COMMISSIONER OF INCOME-TAX Vs. VOORA SREERAMULU CHETTY

JUDGEMENT

(1.) 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.

(2.) The respondent applied to the Commissioner of Income-tax to state a case on a question arising under Section 25(3) of the Income-tax Act. The Commissioner, relying on the decision of this Court in Venkatachalam V/s. Commissioner of Income-tax, Madras (1934) 68 M.L.J. 227 : I.L.R. 58 Mad. 367 (F.B.), 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 : I.L.R. 58 Mad. 357 (F.B.), 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 under Section 33. The applicant then applied to this Court under Section 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 under Section 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/s. Commissioner of Income-tax, Madras (1934) 68 M.L.J. 227 : I.L.R. 58 Mad. 367 (F.B.), 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.

(3.) 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 under Section 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 under Section 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 Secs.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.