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Commissioner of Income-tax Vs. Indradaman Amratlal - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtGujarat High Court
Decided On
Case NumberIncome-tax Reference No. 184 of 1978
Judge
Reported in(1986)51CTR(Guj)215; [1985]156ITR493(Guj)
ActsIncome Tax Act, 1961 - Sections 40 and 261
AppellantCommissioner of Income-tax
Respondentindradaman Amratlal
Appellant Advocate R.P. Bhatt, Adv.
Respondent Advocate K.C. Patel, Adv.
Cases Referred(see Central Bank of India v. Their Workmen
Excerpt:
.....question has been raised as to what is the effect of the decision of the supreme court rejecting special leave petition to appeal (civil) no. we do not think that this contention is well founded. the general principle for grant of special leave is, in exceptional cases, where substantial and grave injustice is shown to have been done or where the case presents features of special gravity. such special leave will, therefore, be granted only sparingly and in exceptional cases (see bharat bank ltd. even after hearing on merits, if the supreme court is satisfied that there has been no failure of justice, it may dismiss the appeal without deciding the main question sought to be raised in appeal (see central bank of india v. [1979]117itr849(guj) .in any case, it would be unsafe to say that..........question has been raised as to what is the effect of the decision of the supreme court rejecting special leave petition to appeal (civil) no. 773681 preferred by the commissioner, against the decision of this court in cit v. sajjanraj divanchand [1980] 126 itr 654. which in the opinion of the division bench of this court consisting of thakkar c.j. bench directed the reference made in chhotalal & co. v. cit : [1984]150itr276(guj) , being income-tax reference no. 31376, to a larger bench, which ultimately overruled the decision in sajjanraj divanchand's case [1980] 126 itr 654. the decision of the full bench in chhotalal & co.'s case is reported in : [1984]150itr276(guj) . the question which has been raised is that the supreme court has rejected the special leave petition preferred by.....
Judgment:

B.K. Mehta, J.

1. At the instance of the Commissioner of Income-tax, Gujarat, the following question has been referred to us for our opinion :

'Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the interest of Rs. 35,456 paid to Shri Amratlal Hargovandas, Hindu undivided family account account, by the individual capacity could not be disallowed under section 40(b) of the Income-tax Act, 1961 ?'

2. Since this question is covered by the decision of Full Bench of this court in Chhotalal & Co. v. CIT : [1984]150ITR276(Guj) , this and other companion matters have been placed for disposal before us. A short but interesting question has been raised as to what is the effect of the decision of the Supreme Court rejecting Special Leave Petition to Appeal (Civil) No. 773681 preferred by the Commissioner, against the decision of this court in CIT v. Sajjanraj Divanchand [1980] 126 ITR 654. which in the opinion of the Division Bench of this court consisting of Thakkar C.J. Bench directed the reference made in Chhotalal & Co. v. CIT : [1984]150ITR276(Guj) , being Income-tax Reference No. 31376, to a Larger Bench, which ultimately overruled the decision in Sajjanraj Divanchand's case [1980] 126 ITR 654. The decision of the Full Bench in Chhotalal & Co.'s case is reported in : [1984]150ITR276(Guj) . The question which has been raised is that the Supreme Court has rejected the Special Leave Petition preferred by the Commissioner, against the decision of this court in Sajjanraj Divanchand's case [1980] 126 ITR 654, on merits and, therefore, it is tantamount to confirming the decision of this court in Sajjanraj Divanchand's case [1980] 126 ITR 654, and, therefore, the Full Bench could not have overruled it. We do not think that this contention is well founded. The reasons are obvious. A party moving the Supreme Court for leave to appeal under article 136 of the Constitution has no right as a matter of course to get the leave. The general principle for grant of special leave is, in exceptional cases, where substantial and grave injustice is shown to have been done or where the case presents features of special gravity. In other words, the grant of special leave depends on as to whether there is a substantial question of law of public interest (see Mundrika Prasad Sinha v. State of Bihar : [1980]1SCR759 ). The Supreme Court has adopted the principles which were followed by the Judicial Committee of the Privy Council in granting special leave to appeal. Such special leave will, therefore, be granted only sparingly and in exceptional cases (see Bharat Bank Ltd. v. Employees of Bharat Bank Ltd. : (1950)NULLLLJ921SC , and Madhav Hayawadanrao Hoskot v. State of Maharashtra : 1978CriLJ1678 ). If, therefore, the Supreme Court refuse to grant leave to an appeal, it does not mean ipso facto that the judgment sought to be appealed against is confirmed as to its ratio andor the conclusions, particularly when there is no speaking order. Even after hearing on merits, if the Supreme Court is satisfied that there has been no failure of justice, it may dismiss the appeal without deciding the main question sought to be raised in appeal (see Central Bank of India v. Their Workmen [1959] 29 Comp Cas 357 : 17 FJR 57). The only effect of not granting special leave is that the legal position enunciated by the judgment of the court sought to be appealed against is one where the Supreme Court for valid reasons declines to interfere (see Additional CIT v. New Jehangir Vakil Mills Co. Ltd. : [1979]117ITR849(Guj) . In any case, it would be unsafe to say that the effect of not granting the special leave, even where the court has in its order refusing to grant the leave stared the special leave petition was dismissed on merits, since there is no practice to state the reasons while refusing the leave that it would be tantamouth to confirming the judgment sought to be appealed against on the matter of the principle involved andor the conclusion reached therein. This contention has not commended itself to us because otherwise it would amount to saying that the decision is binding impliedly without having the benefit of the detailed consideration being stated by the Supreme Court. The contention should, therefore, be rejected and we should proceed on the basis that decision in Sajjanraj Divanchand's case [1980] 126 ITR 654 stands overruled, as clearly directed by the Full Bench in Chhotalal & Co's case : [1984]150ITR276(Guj) . It is in the light of the decision of the Full Bench that we shall have to answer the question referred to us in this reference in the affirmative, i.e., in favour of the assessee and against the Revenue. There would be no order as to costs.


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