KHARKHARI COAL COMPANY P LTD Vs. COMMISSIONER OF INCOME TAX
LAWS(CAL)-1961-7-3
HIGH COURT OF CALCUTTA
Decided on July 17,1961

KHARKHARI COAL COMPANY (P) LTD. Appellant
VERSUS
COMMISSIONER OF INCOME TAX Respondents

JUDGEMENT

H.K.BOSE, C.J. - (1.) THIS is an application for a certificate under Art. 133(1) of the Constitution in respect of an order of a division bench of this Court passed upon an application made under s. 66(2) of the Indian IT Act.
(2.) THE petitioner company lent and advanced certain sums of money to a company known as Vishnu Industrial Co. (P) Ltd., New Delhi, and the interest which the petitioner company received in respect of the loans was duly assessed by the IT authorities as interest on investment under s. 10 of the IT Act. THE said Vishnu Industrial Co. (P) Ltd. went into liquidation on 29th Sept., 1954. At that time a sum of Rs. 2,85,792 was found due and payable by the said company to the petitioner company. In its return submitted to the IT authorities in respect of the asst. yr. 1955-56 (accounting year 1954-55) the said sum of Rs. 2,85,792 was sought to be written off as bad debt. THE ITO, Companies District II, however, by his order, dt. 29th Dec., 1955, rejected the claim of the petitioner company to write off the said sum of Rs. 2,85,792 as bad debt. THE petitioner company thereupon preferred an appeal to the AAC, but this was dismissed on 23rd July, 1957. An appeal preferred by the petitioner company to the Tribunal against the said order of the AAC was also dismissed on 21st Nov., 1959. THE petitioner then moved the Tribunal for stating a case with regard to certain alleged questions of law under s. 66(1) of the IT Act. THE Tribunal rejected the said application. THEreupon this Court was moved under s. 66(2) of the IT Act for calling upon the Tribunal to state a case on the said questions, but this Court summarily rejected the application by its order dt. 2nd Jan., 1961. It is against this order that the petitioner company now intends to prefer an appeal to the Supreme Court. On behalf of the respondent a preliminary objection has been taken to the effect that the order of Division Bench dt. 2nd Jan., 1961, is not a judgment, decree or final order, within the meaning of Art. 133 of the Constitution and, as such, no appeal lies to the Supreme Court. Reliance has been placed on behalf of the respondent on a decision of the Supreme Court in Seth Premchand Satramdas vs. The State of Bihar (1950) SCR 799 : 1 STC313 : TC55R.957. This was an appeal from an order of the Patna High Court, declining to call upon the Board of Revenue to state the case under s. 21(3) of the Bihar ST Act with reference to an assessment made under that Act. The High Court of Patna had granted leave to appeal to the Federal Court following a Full Bench decision of the Lahore High Court in Feroze Shah Kaka Khel vs. CIT AIR 1931 Lah 138. The Supreme Court, however, referred a Special Bench decision of the Patna High Court in Sri Mahant Harihar Gir vs. CIT (1941) 9 ITR 246 (Pat) : TC56R.819, where it was held that no appeal lay to His Majesty in Council under cl. 31 of the Letters Patent of the Patna High Court from an order of the High Court dismissing an application under s. 66(3) of the IT Act (a provision similar to s. 21 of the Bihar ST Act) to direct the CIT to state a case and approved of that case as laying down the correct law. The Supreme Court further pointed out that in order that an appeal to lie to the Supreme Court, the order appealed against has to be either a judgment, decree or final order, but an order dismissing an application under s. 21(3) of Bihar ST Act to direct the Board of Revenue to state a case and refer it to the High Court could not be regarded as a final order within the meaning of cl. 31 of the Letters Patent of the Patna High Court in as much as such an order was advisory or consultative, and standing by itself it did not bind or affect the rights of the party, though the ultimate order passed by the Board of Revenue might be based on the opinion expressed by the High Court. It was further held by the Supreme Court that such an order passed by the High Court was not an order which was passed in the exercise of either its appellate or its original jurisdiction within the meaning of clause 31 of Letters Patent of the Patna High Court.
(3.) THE question whether an order of the High Court passed under s. 66(2) of the IT Act dismissing an application for the directing the Tribunal to state the case is a judgment, decree or final order, within the meaning of Art. 133 of the Constitution from which an appeal lies to the Supreme Court came up for consideration before Punjab High Court in the case of Pehlad Rai and Co. vs. CIT (1952) 21 ITR 523 (Punj) : TC56R.809 and a division bench of that Court, following the decision of the Supreme Court, to which reference has already been made, held that such an order passed by the High Court in the exercise of its jurisdiction under s. 66(2) of the IT Act was not a judgment, decree, or final order within the meaning of Art. 133 of the Constitution, and no appeal from such a decision was competent. THE application for leave to appeal was, therefore, dismissed. Similarly, in a decision of the Madras Court in Omar Salay Mohammed Sait vs. CIT (1955) 28 ITR 77 (Mad) : TC56R.818, Rajamannar, C.J. held an order refusing an application under s. 66(2) of the IT Act for a direction to the Tribunal to state a case and refer the question of law to the High Court was not an order from which an appeal lay to the Supreme Court under Art. 133 of the Constitution or ss. 109 and 110 of the CPC. THE learned Chief Justice referred to the decision of Patna High Court which was approved by the Supreme Court in the case of Seth Premchand Satramdas vs. State of Bihar (supra) and it was also pointed out by the learned Chief Justice that the full bench ruling of the Lahore High Court in the case of Feroze Shah Kaka Khel vs. CIT (supra) could no longer be regarded as good law in view of the observations of the Supreme Court in Seth Premchand's case (supra). It appears to us that inasmuch as an order passed in an application under s. 66(2) of the IT Act cannot be said to dispose of the case finally or by its own force to bind or affect the rights of the parties to such an application, such an order cannot be said to be a judgment, decree or final order, within the meaning of the expression, as used in Art. 133(1) of the Constitution. We, therefore, hold that no appeal lies to the Supreme Court from the order, which was passed by the division bench of this Court on 2nd Jan., 1961, and this application must therefore be dismissed with costs.;


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