)), the House of Lords Viscount <NAME>, L. C., Lord <NAME>, Lord <NAME> of Dunfermline, Lord <NAME> and Lord <NAME>) placed the same construction upon the latter part of R. 4(1). The following passage in the speech of Lord <NAME>, explaining the extent of the fiction in the latter part of the Rule, is extremely instructive :

" The express mandatory terms of the sentence show, in carefully chosen language, that he is to submit to something by reason of his having previously enjoyed this advantage in the shape of repayment of an amount previously paid by way of Excess Profits Duty. Something which is not a profit, but is only a money repayment, something which may not result in a profit, because although trading goes on there is so great a loss on the year that this repayment does not make up the deficit, something which may not be a trading profit, because trading has ceased altogether, nevertheless is to be treated as profit and as profit for the year. Treated' is a, fresh word free from legal technicality. (1) (1926) 11 Tax Cas. 323, 332.

It is the widest word that could be chosen. The <ORG> avoided saying 'shall be assessed as' or I shall be brought into the computation of profit and loss , and simply says that something which is not profit but mere payment shall be treated as profit, which it c may or may not be, and as profit for the year. I think, therefore, that the word treated is an apt word to impose a charge ".

See also in this connection <ORG> v. <NAME> (1).

These cases were relied on by <NAME>, C. J., and <NAME>, J., in the judgment under appeal, and the learned Judges pointed out that the addition of the words " for the purposes of assessment to income-tax and super-tax " rather strengthen the reasoning in its application to the words of the Indian Statute. We agree with this statement. It is to be noticed that the sub-section creates two fictions. - By the first fiction it makes the amount of any repayment ' income' for the purposes of the Indian Income-tax Act , and goes on to say that that ' income ' shall be ' treated ' for purposes of assessment to income-tax and super-tax, as the income of the previous year.

Mr. <NAME>, for the <ORG> contends that no doubt the amount may be treated as 'income ' for the purposes of the Indian Income-tax Act , but the <ORG> is still under a duty to prove that the <ORG> is liable to tax at all. According to him, this will have to be treated as income received outside the taxable territory, because if the fiction contemplated its being treated as 'within the taxable territory ', it would have said so specifically. In our opinion, this submission cannot be accepted. That this would have been taxable income but for the provisions of s. 12(2) of the Excess Profits Tax Act, goes without saying. The income character of the receipt is restored by the fiction, and it is to be brought under assessment without any further proof than this that it has been received as repayment of the United Kingdom tax, in respect of which a deduction was made in the earlier years. The distinction between (1) (1929) 14 Tax Cas. 701.

incomes within and without taxable territories is made unnecessary by demanding that this amount by way of repayment shall be brought to tax and ' treated' as income within the previous year. The effect thus is that the sub- section charges the said amount with a liability to tax by its own force or to borrow the words of Lord <NAME>, is apt to ' impose a charge'.

In our opinion, the amount received as repayment of excess profits tax must be deemed to be 'income' for the purposes of the Indian Income-tax Act and for assessment it must be treated as income of the previous year. The answer to question No. 1 given by <ORG> was thus correct.

The appeal fails, and is dismissed with costs.

Appeal dismissed.