Judgement

Appeal (No. 71 of 1939) from a judgment of the High Court (February 3, 1938) on a reference by the Commissioner of Income-tax, Punjab, North-West Frontier and Delhi Provinces, under s. 66, sub-s.2, of the Indian Income-tax Act, 1922.

The question raised by this appeal was whether or not the profit realized by the appellant, the Punjab Co-operative Bank, Ld., Amritsar, on the sale of certain securities was a profit liable to income-tax under the Indian Income-tax Act, 1922.

The facts appear from the judgment of the Judicial Committee, and the questions referred by the Commissioner were (1.) "Whether in the circumstances of the case the amount of Rs.1,42,588 realised by the assessee on the sale of securities and shares over their cost price is taxable; and (2.) " Whether under the circumstances of the case the net interest amounting to Rs.2764 received from vendees of securities on de die in diem basis is taxable."

The High Court (Addison and Din Mohammed JJ.) answered both questions in the affirmative.

On the hearing of the present appeal a preliminary objection was taken by the respondent as to the jurisdiction of His Majesty in Council, by reason of the provisions of s. 205 of the Government of India Act, 1935, to hear the appeal. The terms of s. 205 appear from the judgment of the Judicial Committee. In the present case the High Court had certified under s. 66a of the Indian Income-tax Act, on the petition of the Appellant Bank, that the case was a fit one for appeal to His Majesty in Council.

1940. June 25, 26, 27. J. M. Tucker K.C. and W. Wallach for the respondent. The preliminary objection to the jurisdiction of His Majesty in Council to hear this appeal arises out of the decision of the Board in Errol Mackay v. Oswald Forbes (1) as to the effect of s. 205 of the Government of India Act, 1935. [The section was read.] If there is a case which does involve a substantial question of law as to the interpretation of the Act of 1935 or any Order in Council made under it, and the High Court certifies that such a question is involved, then no appeal lies to His Majesty in Council either with or

98 Law. Rep. 67 Ind. App. 464 ( 1939- 1940) Punjab Co-Operative Bank v. C ommissioner of Income-Tax 200

without special leave. It is not suggested that any such question is involved in the present case. The burden of the decision in the Errol Mackay case (1), however, is wide enough to make it necessary for the High Court in every case where there is a judgment, decree or final order to consider whether or not there is a question in the case which involves the interpretation of the Government of India Act. The Errol Mackay case (1) did involve the interpretation of a section of an Act as amended by an Order in Council made under the Government of India Act, and therefore came within the words of s. 205. In every case where there is a judgment, decree or final order the duty of the High Court is to consider whether any question in that judgment raises a question of the interpretation of the Government of India Act or any Order in Council made thereunder, and they must then certify one way or the other—the High Court is required of its own motion " to give or withhold a certificate "accordingly." The decision in Errol Mackays case (( 1940) L. R. 67 I. A. 64.) requires the High Court to state definitely that a certificate is being withheld. If a certificate is given, then this Board has no jurisdiction. In the present case it is not known whether it has been affirmatively withheld, and that is why the Board has said that it must be stated one way or the other, because until that is known there is a doubt as to the jurisdiction of the Board. If the High Court have considered the question, and have withheld a certificate, then the matter is at large, and is to be decided according to the ordinary rules governing appeals. The certificate in this case is clearly not one under s. 205. It has been held by the Federal Court in India that