The Commissioner of Income Tax vs Voora Sreeramulu Chetty

Alfred Henry Lionel Leach, C.J.—This is an application for a certificate permitting an appeal to His Majesty in Council from an order of this

Court in an Income Tax matter. The respondent has taken the preliminary objection that this Court has no power to grant a certificate in this case.

The respondent applied to the Commissioner of Income Tax to state a case on a question arising u/s 25(3) of the Income Tax Act. The

Commissioner, relying on the decision of this Court in Venkatachalam v. Commissioner of Income Tax, Madras (1934) 68 M.L.J. 227 : ILR 58

Mad. 367 , refused to state a case on the ground that the order was not prejudicial within the meaning of Section 66(2) read with Section 33. In

Venkatachalam v. Commissioner of Income Tax, Madras (1934) 68 M.L.J. 227 : ILR 58 Mad. 357 , an application was filed in the office of the

Income Tax Officer for a refund of Income Tax under the provisions of Section 48 of the Act. The application was rejected and the Commissioner

refused to interfere by an order u/s 33. The applicant then applied to this Court u/s 66(3). As the order of the Commissioner was not one

enhancing the assessment and as it was considered that it was not ""prejudicial"" to the petitioner the Court held that the application by him to the

Commissioner u/s 66(2) was incompetent. As some doubt was felt as to the correctness of this decision when the case out of which the present

application arises came before the Court a reference was made to a Full Bench of five Judges, and the answer given to the reference was that an

order refusing to interfere with a prejudicial order was itself prejudicial. Consequently it was held that Venkatachalam v. Commissioner of Income

Tax, Madras (1934) 68 M.L.J. 227 : ILR 58 Mad. 367 , had been wrongly decided. On receipt of the answer given by the Full Bench to the

question referred the Bench dealing with the petition directed the Commissioner of Income Tax to state a case on the point of law involved. The

Commissioner of Income Tax desires to challenge the correctness of the decision of the Full Bench in an appeal to His Majesty in Council.

Section 66-A(2) provides that an appeal shall lie to His Majesty in Council from any judgment of the High Court delivered on a reference made

u/s 66 in a case which the High Court certifies to be a fit one for appeal. Mr. Patanjali Sastri, on behalf of the Commissioner of Income Tax,

concedes that the Court has no jurisdiction to grant a certificate u/s 66-A(2), but says that it has power to do so under Clause 40 of the Letters

Patent. Clause 40 has to be read in conjunction with Clause 39. Clause 39 gives a right of appeal to the Privy Council in a matter not being of

criminal jurisdiction, from a final judgment, decree or order made on appeal and from a final judgment, decree or order made in the exercise of

original jurisdiction by Judges of the High Court or of a Division Court from which an appeal does not lie to the High Court under Clause 15 of the

Letters Patent. Then follows a proviso to the same effect as the provisions of Sections 109 and 110 of the Code of Civil Procedure. Clause 40

provides that the Court, at its discretion, may grant leave to appeal from a preliminary or interlocutory judgment, decree or order, in a proceeding

contemplated by Clause 39, subject to the same rules, regulations and limitations which apply to appeals from final judgments, decrees or orders.

In the case of Tata Iron and Steel Co. Limited v. Chief Revenue Authority of Bombay (1932) 45 M.L.J. 295 : L.R. 50 IndAp 212 : ILR 47

Bom. 724 , the Judicial Committee held that an appeal did not lie under Clause 39 of the Letters Patent of the Bombay High Court (which

corresponds to Clause 39 of the Letters Patent of this Court) from a decision of the High Court upon a case stated and referred to the Court by

the Income Tax Act, 1918, since the decision was merely advisory and therefore was not a final judgment, decree or order within the meaning of

the clause. In that case it was not argued that the decision was an interlocutory judgment, order or decree within the meaning of Clause 40, but the

argument is advanced here. It is said that the judgment of this Court in the Full Bench reference constitutes an interlocutory judgment within the

meaning of that clause and that the order directing the Commissioner of Income Tax to state a case based on the judgment of the Full Bench is also

within the clause. In my opinion these contentions cannot be maintained. If there is no appeal from a final order in an Income Tax matter, apart, of

course, from the appeal now given u/s 66-A(2), it is difficult to understand how there can be an appeal from an interlocutory order in such a

matter. I regard the direction which was given to the Commissioner of Income Tax to state a case as being an interlocutory order in a matter in

which the Court was required to act in an advisory capacity and the reference to the Full Bench formed part of the interlocutory proceedings. Tata

Iron and Steel Co. Limited v. Chief Revenue Authority of Bombay (1923) 45 M.L.J. 295 : L.R. 50 IndAp 212 : ILR 47 Bom. 724 is final on the

question whether there is an appeal when the Court is acting merely in an advisory capacity under the Income Tax Act and It covers the present

case.

The opinion which I have expressed receives support from the decisions in E.M. Chettyar Firm v. Commissioner of Income Tax ILR (1930) 8

Rang. 435 and Delhi Cloth and General Mills Co. v. Income Tax Commissioner, Delhi (1927) 2 ITR 439. and Mr. Patanjali Sastri admits that this

Court has followed the decision in E.M. Chettyar Firm v. Commissioner of Income Tax ILR (1930) 8 Rang. 435 in an unreported case. There is a

decision of the Lahore High Court - Feroze Shah v. Commissioner of Income Tax I.L.R.(1931) 12 Lah. 166 - which conflicts with the decisions I

have just mentioned, but it is not necessary to discuss it because we are bound by the decision of this Court.

For these reasons I would hold that the objection taken by the respondent is well-founded and that as the case HOW stands this Court has no

jurisdiction to grant a certificate. The respondent is entitled to the usual costs, Rs. 100.

Gentle, J.

I agree and wish to add a few words. It is conceded that u/s 66-A(2) of the Income tax Act there is no authority for this Court to grant a

certificate in this matter permitting an appeal to His Majesty in Council, and the application is really based upon the provisions of Clause 40 of the

Letters Patent. This clause does provide an appeal from a preliminary or interlocutory decision ""as aforesaid."" ""As aforesaid"", it is conceded by

Mr. Patanjali Sastri refers to the proceedings contemplated by Clause 39 of the Letters Patent. In my opinion this matter is not a final judgment,

decree or order within the contemplation of Clause 39. Since it has been held by their Lordships of the Judicial Committee in Tata Iron and Steel

Company, Limited v. Chief Revenue Authority of Bombay (1923) 45 M.L.J. 295 : L.R. 50 IndAp 212 : ILR 47 Bom. 724 , that there is no

appeal under Clause 39 of the Letters Patent from a decision of the High Court in an Income Tax matter it must follow that there can be no appeal

and no authority for this Court to grant a certificate permitting an appeal to His Majesty in Council under the provisions of Clause 40 of the Letters

Patent. For these reasons I agree with the views expressed by my Lord the Chief Justice that this application should be dismissed.

Somayya, J.

I agree.