P.C. Ray And Co. (India) Private Ltd. vs A.C. Mukherjee, Income-Tax Officer

Rewritten Version Notice: This is a rewritten version of the original judgment.

Court: Supreme Court of India

Case Number: Not extracted

Decision Date: 15 May, 1958

Coram: Chakravartti, C.J.

The judgment in the matter of P.C. Ray And Co. (India) Private Ltd. versus A.C. Mukherjee, Income‑Tax Officer, dated 15 May 1958, was delivered by Chief Justice Chakravartti. The Court observed that the appellant’s submissions in the appeal were somewhat difficult to follow because they did not correspond closely to the arguments that had been presented before the lower court, and the expanded latter part of the appeal did not appear to be a natural continuation of the relatively brief initial portion. Nonetheless, the Court stated that it now understood precisely what the appellant intended to convey.

The appellant is a private limited company that was incorporated under the Companies Act of 1956. Its purpose was to acquire the assets, liabilities, and existing contracts of a predecessor company. Earlier, the predecessor had obtained a lease covering a substantial area of forest land in North Andaman with the intention of exploiting the timber on that land. Because timber from Andaman had very limited local demand, the predecessor needed a means of transporting the harvested timber to the mainland. To that end, it periodically hired sea‑going vessels. One such vessel was the “Eastern Venture,” owned by Newland Steamship Co. Ltd. of Hong Kong. The predecessor entered into a charter‑party with the owner of that vessel, which was executed in London on 25 August 1954. The charter‑party was a uniform time charter covering an initial period of six months, with an option to extend for a further three months. Although the original term subsequently expired and the vessel changed ownership at least twice, the parties continued to renew or otherwise extend the terms of the charter‑party from time to time. It was not disputed that the essential terms and conditions of the original charter‑party dated 25 August 1954 remained in force, subject only to a single slight modification that the Court would later describe.

The Court indicated that its analysis would be confined to the provisions governing the payment of hire. Clause six of the charter‑party stipulated that the charterers were required to pay a hire rate of sixteen shillings per ton on the vessel’s dead‑weight tonnage of 5,250 tons, payable every thirty days in advance. The clause further required that the hire be paid in cash in Calcutta, and that no discount be allowed. Later, an apparently inconsistent provision was introduced in clause twenty‑six, providing that the hire specified in clause six was to be paid by telegraphic transfer to London. An addendum was subsequently inserted, agreeing that payment could be made in cash either in London or Hong Kong.

The principal focus of the Court’s adjudication, however, lay with clause fourteen of the charter‑party. Clause fourteen read as follows: “The charterers or their agents shall, if required, advance to the Master, for the vessel’s account at any port, the necessary funds for ordinary disbursements, charging only interest at six per cent per annum, such advances to be deducted from hire.” The Court noted that this clause was the core issue for determination in the present case.

The charterers or their agents were required to advance, when the Master asked for it, any necessary funds for ordinary disbursements that the vessel incurred at any port. The advance could attract interest at a rate of six percent per annum, and any such advances were to be deducted from the hire payable under the charter‑party.

Another clause that is relevant is clause twenty‑five, which stipulated that the owners must pay a commission of three percent to Clegg, Cruickshank & Co. Ltd., Calcutta, together with certain commissions and brokerage fees to two other parties that were apparently based in London.

Clause fourteen mandated that the vessel be employed solely for the carriage of lawful merchandise between good and safe ports or places. In practice the ship appears to have operated mainly between Calcutta and the North Andaman islands. To be permitted to leave Calcutta, the vessel needed a port‑clearance certificate. The customs authorities would issue such a certificate only on production of an income‑tax clearance certificate.

It emerged that Clegg, Cruickshank & Co. Ltd., acting as the local agents of the owners, and later the appellant company itself, gave a guarantee to the income‑tax authorities that any income‑tax liability of the owners on their freight earnings would be paid. Relying on that guarantee, the Income‑Tax Officer issued the required clearance certificates without further inquiry, and this arrangement continued until February 1956.

In February 1956, the Income‑Tax Officer, who was then handling the matter, became more inquisitive. After a discussion with representatives of the appellant company, he sent a letter dated 21 February 1956 requesting clarification on two points: first, whether the hire for the ship had been paid to the owners in accordance with clause six of the charter‑party; and second, if it had, what the actual amount of the hire was, together with all other expenses that had been paid or were payable on behalf of the non‑resident owners. The officer’s concern stemmed from clause six, which required the hire to be paid in Calcutta; he presumed that a payment made in Calcutta to a non‑resident would constitute a taxable receipt within the territory.

On 6 March 1956 the appellant company responded to the officer’s letter. It informed the officer that the hire had been paid under clause twenty‑six of the charter‑party, which provided for payment in London, regardless of the requirement in clause six. Consequently, the hire had not been paid in Calcutta but had been remitted to London. Along with this reply, the appellant attached a statement that purported to show the actual amount of hire, commission and other expenses paid and the net amount remitted.

The attached statement began with an abstract that was difficult to interpret. The Court therefore set out the figures in a more understandable format. The statement itself consisted of entries arranged in four columns: the first column indicated the period concerned, the second column gave the total monthly hire, the third column listed the disbursements, and the fourth column recorded the net amount remitted.

The statement supplied by the appellant was arranged in four columns. The first column recorded the period to which the entries related, the second column showed the total amount of hire for each month, the third column listed the disbursements, and the fourth column indicated the net amount that was remitted. According to the figures entered in the third column, the total disbursements made between September 1954 and March 1955 amounted to Rs 52,109‑11‑0, while the total disbursements made between April 1955 and February 1956 amounted to Rs 69,768‑13‑6. The disbursements comprised advances given to the master, costs incurred for repairs, and commissions paid to the local agents of the owners. The sum that was actually remitted to London consisted only of the balance remaining after deducting these disbursements from the total hire. On examining this statement, the Income‑Tax Officer concluded that the disbursements represented a payment made in India to a non‑resident, and therefore fell within the chargeable amount contemplated by section 18(3B) of the Income‑Tax Act. Consequently, on 17 March 1956 the Officer addressed a letter to the appellant company. The letter referred to the appellant’s communication numbered 97A/1324/56 dated 6 March 1956 and stated in full: “Kindly refer to your letter No. 97A/1324/56, dated March 6,1956. It is aparent from the enclosures to the said letter that Rs. 52,109 and Rs. 69,768 were constructively received in India by the non‑resident owner of the above mentioned vessel during 1954‑55 and 1955‑56 respectively. You should have, therefore, deducted and paid tax under section 18(3B) in respect of such income. As this has not been done, you have rendered yourself liable for laymen of such taxes under section 18(7) of the Income‑tax Act, 1922. I am accordingly enclosing necessary chilliness for payments of such taxes. Kindly note that these taxes should be paid within March 1956.” The appellant did not accept liability for the amount demanded, and further discussion between the appellant and the Income‑Tax Officer ensued. During this period the vessel changed ownership twice: first it passed from the Newland Steamship Co. Ltd. to Pan Norse Steamship Co. S.A. of Panama, and subsequently to Messrs. Wallem & Co. Ltd. The new owners, Wallem & Co. Ltd., denied any liability to pay Indian income‑tax, but as a compromise they offered to pay Rs 5,000, representing what they claimed to be their proportionate share of the tax alleged to be due. The Income‑Tax Officer refused to accept this offer and did not alter the demand originally made to the appellant company. Ultimately, the appellant company complied with the original assessment and paid the tax demanded by three chilliness on 18 May 1956. Following that payment, on the same day the appellant filed an application before this Court under article 226 of the Constitution, seeking a rule directing the Income‑Tax Officer to show cause why a writ of certiorari should not be issued, to command him to certify and return the records of the proceedings, and to obtain a peremptory order quashing the proceedings if the Officer failed to answer, gave an insufficient answer, or furnished a false answer.

The petition asked the Court to issue an order that would set aside the proceedings if the Income‑tax Officer either failed to respond, gave an inadequate response, or gave a false response. A rule in accordance with that application was initially granted, but at the final hearing the rule was discharged by the learned judge, Sinha, J. The present appeal challenges that order which discharged the rule. In the judgment of Sinha, J., the appellant’s case was framed as follows: the sums paid as disbursements were made pursuant to clause 14 of the charter‑party and, because they were paid under that clause, they were characterised as loans advanced to the owners rather than as partial payments of the hire. The judge further considered that even if the sums were not loans but were instead partial hire payments, they would still not be taxable under the Indian Income‑tax Act because such partial payments had not been received by the owners in India. Moreover, the amounts could not be treated as taxable under section 18(3B) because, in any event, they represented only gross receipts in the hands of the owners and could not be said to constitute income until all other receipts and the expenses incurred in connection with them had been accounted for and a taxable figure determined. The learned judge rejected each of these three contentions. Before the Court, Mr. Mitra, who also appeared before the trial judge, reiterated his argument that the disbursement amounts were merely loans and, since the Income‑tax Act does not tax borrowings, they were not taxable under the statute. He disavowed the second contention that had been attributed to him by the trial judge and asserted that the issue concerning the nature of the receipts had actually been raised on behalf of the Department, with the cases cited by the trial judge having been cited by the Department’s counsel. He further stated unequivocally that the disbursement payments were, in his view, made in Calcutta, and he did not indicate in his opening address that he wished to continue arguing that the disbursement amounts could not be treated as taxable because they were merely gross receipts in the owners’ hands. Apart from the argument that the advances were loans, Mr. Mitra also contended that because the sums were paid for disbursements they were earmarked for specific expenditures and therefore could not be considered income. As the argument progressed, he came to think that he should also press the point that, irrespective of any other classification, the payments were merely revenue receipts in the hands of the non‑resident owners and could not be taxed as income. He returned to this position after the Court drew the parties’ attention to the relevant decision.

The Court first referred to the decision in Commissioners of Inland Revenue v. Corporation of London and recalled that the three principal arguments had been summarized earlier. Before examining the submissions of counsel, the Court found it useful to read the relevant statutory provision, namely section 18(3B) of the Income‑Tax Act. The Court noted that it was unnecessary to read section 18(7) because that subsection merely provides that a person who is responsible for deducting tax under section 18 and fails to do so shall himself be treated as in default with respect to the tax. The provision that required attention was section 18(3B), which the Court reproduced as follows: “Any person responsible for paying to a person not resident in the territories any interest not being ‘interest on securities’, or any other sum chargeable under the provisions of this Act shall, at the time of payment, unless he is himself liable to pay any income‑tax and super‑tax thereon as an agent, deduct income‑tax at the maximum rate.” The Court explained that, from this wording, the sub‑section is triggered only when (i) there is a person who is responsible for making a payment to a non‑resident and (ii) the payment is either interest, interest on securities, or any other sum that is chargeable under the Act. The Court observed that it was not in dispute that the appellant company was the person making certain payments to a non‑resident. The remaining issue, therefore, was whether the particular payments that were the subject of the present dispute—payments made on account of disbursements—were sums chargeable to Indian income‑tax.

At this point the Court drew attention to what it described as a curious oversight that appeared on the part of all parties involved in the matters previously cited. The statement furnished by the appellant company to the Income‑Tax Officer clearly indicated that the items described as “disbursements” had actually been paid on three separate heads: (1) a commission that was later identified as being payable to Clegg, Cruickshank and Co. Ltd.; (2) an advance given to the ship’s master for disbursements; and (3) costs incurred for repairs. The petition filed by the appellant itself, in paragraph 21, specified that of the amounts taxed by the Income‑Tax Officer on the disbursements, Rs 32,092‑5‑9 had been paid to Clegg, Cruickshank and Co. Ltd., and Rs 9,028 had been paid for repairs to the vessel and for bunkering at the time of re‑delivery to various persons resident in India. Despite these admissions regarding the true nature of part of the disbursements, the case proceeded before the learned trial Judge on the premise that the entire amount had been paid by the appellant company under clause I4 of the charter‑party as “ordinary disbursements for the vessel’s account”. The learned Judge observed that it was admitted that monies had indeed been paid under clause I4 by the petitioner in India.

The Court noted that the sums in question had been deducted from the hire charges and that the amount was not contested. It then observed that clause I4 of the charter‑party made no reference to any commissions payable to local agents of the owners, nor to any expenditures for repairs to the vessel. Consequently, the Court found it impossible to understand how payments recorded as commissions and repair costs could be characterized as amounts falling under clause I4. Counsel for the appellant, Mr Mitra, admitted frankly that he had erred in following the definitive instructions received from his clients; he had failed to separate payments that were ordinary disbursements on the vessel’s account from those that represented commissions to the owners’ agents or expenses for repairing the ship. The Court considered this distinction to be material, because the principal argument advanced by Mr Mitra relied on clause 14 of the charter‑party, which stipulated that advances made under that clause were to be treated as loans to the owner bearing interest. The Court pointed out that if certain payments did not fall within the ambit of clause 14, and if there was no evidence showing the authority by which the appellant company had effected those payments, then the contention that all such payments, including those not for ordinary disbursements, were loans could not be sustained. Nevertheless, the Court indicated that it would not pursue the separation of the two categories of payments in this appeal; instead, it would address the arguments presented by counsel on the basis that all advances were made under the provisions of clause 14. The Court emphasized that this approach was adopted particularly because the Revenue Department had also failed to highlight the distinction that the petition itself revealed. The Court further described another oversight, which it deemed even more significant. One of the reasons put forward to support the view that the disbursement payments were loans was the provision in clause 14 that such advances should attract interest. However, after reviewing the material before it, the Court found that the appellant company had never treated those payments as loans; rather, the company accounted for them as pre‑payments of freight. No petition contained any statement that the appellant company had ever charged interest on the advances, nor that it had acted as a creditor by offsetting its claim against the owners and deducting interest‑bearing amounts from the hire. In contrast, the statement submitted to the income‑tax authorities, which the Court had already examined, demonstrated that, month after month, the company remitted to the owners the full balance of the hire after deducting only the actual amounts it had paid out for disbursements. If one examines the figures for any given month and adds the amounts shown in the third column—the net sum remitted—it always equals the total hire chargeable under the charter‑party.

When the figures for any month are examined and the amount shown in the third column – the net sum remitted – is added, the result always equals the total hire that is chargeable under the charter‑party.

The hire amount for a certain period was originally Rs 56,097‑6‑3, but it was later increased to Rs 96,470‑6‑3.

The records indicate that in every month of the two income‑tax years under consideration, either the master alone or the master together with the owners’ local agents received a portion of the hire, while the owners received the remaining balance.

Clause 26 of the charter‑party provides that the charterers must apply for and obtain the foreign‑exchange amounts they intend to remit to England. The specific amounts for which the appellant sought exchange‑control approval are disclosed in paragraph 14 of the petition and in a letter dated 17 November 1955 from the Assistant Director General of Shipping, reproduced on page 41 of the paper book, which details the sterling exchange made available to the appellant on its request.

The appellant appears to have requested the release of sterling exchange on the basis of the agreed hire for the vessel, reduced only by a three percent brokerage payable to Clegg, Cruickshank and Co. Ltd., and by any disbursements it had made on behalf of the owners; no deduction for interest was made.

Consequently, the appellant seems to have operated on the premise that, out of the total agreed hire, it was paying a part in India to the master for ordinary disbursements or for vessel repairs, and another part to the owners’ local agents as commission, while the entire balance was transmitted to England.

Although clause 14 of the charter‑party mentions advances and the charging of interest on such advances, the actual conduct of the appellant company was on a completely different footing. On the basis of the appellant’s own practice, it is impossible to reconcile its actions with the notion that it was advancing loans to the owners.

Since the lower court proceeded with the consent of all parties that the payments were made in accordance with clause 14 of the charter‑party, and since the incidents of payment under that provision must be considered, the Court will now examine that position.

The first issue for determination is whether, assuming that the entire amount was advanced to the ship’s master for ordinary disbursements, the amounts paid should be characterised as loans rather than as part‑payments of the hire. The arguments before the Court turned on the construction of the particular charter‑party, which was entirely proper, but it also proceeded on the footing that the matter was free of authority. In fact, there is

In this case the Court observed that there exists a very extensive literature on the subject which has been discussed in all the leading textbooks on charter‑parties before it. Although the literature is extensive, the Court noted that the matter was being proceeded on the assumption that it was free of authority. The Court cited several leading works, for example Maclachlan on Merchant Shipping, seventh edition, pages 434 and following; Carver on Carriage of Goods by Sea, third edition, page 664 and following; and Abbott on the Law of Merchant Ships and Seamen. The Court explained that the principal point, which does not require any specific authority, is that whether money advanced by a merchant is to be treated as a loan to be repaid by the shipowner or as part payment of the freight depends on the terms of the written instrument and on the construction of those terms. The Court further stated that the very elaborate discussion of case law, particularly in About, was illuminating. It identified the leading authority on the issue as the House of Lords decision in Allison v. Bristol Marine Insurance Co. The Court emphasized that the question of whether an advance made by a charterer to the ship’s master for ordinary disbursements is a loan or part‑payment of freight is important not only for tax purposes but also for another vital purpose. Under the applicable rule of English law, which eminent judges have described as anomalous yet have found impossible to disturb because of its deep roots in precedent, a part‑payment of freight can never be recovered from the shipowner even if the cargo is lost and the freight is never earned. Conversely, if the advance is merely a loan, its consequences are unrelated to the contract of carriage and the money is always recoverable as a loan. The Court observed that a clause whereby the charterer will advance to the master such amounts as may be required for ordinary disbursements is now a common feature of both voyage charters and time charters. Accordingly, the question of whether such advances constitute loans, recoverable regardless of the voyage’s outcome, or part‑payments of freight, recoverable only under certain conditions, arises frequently. The Court pointed out that the law on this point has long been settled, as the leading authorities on the matter are of considerable age, and that a consistent principle can be drawn from those authorities.

The principle that could be extracted from the cited authorities was that when the terms of a charter‑party demonstrate that an advance was intended to operate as a part‑payment of the freight, that intention may be manifested either directly or indirectly. A circumstance that had consistently been regarded as decisive was the situation where the shipowner received the advance and, in return, consented to a rebate covering the cost of securing insurance for the prepaid freight. Such a clause was treated as conclusive because prepaid freight could be insured, whereas a pure loan could not be insured.

In the charter‑party that formed the subject of the present dispute, the charterer was permitted to make advances for ordinary disbursements on behalf of the vessel. The agreement allowed the charterer to charge interest on those advances, yet it simultaneously provided that the charterer could recover its dues by deducting the amount of the advances from the hire payable to the shipowner. Consequently, the charter‑party contained both a provision for the accrual of interest and a provision for the deduction of the advance from the hire. The effect of a deduction clause was illustrated by observations of several learned judges in the well‑known case of Manfreld v. Maitland. In that case, one‑half of the freight was stipulated to be paid in cash upon unloading and delivery, with the balance to be paid by bill on London after four months, and the charter‑party also provided that the captain would receive cash for the ship’s use. The pivotal question was whether the sums paid to the master under that provision, for which the master had drawn a bill, constituted a loan or an advance freight payment. The Court of King's Bench, speaking unanimously, held that the sums were a loan. The reasoning was that the advance provision appeared after the complete freight‑payment clauses, and there was no indication that the freight rights and the liability for advances to the master were intended to be inter‑linked. As Justice Bayley observed, “In the earlier part of the instrument there is an express stipulation as to the manner in which the freight is to be paid, but it is altogether silent as to any deduction for advances from the freight. The stipulation is that one‑half of the freight shall be paid in cash on unloading, and the remainder by a bill on London at four months’ date. Had deduction of the previously advanced money been intended, it would have been inserted. In the absence of such a stipulation, the money was to be advanced as a loan by the freighter.” The import of that observation was that, had the charter‑party contained a clause allowing deduction of the advance from the freight, the court would have treated the advance as a part‑payment of the freight rather than as a loan.

The judge explained that if the charter‑party had contained a clause allowing the amount advanced to be deducted from the freight, the advance would not have been characterized as a loan but rather as a partial payment of the freight. The charter‑party also included a provision concerning the payment of interest, which at first glance seemed to indicate that the advance was initially a loan. To interpret the effect of an interest clause, the judge referred to the reasoning in the case of Allison v. Bristol Marine Insurance as articulated by Lord Hatherley. In that case the House of Lords was asked, in the words of Lord Chelmsford, whether the advance was “an advance in the nature of a loan, or was it a pre‑payment of half the freight?” Under the charter‑party in that case the freight was to be paid on unloading and upon proper delivery of the cargo at the rate of forty‑two shillings per ton of twenty hundredweight of the quantity delivered. The agreement further stipulated that the freight was to be paid “one‑half in cash on signing bills of lading less four months’ interest at the bank rate, but not less than five per cent per annum, five per cent for insurance and two and a half per cent on the gross amount of freight in lieu of consignment at Bombay, and the remainder of the right delivery of the cargo, less cost of coals short delivered, in cash.” Lord Hatherley observed that the parties, wishing to have a portion of the freight prepaid so that they would not have their money tied up for the duration of a long voyage, entered into an arrangement whereby the charterer would make a pre‑payment (in the case at hand one‑half of the freight) and, in consideration for this early payment, would receive a rebate of interest, effectively discounting the prepayment, together with a further rebate for insurance because the charterer, having made the payment, would bear the risk of loss of the cargo. The judge therefore concluded that a clause providing for interest does not inevitably signify that the amount advanced is a loan; rather, it may simply represent a mechanism by which the charterer, who makes the advance, is given a rebate as consideration for the concession extended to the shipowner. Applying the authorities and principles discussed, the judge held that the advances stipulated in clause 14 of the charter‑party before the court were not loans but were pre‑payments of a portion of the hire, for which the charterer was allowed to receive a rebate in the form of interest.

The Court held that the sums described in clause 14 were not loans but were payments made in advance of a portion of the hire, and that the charterer was authorised to grant a rebate expressed as interest on those payments. The Court’s conclusion was based on the contractual provision that permitted the charterer to deduct its own dues from the hire. The Court further observed that, for the issues presently before it, it was of little importance to decide whether the advances under clause 14 were initially characterised as loans. The decisive question, according to the Court, was whether the appellant company had transferred any amount to the non‑resident ship owner while the transaction was situated in the taxable territory. If such a transfer had taken place, the Court noted that, aside from other considerations concerning the applicability of the Income‑Tax Act, the condition stipulated in section 18(3B) would be automatically satisfied. The Court added that, even if the advances had been treated as loans at the time they were made, there was no claim that those loans remained outstanding. In order for any repayment to occur, the money belonging to the ship owners would necessarily have to be applied toward the settlement of the loan. Assuming, as the Court did, that the advances were initially loans, the entire hire payable at the beginning of the following month would still have been in the possession of the charterer, unreduced by any payment. The Court explained that the charterer could only satisfy its own debt by drawing an amount equivalent to its dues from the hire, which would then be regarded as money belonging to the owners and paid by them in discharge of the loan obligation. The Court emphasized that the charterer could not simply use its own funds to repay itself. Whether the mechanism is described as a set‑off or as a prior payment to the owners followed by reimbursement through the charterer, the hire due to the owners was received and utilised in Calcutta, because it was only that portion of the hire that was employed to discharge the advances made by the charterer to the master on the owners’ account. The Court expressed that it could not conceive of a situation where the charterer repaid itself without the money first becoming the owners’ money, that is, the debtor’s money. Consequently, if the necessary portion of the hire had to be transformed into the owners’ money in Calcutta before being applied to the charterer’s debt, the Court held that such money was constructively received by the owners in Calcutta, as correctly determined by the Income‑Tax Officer. The Court then turned to the statement supplied by the appellant, noting that the first month shown, September 1954, listed a total hire of Rs 56,097‑6‑3, disbursements of Rs 1,682‑14‑9, and a net remittance of Rs 54,414‑7‑6, from which the owners received the balance.

The Court observed that only the amount finally remitted to London was actually received there, and that the remaining balance of the hire had not been left unpaid, since no party claimed otherwise. Consequently, the Court noted that it was appropriate to inquire when that outstanding balance had been settled and from which source of funds the payment had been made. The Court had already indicated that the manner in which the appellant company had acted completely excluded the notion of a loan. Instead, the appellant’s conduct suggested that the company was either paying commission to the owners’ local agents in Calcutta or disbursing to the ship’s master the sums that he required for his own expenses, on the basis that such disbursements represented a portion of the freight earnings.

Assuming, for the sake of argument, that the charterer had initially advanced loans to the master and that those loans were later recovered by deducting the charterer’s dues from the hire, the Court explained that the repayment would have been effected through such deduction. In other words, the loan would have been repaid by applying an equivalent amount out of the hire, thereby converting that portion of the hire into money that belonged to the owners. The Court further observed that, on the statement of accounts, the difference between the total hire charge for each month and the amount actually remitted to London could only have been transferred to the owners in Calcutta. No party contended that this difference had been paid in London, nor was there any claim that it had not been paid at all.

For all of the reasons just set out, the Court concluded that the advances made in the present matter could not be characterised as loans. Rather, they were pre‑payments of portions of the hire. Even if, hypothetically, those advances were initially treated as loans, the Court held that such a label was irrelevant to the present analysis because, even as loans, they had been repaid in Calcutta by deducting the amounts from the hire owed to the ship’s owners. This deduction process involved converting a corresponding portion of the hire into money that was paid to the owners in Calcutta before being applied to the repayment of the advances. Accordingly, the first ground raised by counsel Mr Mitra was dismissed.

The Court then turned to the second argument advanced by counsel Mr Mitra, which was that even if the advances to the ship’s master were construed as part‑payments of the hire, they nonetheless were not chargeable under the provisions of the Indian Income‑Tax Act and therefore fell outside the scope of section 18(3B). The Court found this contention untenable and rejected it.

Even on the premise that the advances were loans repaid by deduction from the hire, the Court reiterated that monies belonging to non‑resident owners had been applied, under their instructions, to settle their creditors in India. The Court referred to the decision in Keshav Mills Ltd. v. Commissioner of Income‑Tax, which established that such amounts were received by the owners in India. However, the Court noted that the remaining question was whether, despite being received in India, those amounts were chargeable under the Income‑Tax Act within the meaning of section 18(3B). The Court explained that if “chargeable under the provisions of this Act” is interpreted to mean that the sum is actually liable to be assessed to tax—that is, that the amount constitutes taxable income—then a difficulty arises in complying with the provisions of the section.

In this case, the Court observed that when the sum contemplated is taxable income, a difficulty inevitably arises in complying with the provisions of the section. It appeared that, before the trial Judge, Mr Mitra had drawn attention to the difficulty inherent in the various forms of the provision. A layperson who must make a payment to a non‑resident and who must decide whether that payment will be taxable in the hands of the recipient would be confronted with an almost impossible task. The Court explained that this difficulty led it to consider, at one stage, whether the expression “any other sum chargeable under the provisions of this Act” could be interpreted in the same way that English law had interpreted the expression “annual payment” in the old Rule I of Case III of Schedule D to the English Income Tax Act. The Court referred to the decision in Commissioners of Inland Revenue v. Corporation of London (as Conservators of Epping Forest) for guidance. Under Rule I of Case III, tax was payable on “any interest of money or annual payment”. The rule required a person making an annual payment to another to deduct the appropriate amount of tax, as prescribed by Rule 19. In the case cited, the assessee raised exactly the same question as Mr Mitra, contending that the term “annual payment” could not include payments that, in the hands of the recipient, would be merely trading receipts, against which expenses would have to be set off before any taxable income could be identified.

The argument was based on the well‑known dichotomy introduced by Lord Grain, M.C., concerning the notion of “annual payment” in his judgment in In re Hanbury. The learned Master of the Rolls had explained that there were two classes of “annual payments”. The first class consisted of “pure income profit”, that is, receipts such as interest or annuities which would be taxable in the recipient’s hands without any deductions. The second class comprised payments that, for the recipient, would appear as ordinary trading receipts in a profit‑and‑loss account and would have to be considered only as items in the computation of profit after deducting ordinary expenses. The case followed a chequered judicial history, but ultimately the House of Lords accepted the contention. Lord Reid, speaking most directly, observed that although the words “annual payment” in Rule I of Case III contained no explicit qualification, a limitation must be implied to exclude payments, or portions of payments, that could not be described as income within the meaning of income‑tax law. He specifically pointed to trading receipts, noting that a trader’s income can be determined only after deducting expenditures from gross receipts; therefore, receipts received from another person could not be regarded as “annual payments” within the meaning of the rule.

In the House of Lords the court held that the contribution made by the Corporation of London to itself as Conservators of Epping Forest was not a trading receipt but what Lord Greene described as “pure income profit.” The Lords also recognised a distinction between such pure income – receipts that Sir Remained Evershed said possess “the character of income chargeable itself as such to tax” – and receipts that must be set off against expenses before any taxable income can be determined. They further held that the term “annual payment” in rule I of Case III of Schedule D to the English Act was intended to cover payments of the former kind, i.e., pure income.

The provisions of section 18(3B) of the Indian Act are not dissimilar to rule I of Case III of Schedule D to the English Act. Both statutes tax interest other than interest on securities and any other sum chargeable under the provisions of the Act, or, in the English context, interest or other annual payment. Each requires the payer to deduct tax from the amount payable to the payee. At one stage of the argument it seemed reasonable to interpret the words “any other sum chargeable under this Act” in the same way that English law had interpreted “annual payment.” Earlier I had suggested that the term “chargeable” might be read not as “assessable to tax” but as “liable to be brought into computation” under one of the heads of income defined in section 6 of the Act. Under that view, if an amount payable to a non‑resident falls into categories such as income from property, profits and gains of business, profession or vocation, or income from other sources, it would be taxable, whereas amounts exempt by nature, for example agricultural income, would fall outside the provision.

Upon a more detailed examination of the section and the relevant authorities, I concluded that the earlier interpretation is the correct one. This conclusion is reinforced by the language of section 18(3C), which makes clear that payments which, when received, may be gross receipts from which only part or none may be taxable, are nevertheless intended to fall within the ambit of the provision. Section 18(3C) provides: “Where the person responsible for paying any sum chargeable under this Act other than interest, to a person not resident in the taxable territories, considers that the whole of such sum would not be income chargeable in the case of the recipient, he may make an application to the Income‑tax Officer to determine, by general or special order, the appropriate proportion of such sum so chargeable and upon such determination tax shall be deducted therefrom by the person responsible for making such payments in accordance with the provisions of sub‑section (3B).” This wording shows that the statute contemplates not only sums that are wholly taxable “pure income profit” but also amounts of a mixed composition, of which only a part may be taxable. The view is further supported by Supreme Court authority, as reflected in the decision of Aggarwal Chamber of Commerce Ltd. v. Ganpat Rai Hiralal, where the Court considered a similar issue.

Section 18(3C) of the Income‑Tax Act states that when a person who is responsible for paying any sum chargeable under the Act, other than interest, to a person who is not resident in the taxable territories, believes that the entire sum would not constitute income chargeable in the hands of the recipient, that person may file an application with the Income‑Tax Officer. The officer may then determine, by issuing either a general or a special order, the appropriate proportion of the sum that is chargeable to tax. Once this proportion is fixed, the person making the payment is required to deduct tax on that amount in accordance with the provisions of subsection (3B). This provision makes it clear that the law does not limit itself only to amounts that are wholly taxable without any deduction – what Lord Greene described as “pure income profit” – but also embraces amounts of a mixed character, where only a part of the total may ultimately be taxable. The Court’s view is reinforced by the authority of the Supreme Court. In the case of Aggarwal Chamber of Commerce Ltd. v. Ganpat Rai Hiralal, the Supreme Court examined whether a particular party could be treated as an agent of a non‑resident for the purposes of section 40(2) and section 42(1) because it had received income, profits or gains chargeable under the Act on behalf of the non‑resident. Although the case primarily dealt with sections 40, 41 and 42, the Court also referred to section 18, which is expressly mentioned in the first proviso to section 42(1). The argument before the Supreme Court was that the total worldwide income of the non‑resident was not taxable, and therefore the party receiving the payments on its behalf could not be said to be receiving profits and gains and thus could not be considered an agent. This contention mirrored the argument presented in the present matter, namely that a person could only be an agent of a non‑resident if he received an amount of taxable income on the non‑resident’s behalf. The Supreme Court rejected this contention, stating that if the Hapur firm had correctly paid tax on the profits, the respondent could not challenge the amount on the ground that his total worldwide income was not taxable and that he was entitled to his profits without deductions. The Court explained that such a question must be raised by the non‑resident assessee during his own assessment, and that persons who are required by the Act to deduct tax at the time of payment are not concerned with the ultimate result of the assessment.

The Supreme Court further observed that the scheme of the Act mandates deductions to be made from “salaries”, “interest on securities” and other heads of “income, profits and gains”, with the final adjustments to be made at the time of assessment. Whether, in the final outcome, the amount of tax deducted is greater or lesser than the tax actually payable under the law does not affect the rights, liabilities and powers of a person under section 18, nor does it affect the status of the agent under sections 40(2) and 42(1). This passage, in the Court’s view, provides a complete answer to the contention advanced before us and strengthens the construction suggested for section 18(3C). The passage demonstrates that the operative concern of the provision is the deduction at the time of payment, irrespective of the eventual assessment result.

The Court observed that the quantum of tax deducted, whether it is a lesser or greater amount, and the amount that must ultimately be paid as income‑tax in accordance with the law then in force, does not alter the rights, liabilities or powers of a person under section 18, nor those of an agent under sections 40(2) and 42(1). In the Court’s view, this passage supplies a complete answer to the contention raised before it and supports the interpretation that the Court has proposed for section 18(38). Counsel for the petitioner, Mr Mitra, attempted to set the Supreme Court’s decision apart by arguing that the party treated as an agent in the cited case had received, on behalf of the non‑resident, an amount representing the profits of certain transactions and had paid tax on that amount. According to Mr Mitra, the sum received was therefore not a gross receipt but a profit, and if it was profit it would be clearly chargeable under the Act and would constitute “income, profits and gains” in the narrow sense that the words denote. That contention is, however, untenable on its face, because the so‑called profits of a single commercial venture or a series of such ventures represent the surplus after deducting expenditures related to those transactions, and such surpluses are precisely the taxable profits contemplated by the income‑tax law. If Mr Mitra’s principal argument were correct—that the expressions “any other sum chargeable under the provisions of the Act” in section 18(38) and “income, profits and gains” in sections 40(2) or 42 refer only to net income that is already taxable under the Act—then gross receipts whose taxability, or the taxability of any portion thereof, is still to be determined would fall outside the scope of either provision. The profits received by the Hapur firm in the Supreme Court case were no less than gross receipts for the purpose of assessing the non‑resident, because, like any other revenue‑type receipt that the non‑resident might obtain, they would have to be offset against the totality of the non‑resident’s expenses before any taxable income could be ascertained. Consequently, the Supreme Court’s decision cannot be distinguished on the basis of the argument advanced by Mr Mitra. The Court further noted that the Supreme Court case closely parallels the English case of Nielsen, Anderson and Co. v. Collins : Tarn v. Scanlan, which had been cited on behalf of the respondent. One of the issues in that English case was whether section 41 of the then English Act, which imposed tax in the name of “a factor, agent or receiver having the receipt of any profits or gains arising as herein mentioned,” referred to net profits or gains that would actually be taxed, or whether it encompassed gross profits or gains that, after proper deductions, might result in no taxable amount.

The Court of Appeal in England ruled that gross profits were to be taken into account for tax purposes. In that decision, Lord Handowrth, M.R., agreed with an earlier observation made by Lord Justice Fry, holding that the phrase “factor or agent having the receipt of any profits or gains” was intended to include gross profits or gains, even though such amounts might contain within them some net profits or gains that would ultimately be subject to income‑tax. The Court reasoned that if the gross receipts were ignored and only the net profit after deductions were considered, the tax base could disappear, leaving nothing on which tax could be levied. The same principle, the Court said, should be applied to the construction of section 18(3B) of the Income‑Tax Act. In the view of the Court, there was no reason to adopt a different rule for that provision, especially since the Supreme Court’s decision, which also mentioned section 18, had already reached a similar conclusion. Consequently, the second contention raised by Mr Mitra could not succeed and was rejected.

The third contention put forward by Mr Mitra asserted that the payments in the present case were made for ordinary disbursements on the chartered vessel’s account and were therefore earmarked for expenditure. He argued that if the non‑resident owner was required to spend the amounts on maintenance or operation of the vessel, such payments could not be regarded as income in his hands and thus should not be taxable under the Income‑Tax Act. The Court rejected this argument, stating that a fundamental principle of income‑tax law prevents the characterization of a payment by looking at how the payee intends or is required to use it after receipt. The Court cited the earlier House of Lords decision in Commissioners of Inland Revenue v. Corporation of London (as Conservators of Epping Forest). In that case, a contribution made by the London Corporation under the Epping Forest Act, 1878, was intended to cover any deficit in the Conservators’ accounts. The Act required the Corporation to match any shortfall, meaning the contribution was strictly for meeting expenditure. It was contended that because the contribution was destined for that purpose, it could not be treated as income. Lord Reid observed that “no part of the sums paid by the city in this case can ever be profit in the hands of the Conservators, because the amount of any sum payable is measured by the amount of the Conservators’ deficit, and, therefore, the whole of it must go to pay expenses and no part of it can ever be profit.” The Court held that the same reasoning applied, and therefore the third contention was untenable.

It was observed that the arguments presented were exactly the same as those put forward earlier by Mr Mitra. Those arguments had been considered by Lord Reid, who concluded that the contention rested on a mistaken understanding of the meaning of “income” or “profit” as used in the Income‑Tax Act. Lord Reid explained that even though a surplus received by a person was required to be applied in a prescribed manner and could not be retained as ordinary profit, the amount nevertheless qualified as income within the meaning of the statute. He referred to the discussion on page 329 of the report for this reasoning. In a similar vein, Lord Normand made observations that corresponded to the same principle, which can be found on page 324 of the report. Having recorded those authorities, the Court found it unnecessary to elaborate further on the third and final point raised by Mr Mitra.

The Court then turned to the remaining contentions that had been raised on behalf of the appellant. After having examined all of the substantive arguments submitted by the appellant, the respondent’s counsel argued that a writ of certiorari could not be entertained in the present circumstances because the Income‑Tax Officer possessed clear jurisdiction to determine the appellant’s tax liability under section 18(7) of the Act. According to the respondent, the only possible allegation against the Officer was that he had erred in applying the law, and even if such an error existed, it did not fall within the scope of a writ of certiorari. The respondent’s position was that the Officer’s jurisdiction extended both to correct and to mistaken decisions, and that the mere belief of the appellant that the decision was erroneous, or even an actual error, could not be corrected by the writ. In assessing this line of argument, the Court recalled an earlier English decision, Rex v. Inspector of Taxes and Commissioners of Income Tax, in which assessors sought writs of prohibition, certiorari and mandamus against additional income‑tax assessments and the associated rules nisi. The Court in that case, led by Lord Hewart C.J. together with Lords Lush and Bailhache, held that the Surveyor of Taxes, having acted within his jurisdiction, could not be subjected to a high‑prerogative writ even if his view of the law was mistaken. The Court noted, however, that the view expressed in the Rex v. Inspector case is now regarded as outdated. Subsequent authority, particularly Rex v. Northumberland Compensation Appeal Tribunal, Ex parte Shaw, observed that the writ of certiorari had fallen into desuetude and that the courts thereafter confined its application to cases involving a lack of jurisdiction or an excess of jurisdiction. More recent jurisprudence has clarified and revived the true ambit of the writ, establishing that genuine errors of law that appear on the face of the record are now deemed amenable to correction by a writ of certiorari.

The Court explained that a writ of certiorari may be used to correct errors that appear on the face of the record. It recalled the Privy Council observation in Rex v Nat Bell Liquors Ltd that such supervision involves two aspects: the scope of the inferior tribunal’s jurisdiction and the manner in which that jurisdiction is exercised in accordance with law. Accordingly, mistakes made in applying the law while exercising jurisdiction fall within the ambit of a certiorari petition. Consequently, the Court held that the mere fact that the Income‑Tax Officer possessed jurisdiction over the appellant’s liability did not, by itself, defeat the applicant’s request for a writ. However, the Court emphasized that for a legal error to be corrected by certiorari, the error must be evident on the face of the record. In other words, the impugned order must be a “speaking order” that sets out reasons for its conclusion and those reasons must be manifestly wrong. The appellant had argued that the order in this case was mute and that no speaking order existed, and therefore no error could be found on the record.

The Court rejected that argument, observing that the Income‑Tax Officer’s letter dated 17 March 1956 clearly contained an express order. The letter did more than merely state that the appellant was liable for tax under section 18(7) of the Act. It further explained that amounts of Rs 52,109 and Rs 69,768 had been “constructively received in India” by the non‑resident owner of the vessel. Because the letter set out the factual basis for the assessment, it could not be described as a mute or non‑speaking order. The Court noted that the officer’s finding relied on the principle that the disbursements paid to the non‑resident were deemed to have been constructively received in India. That principle made the appellant liable under section 18(7) rather than the deduction requirement of section 18(3B). After reviewing the content of the letter, the Court concluded that no error of law was apparent on the face of the record. Accordingly, the Court held that the absence of a procedural defect does not preclude the availability of a writ of certiorari, even though the order was a speaking one. The Court also indicated that a further ground challenging the appellant’s entitlement to the writ had been raised, although the discussion of that ground would follow later.

The Court noted that, although the issue at hand was of relatively minor importance, it was necessary to address it because it raised a significant question of propriety and procedure that also affected the availability of a writ. The Court recalled that the appellant had paid the tax on 8 May 1956 and subsequently filed a petition under article 226 of the Constitution on 18 May 1956. In paragraph 26 of that petition the appellant claimed that it possessed no other satisfactory or adequate remedy. However, the Court observed that the records later revealed that the appellant had actually filed an appeal against the very order it was challenging in the petition on 7 June 1956. The respondent, in paragraph 24 of his affidavit‑in‑opposition, denied the appellant’s allegation that there was no alternative or adequate remedy and asserted that the appellant had ample remedy available under the Act. The appellant contested this denial in paragraph 18 of its affidavit‑in‑reply, reiterating the submissions made in paragraph 26 of the original petition. The affidavit‑in‑reply was affirmed on 3 September 1956. Consequently, the Court found that, despite having filed an appeal before the Appellate Assistant Commissioner as early as 7 June 1956, the appellant continued to maintain on 3 September 1956, and in spite of the respondent’s denial, that it lacked any adequate or legal remedy. Moreover, during the oral arguments before the Court, the appellant never mentioned that it had also pursued an appeal; the Court learned of this fact only through an affidavit filed by the respondent. The affidavit explained that the deponent became aware of the pending appeal on 6 May 1958 when he accidentally discovered it in a list of appeals pending before the Appellate Assistant Commissioner. The Court then turned to the substantive question, which was not whether a writ of certiorari could be sought or issued when an alternative remedy existed, but rather how the presence of such a remedy should influence the decision. It is well settled that the existence of an alternative remedy does not constitute an absolute bar to the issuance of a writ of certiorari, although courts may consider the availability of the remedy when deciding whether to grant the writ. The present case was not one in which the appellant had exhausted all alternative remedies and then turned to the constitutional writ. Finally, the Court observed that counsel had cited a recent Supreme Court decision in State of U.P. v. Mohammad Nooh, which merely held that superior courts may issue a writ of certiorari in appropriate cases even when an alternative remedy exists and an appeal to a lower court or tribunal is available but has not been utilized.

The Court observed that the principle articulated by the Supreme Court in a previous decision did not apply to the present matter. In the earlier case, the Supreme Court had held that the existence of an alternative remedy was not an absolute bar to the issuance of a writ of certiorari, although the availability of such a remedy could be taken into account. The Court noted that the present case differed because the appellant, after obtaining a rule from this Court, simultaneously pursued an appeal under the ordinary law while keeping the alternative remedy undisclosed to the Court until the very end. The record showed that the appellant’s appeal before the Appellate Assistant Commissioner remained pending. On the basis of these facts, the respondent urged the Court to follow the reasoning in Rashid and Sons v. Income‑tax Investigation Commission. In Rashid and Sons, the assessee, dissatisfied with a decision of the Income‑tax Investigation Commission, filed several applications under article 226 of the Constitution in the Punjab High Court. Those applications were dismissed on the ground that the Allahabad High Court possessed jurisdiction, since the assessee and the source of his income lay within its territorial jurisdiction, a principle derived from the Judicial Committee’s decision in Ryots of Garabandha v. Zamindar of Parlakimedi. After the dismissal of the four applications, the assessee appealed to the Supreme Court. The Supreme Court held that the Punjab High Court’s view on jurisdiction was erroneous and then examined the appropriate order. It was brought to the Supreme Court’s attention that the assessee had already caused a reference to be made to the Allahabad High Court under section 18(5) of the Investigations Commission Act, and that reference was still pending. The Supreme Court remarked, “In these circumstances, we think that it would not be proper to allow the appellants to invoke the discretionary jurisdiction under article 226 of the Constitution at the present state.” The Court also noted that the income‑tax authorities had not referred all the matters the petitioner desired, but emphasized that the Act itself provided sufficient remedies for such omissions. Relying on the authority of that case, the respondent contended that, just as the Supreme Court declined to issue a writ when the petitioner had already initiated a reference under the Investigation Commission Act and was pursuing a parallel remedy, this Court should likewise refuse to issue a writ in the present case, even if the appellant later demonstrated entitlement, because the appellant had initially lacked candor by not informing the Court of the parallel appeal and had chosen to pursue another remedy.

In the present matter, the Court stated that it must decline to issue a writ of certiorari for the same reason that the Supreme Court had refused to grant a writ to the petitioner, namely that the petitioner had already caused a reference to be made under the provisions of the Investigation Commission Act and was therefore pursuing a parallel remedy. The Court further held that even if the appellant could otherwise demonstrate entitlement to a writ, the Court could not grant one because the appellant had initially lacked candor by failing to disclose to the Court that it had also preferred an appeal, and because the appellant had elected to pursue that alternative remedy and must therefore remain bound by it.

The Court noted that it has been argued that a court should not adjudicate a writ application while another tribunal, in this case an inferior tribunal, is simultaneously deciding the same issue. Counsel for the appellant contended that the Supreme Court decision was not applicable because, in that case, the alternative remedy was being pursued before the High Court, whereas here the alternative remedy was being pursued only before an Appellate Assistant Commissioner. The Court observed that this factual difference does not create a material distinction; if anything, it makes the appellant’s position weaker.

The Court expressed the view that it would be both odd and highly inconvenient if, while exercising jurisdiction under article 226 of the Constitution, the Court were to adopt one view on the matters involved and another division of the same Court were to adopt a different view while dealing with a reference concerning the same points that might later arise before this Court in the chain of remedies under the Income‑Tax Act. Apart from the appellant’s lack of candor before the trial court, the Court found that the mere pendency of an appeal against the same order provided sufficient ground to refuse the issuance of a writ, even if the Court were otherwise convinced of the appellant’s substantive right to such relief.

The Court added that, during an extensive discussion of the difficulty created by the appellant’s own decision to prefer the appeal, no suggestion was made that the appellant would be prepared to withdraw that appeal.

Addressing the question of precedent, the Court referred to the case of Rex v. Inspector of Taxes. In that case, the assessee had preferred an appeal while also moving the High Court for a writ, but it was not clear whether the appeal preceded the writ application. At the time the rules nisi were heard, the appeals were still pending. The Court in that case cited the pendency of the appeal as one of the reasons for refusing the writ, observing that the court was confronted with undoubted jurisdiction, a decision within its authority, and an existing right of appeal that could correct any erroneous conclusions.

In the judgment, the Court observed that the situation presented involved “the ambit of the jurisdiction, a right of appeal whereby incorrect conclusions may be corrected, and an actual recourse to that appeal by the applicants who are before the court seeking these rules.” On that basis, the Court held that each of the writ applications must be dismissed. The counsel for the appellant, identified only as Mr Mitra, argued at the close of his submissions that there existed a serious doubt as to whether the appeal originally preferred by his client was legally maintainable. He submitted that, because of that doubt, the existence of the appeal should not prevent the Court from issuing a writ of certiorari. The Court noted that it had already ruled against the appellant on the merits of the case. Accordingly, the Court stated that it would be inappropriate to pass any further view on the maintainability of the appeal. Nevertheless, the Court pointed out that the appellant had expressly taken the position that a right of appeal existed and had, in fact, filed such an appeal. In considering whether the appellant’s conduct was proper or whether the issuance of a writ was expedient, the Court confined its analysis to the position actually adopted by the appellant. Since the appellant was prosecuting an appeal, the Court treated the appeal as an alternative remedy that the appellant believed to be available. The Court further emphasized that, because the merits of the appeal had already been decided against the appellant, the question of whether a writ of certiorari could or could not be issued in view of the pending appeal was immaterial.

Regarding the substantive reasons for the decision on the merits, the Court referred to earlier portions of the judgment. It addressed an argument raised by the appellant that the proper construction of section 18(3B) of the Income‑Tax Act had already been settled in the earlier decision of Das Gupta, J., and the Court in Appeal No 151 of 1958, namely Dutt v. Anglo‑India Jute Mills Co. Ltd., decided on 21 March 1957. Upon reviewing that judgment, the Court concluded that the earlier case did not directly decide the precise point in issue. The earlier case had concerned whether the term “residence” in what is now section 18(3B) referred to a physical residence or a residence defined for income‑tax purposes. However, that case did not determine which sums were chargeable under the provisions of the Act as contemplated by the sub‑section. The Court noted that the earlier judgment contained one or two observations suggesting that the payments in question might be regarded as gross receipts in the hands of the recipient, but the Court could not treat those observations as a binding decision on the question raised. Consequently, for the reasons previously set out, the Court dismissed the appeal and ordered that costs be awarded. The judgment was concurred by the other Justice, and the appeal was formally dismissed.