1. This is an application by the petitioner Messrs. Gotan Lime Syndicate, Gotan, for a certificate for appeal to the Supreme Court, arising out of a reference under Section 66 (1) of the Indian Income-tax Act, 1922, which was answered by us against the petitioner by our order dated the 9th October, 1963.
2. The facts leading up to the reference have been narrated at length in our order which is sought to be appealed against and need not be reiterated. Suffice it to say that the petitioner is a registered firm carrying on business in the manufacture of lime from lime-stone and obtained on lease from the State Government a certain area of land in connection with that business for a certain period and annually paid a sum of Rs. 96,000/-to the Mines Department of the State as lease money. The petitioner claimed that this was a recurring or a periodical expenditure, and, therefore, was an expenditure of a revenue nature for which deduction should be allowed to it under Section 10(2)(xv) of the Income-tax Act of 1922. Although this plea was rejected by the Income-tax Officer and the Appellate Assistant Commissioner, it prevailed with the Income-tax Appellate Tribunal Bombay Bench B, whereupon a reference was made to this Court under Section 66 (1) of the Income-tax Act at the instance of the Commissioner of Income-tax, Delhi and Rajasthan, New Delhi.
The question which thus arose for decision before this Court was whether on the facts and circumstances of the case, the sum of Rs. 96,000/-paid by the assessee petitioner during each of the relevant accounting years was rightly allowed as a revenue deduction in competing the business profits of the assessee company. We answered, this question in the negative and held that the expenditure with which we were concerned in this case was not incurred for the mere acquiring of the stock-in-trade or raw material for the assesses but was incurred for the acquisition of a source from, and/or the means by, which the stock-in-trade was to be acquired, and was, therefore, in the nature of an acquisition of an asset or advantage for the enduring benefit of the assessee's business, and that being so, it was tantamount to capital expenditure for which no deduction could be allowed to the assessee under Section 10(2)(xv) of the Income-tax Act.
We further held that the circumstance that the assessee was required to make an annual and recurring payment to the State and that that payment might have varied from year to year under certain contingencies, did not make any substantial difference to the conclusion to which we came. It is against this decision that the petitioner now applies for a certificate for appeal to the Supreme Court under Section 66-A of the Income-tax Act, 1922, or Section 261 of the Income-tax Act, 1961. As the provisions of both these sections are identical, it is immaterial whether the present application is treated as having been made under the one or the other section.
3. The sole question for decision before us is whether we should certify this case to be a fit one for appeal to the Supreme Court. It has been strenuously contended before us on behalf of the department that we should hold against the petitioner on this point, as, in coming to the conclusion to which we did, we have relied on the guiding tests as laid down by the Supreme Court in Pingle Industries Ltd. v. Commr. of Income-tax : 40ITR67(SC) and Abdul Kayoom v. Commr. of Income-tax : 44ITR689(SC) and certain English cases cited with approval therein, and, therefore, the case does not involve any substantial question of law but really boils down to a matter of the application of that law to the facts and circumstances of a particular case. Our attention was invited in this connection to the decision of the Supreme Court in State of Jammu and Kashmir v. Thakur Ganga Singh : 2SCR346 in support of this submission. In the last-mentioned case, it was held that a substantial question of law cannot be said to arise where the law has been finally and authoritatively decided by the Supreme Court and what remains to be done by the High Court is only to apply that interpretation to the facts before it.
4. It is in these circumstances that we are called upon to pronounce whether the present is a fit case for the grant of a certificate for appeal to the Supreme Court within the meaning of Section 66-A(2) of the Income-tax Act, 1922, or Section 261 of the Income-tax Act, 1961. The language of these provisions is in the same terms as Article 133(1)(c) of the Constitution or Section 109(c) of the Code of Civil Procedure. The interpretation of Article 133(1)(c) came before a Full Bench of this Court in Gulab Bai v. Manphool Bai , though under somewhat different circumstances, and it was laid down that even though the point in dispute was measurable in terms of money and the valuation involved was less than that prescribed by Clauses (a) and (b) of Article 133(1) of the Constitution or Section 110, C. P. C. a certificate for appeal to the Supreme Court under Article 133(i)(c) or Section 109(c), C. P. C. could be given provided the case involved a question of great public or private importance.
It was also held that the mere existence of a substantial question of law was not sufficient to give the High Court jurisdiction to give leave to appeal under any of the provisions in question, and what was of the essence of the matter was that the question must be of great public or private importance. As to what would be a question of general public or private importance, it was pointed out that that would depend upon the facts and circumstances of each case.
5. Now, as we look at the provision contained in Article 133(1)(c) of the Constitution, and the same considerations in our opinion would apply to Section 66-A (2) of the Income-tax Act, 1922, or to Section 261 of the Income-tax Act, 1961, the grant of a certificate thereunder is essentially a question of discretion of the High Court independently of any pecuniary considerations. But, like all discretions in judicial matters, this discretion cannot be arbitrary or capricious and must be regulated by rational considerations. It further seems to us, having regard to the wide language in which this provision is couched, that the existence of a substantial question of law cannot be held to be a necessary pre-condition to the grant of a certificate under this provision, though, broadly speaking, this may be one of the factors which may fall to be taken into account in deciding whether a certificate should or should not be granted. A question of great general importance may be one of fact, and, where that is so, it will fall within the purview of Article 133(1)(c). See River Steam Navigation Co. Ltd. v. Shyam Sunder Tea Co. Ltd. AIR 1956 Gau 1. But so far as a reference under Section 66 of the Income-tax Act, 1922, or a reference under the corresponding Section 256 of the Income-tax Act 1961 is concerned, the question has to be one of law and therefore an application for certificate for appeal to the Supreme Court in this class of cases is always bound to be grounded on a question of law. What, however, must be borne in mind in this connection is that a question of law or, even a substantial question of law by itself would not be enough to attract the provisions of Article 133(1)(c), as it seems to be settled by a long string of decisions that what is essentially required is the existence of a question of great public or private importance. See Banarsi Parshad v. Kashi Krishna Narain 28 Ind App 11, Bibhabati Devi v. Ramendra Narayan Roy : AIR1942Cal498 . Even so, it may perhaps be well to remember what the learned Judges of the Federal Court in Jagannath Baksh v. United Provinces laid down with reference to Section 208(b) of the Government of India Act 1935 that the question of grant of leave to appeal to His Majesty in Council must be dealt with on the facts and circumstances of each case, and that it would be neither possible nor desirable to crystallise the rules relating to the exercise of the Court's discretion in the matter.
6. Bearing these principles in mind, and on a most careful and anxious consideration of all the issues involved, we have come to the conclusion that this is a fit case in which we should incline to grant a certificate for appeal to the Supreme Court. This litiagtion involves a serious question of law which is not an easy one to decide, and as we took the opportunity of pointing out in the course of our judgment:
'Indeed the question is not unoften one of such perplexity that the one conclusion on which the cases taking diverse views seem to agree is that it is not possible to lay down any hard and fast formula or to enunciate any rigid or scientific principle which could be applied as a sure criterion to all the cases and, therefore, 'the practical rule that is laid down is that each case must be decided having regard to its own peculiar facts and circumstances'.'
(The underlining (here into ' ') is ours).
Again, we may reproduce with advantage thefollowing extract from the majority judgment ofthe Supreme Court in : 44ITR689(SC) (Supra):
'What is attributable to capital and what to revenue has led to a long string of cases here and in the English Courts. The decisions of this Court reported in Assam Bengal Cement Co., Ltd. v. Commr. of Income-tax, : 27ITR34(SC) and Pingle Industries' case : 40ITR67(SC) (Supra) have considered all the leading cases and have also indicated the tests, which are usually applied in such cases, it is not necessary for us to covet the same grounds again. Further, 'none of the tests is either exhaustive or universal. Each case depends on its own facts, and a close similarity between one case and another is not enough, because even a single significant detail may alter the entire aspect'. In deciding such cases, one should avoid the temptation to decide cases...... by matching the colour of one case against the colour of another
(The underlining (here into ' ') is ours).
We have no doubt that the present case is not without its peculiar features and it raises an issue of importance both from the public and the private points of view which has been clearly brought out in our judgment, and has been disposed, of by us. It, therefore, does not seem to us to fall within the principle enunciated in : 2SCR346 (Supra). Our decision in this case is likely to affect not only the present petitioner in so far as his assessment for subsequent years is concerned, but may obviously affect numerous other cases of a like nature. The case also involves pecuniary liability of a very considerable value. Having regard to all these circumstances, we, have, on the whole, felt persuaded to hold that this is a fit case in which we should grant a certificate for appeal to the Supreme Court. Let a certificate be granted accordingly.