Judgement

Petitions for special leave to appeal from two orders of the High Court (January 6 and 12, 1926) made upon two cases stated by the Commissioner of Income Tax under s. 66, subs. 2, of the Indian Income Tax Act (Act XI. of 1922), upon applications by the petitioners.

One petition related to an assessment dated June 12, 1923, for income tax for the year 1922-3, which assessment provided for the recovery of additional income tax for the year 1921-2 by way of adjustment under s. 19 of the Indian Income Tax Act, 1918. The petitioners contention was that the adjustment was barred by s. 34 of the Act of 1918.

The other petition related to an assessment dated March 23, 1924, for the year 1923-4, so far as it included a sum of Rs. 1,00,000, which the petitioners had carried to their profit and loss account for the year 1922 from a reserve account created out of profits for the year 1918. The petitioners contended that the sum of Rs.1,00,000 should have been assessed for the year in which it was received, and that the present assessment in respect of it was barred by s. 34 and s. 35, sub-s.1, of the Act of 1922.

The High Court (Le Rossignol and Martineau JJ.) had rejected the contentions of the petitioners upon the cases stated and affirmed the decisions of the Commissioner.

The petitioners applied to the High Court for leave to appeal to the Privy Council, but both applications were dismissed.

The first of those applications related to the assessment of March 23, 1924. The learned judges (Broadway and Zafar Ali JJ.) held that under s. 66a, sub-s. 2 (added to the Income Tax Act, 1922, by Act XXIV. of 1926), under which the application was made, a certificate could be granted only in cases involving a question of law of great private or public importance. They were of opinion that the point of law involved was not of such universal or paramount importance as to warrant the granting of a certificate. The judgment is reported at I. L. R. 8 L. 269.

On the second application the same learned judges observed that the point raised could scarcely arise again, having regard to alterations in the legislation.

Each of the petitions stated that the amount involved was Rs. 15,000 or thereabouts, and that questions of considerable importance arose.

July 18, 19. Sir George Lowndes K.C. and E. B. Raikes for the petitioners.

Dunne K.C. and Kenworthy Brown for the respondents.

July 26. The judgment of their Lordships was delivered by

LORD BLANESBURGH. These petitions are each of them for special leave to appeal from orders made by the High Court of Judicature at Lahore on references to that Court under s. 6, sub-s.2, of the Indian Income Tax Act, 1922.

In each case the sum in dispute exceeds Rs. 10,000. In each the order in question was made before April 1, 1926—that in the first of the two cases being of date January 12, 1926, and that in the second having been made on January 6, 1926. In each case, also, the High Court refused to certify that the case was a fit one for appeal to His Majesty in Council. With these facts for its foundation, an interesting argument was addressed to the Board upon the nature of the statutory appeal in such cases as these, and upon the question whether in the present instances there is any such appeal at all.

The learned judges of the High Court were of opinion that the petitioners had a right of appeal to His Majesty in Council provided they could, in effect, bring their cases within the requirements of s. 109 (c) of the Code of Civil Procedure, but not otherwise. They dealt with the applications for certificates on that footing, and they dismissed them. Hence the present petitions.

At the hearing before the Board, the view of the High Court was resolutely challenged by the petitioners. It sufficed, it was contended, that the cases should fall within the requirements of s. 110 of the Code the petitioners right of appeal was in no way conditional on compliance with the requirements of s. 109 (c). The respondents, o