1. This is an application for a Certificate under Article 135 of the Constitution in respect of a decision of a Division Bench of this Court, dated May 4, 1961, whereby an application under Section 66 (2)of the Indian Income-tax Act for calling upon the Income-tax Appellate Tribunal to state a case and refer certain questions of law to this Court wassummarily rejected.
2. The petitioner is a Hindu undivided family of which one B.K. Rohatgi is the Karta. In respect of the assessment year 1944-45 the Income-tax Officer included a sum of Rs. 98,426/- as the income of the said joint family. This amount represented the remuneration paid by India Electric Works Limited to Mr. Rohatgi for services rendered by him to the Company as Managing Director under the terms of an agreement, dated January 31, 1934, between India Electric Works Limited and Mr. Rohatgi. The Income-tax Officer treated this income earned by the Managing Director as the income of the joint family and assessed it to tax as such after overruling certain contentions raised on behalf of the Hindu undivided family that the amount in question was not assessable as the income of the joint family.
3. Against the order of the Income-tax Officer the petitioner filed an appeal before the Appellate Assistant Commissioner of Income-tax Range 'A', Calcutta, but -the Appellate Assistant Commissioner upheld the order of the Income-tax Officer. The petitioner thereafter filed an appeal before the Income-tax Appellate Tribunal, but the Appellate Tribunal held that in view of the decision of the Supreme Court in respect of the assessment year 1943-44 it should be held that the income belonged to the joint family.
4. The petitioner being aggrieved by the said order of the Income-tax Appellate Tribunal applied to the Tribunal for a Reference to the High Court under Section 66 (1) of the Indian Income-tax Act and for statement of a case to the High Court relating to certain questions of law mentioned in paragraph 5 of the petition. The said application under Section 66 (1) of the Act was, however, refused by the Tribunal by its order dated July 19. 1960.
5. Thereafter an application was made to this Court under Section 66 (2) of the Indian Income-tax Act, but the said application, as I have already stated, was summarily rejected by a Division Bench ef this Court on May 4, 1961. It is against this order of the Division Bench that the petitioner now intends to prefer an appeal to the Supreme Court.
6. On behalf of the respondent a preliminary objection has been raised as to the maintainability of the appeal to the Supreme Court.
7. Learned counsel for the petitioner in answer to the preliminary objection contends that the appeal is competent under the provisions of Article 135 of the Constitution which reads as follows:
'Until Parliament by law otherwise provides, the Supreme Court shall also have jurisdiction and powers with respect to any matter to which the provisions of Article 133 or 134 do not apply if jurisdiction and powers in relation to that matter were exercisable by the Federal Court immediately before the commencement of this Constitution under any existing law.'
8. It is submitted by the learned counsel for the petitioner that by reason of the provisions of the Federal Court (Enlargement of Jurisdiction) Act 1947, (Act I of 1948) and by reason of the Abolition of the Privy Council Jurisdiction Act, (C. A. Act V of 1949) the Federal Court had jurisdiction immediately before the commencement of this Constitution to entertain appeals in respect of Income-tax matters. Consequently if the decision of the Division Bench refusing the application under Section 66 (2) of the Act is not judgment, decree or final order within the meaning of Article 133 of the Constitution, then by virtue of the terms of Article 135 of the Constitution, an appeal would automatically lie to the Supreme Court from the decision of the Division Bench in question.
9. Reliance is placed upon a decision of this Court reported in Commissioner of Excess Profits Tax, West Bengal v. Ruby General Insurance Co. Ltd. : 25ITR418(Cal) . Chakravartti, C.J. in construing the provisions of the Federal Court (Enlargement of Jurisdiction) Act, 1947 (Act I of 1948) observed that the expression ''civil case' was not used in that Act in the strict sense of cases governed by the C.P. C. but was used in a sense, large enough to comprise proceedings in Income-tax matters. The jurisdiction to hear appeals arising out of Income-tax matters came to the Federal Court under the aforesaid Act and has now been conferred on the Supreme Court by Article 135 of the Constitution. At page 360 of the report (Cal WN): (at p. 480 of AIR), the learned Chief Justice observed as follows:
'It appears to me that since Article 135 applies to the case and the petitioner is entitled to ask for leave under that Article read with Section 66A (2; of the Income-tax Act, the second argument of Mr. Khaitan does not call for consideration. I may, however, add that Article 133 cannot possibly have any application to an appeal in an income-tax matter and therefore no argument founded on that Article, whether in favour or against an appeal is relevant.'
In this particular case the application for Certificate was allowed, but Certificate under Article 135, read with Section 66A (2) of the Indian Income-tax Act was directed to be drawn up. So this case is no authority for the proposition that an appeal in respect of Income-tax matters lies to the Supreme Court independently and solely by virtue of the provisions of Article 135 of the Constitution.
10. The attention of the Court has also been drawn to a decision of the Bombay High Court reported in Jamanadas Prabhudas, Bombay v. Commissioner of Income-tax, Bombay City : 22ITR150(Bom) . In this case Chagla, C. J. has held that the expression 'judgment, decree Or final order' used in Article 133(1) of the Constitution does not apply to a decision given by the High Court under Section 66 of the Income-tax Act on a Reference, and so when a petition is made to the High Court arising out of a Reference decided by the High Court, for leave to appeal to the Supreme Court, apart from Article 132, the High Court has to consider whether leave should be granted or not only under Section 66A (2) of the Income-tax Act. Referring to Article 135 of the Constitution the learned ChiefJustice observed that the result of the Federal Court (Enlargement of Jurisdiction) Act, 1947, and the Abolition of the Privy Council Jurisdiction Act, 1949, is that before the Constitution came into force the Federal Court had the same jurisdiction that the Privy Council had under Section 66A (2) to hear appeals in Income-tax matter, and if the Federal Court had the jurisdiction, the Supreme Court has also jurisdiction under Article 135 of the Constitution. In paragraph (5) of the judgment the following observation occurs :
'For this purpose, our attention is drawn to Article 135 which confers upon the Supreme Court the jurisdiction and powers which were exercisable by the Federal Court immediately before the commencement of the Constitution, This jurisdiction is additional to the jurisdiction conferred upon the Supreme Court by Articles 133 and 134, and Sir Jamshedji is right that if the Federal Court had no jurisdiction to hear income-tax matters then the Supreme Court would not have jurisdiction under Article 135 and the result might be that there would be no right to appeal to the Supreme Court either under Article 133 or under Article 135. But the position in law is clear that the Federal Court had the jurisdiction before the commencement of the Constitution to hear appeals in income-tax matters. The Privy Council had the right to hear appeals under Section 66-A (2). Then an Act was passed, being Act I of 1948, enlarging the appellate jurisdiction of the Federal Court, and under this Act the jurisdiction was conferred upon the Federal Court to hear all appeals in civil matters which were being heard by the Privy Council, and it was by reason of this Act that the Federal Court entertained appeals in income-tax matters. Then came Act V of 1949. ........ ........ Therefore the result ofthose two Acts was that before the Constitution came into force the Federal Court had the same jurisdiction that the Privy Council had under Section 66A (2) to hear appeals in income-tax matters, and if the Federal Court had the jurisdiction the Supreme Court has also jurisdiction under Article 135.'
11. Therefore, this case also lays stress on the aspect that inasmuch as the Privy Council had jurisdiction by virtue of Section 66A (2) to entertain appeals in income-tax matters, the Federal Court acquired that jurisdiction to entertain appeals under Section 66A (2) by reason of Act I of 1948 read with Act V of 1949. This case also does not support the proposition that an appeal lies to the Supreme Court in respect of income-tax matters only by virtue of the provisions of Article 135 of the Constitution.
12. The Supreme Court in the case of Garikapati Veeraya v. N. Subbaiah Choudhury : 1SCR488 , had occasion to construe Article 135 of the Constitution. In that case the question arose whether a suit instituted prior to the coming into force of the Constitution and in which a decree was passed after the coming into force of the Constitution, and where the value of the subject matter in dispute was only Rs. 11,400/-, i.e., much below the requirement as to valuation, as contemplated by Sub-clauses (a) and (b) of Clause (1) of Article 133 of the Constitution,would be subject of an appeal to the Supreme Court by virtue of the provisions of Article 135 of the Constitution. The Supreme Court at page 542 of the report (SCA) : (at p. 564 of AIR), recorded the following conclusion :
'For reasons stated above we think that the suit out of which this application arises, having been instituted before the date of the Constitution the parties thereto had, from the date of the institution of the suit a vested right of appeal upon terms and conditions then in force, and the judgment sought to be appealed from being a judgment of reversal and the value of the subject-matter being above Rs. 10000 the applicant had a vested right of appeal to the Federal Court under the provisions of the old Civil Procedure Code read with the Government of India Act, 1935, and the Federal Court (Enlargement of Jurisdiction) Act, 1947. Such a vested right of appeal was a matter which did not fall within Article 133 and jurisdiction and powers with respect to such right of appeal Was exercisable by the Federal Court immediately before the commencement of the Constitution and consequently the applicant had a right of appeal under Article 135 and the High Court was in error in refusing leave to appeal to the petitioner.'
13. It is clear from several other observations made in this judgment of the Supreme Court that it is a general principle that every law touching substantive rights which include a right of appeal is presumed to be prospective only, and so Arts. 133 and 134 of the Constitution apply only to judgments, decrees and orders of a High Court passed after the coming into force of the Constitution. Hence under the two Articles taken by themselves, judgments, decrees and orders passed before the Constitution would not be appealable to the Supreme Court, even if the requirements of these two Articles were satisfied. In the case of such judgments, decrees and orders an appeal would have lain to the Federal Court if the requirements of the law as it existed before the Constitution had been satisfied, but owing to the abolition of the Federal Court, the right of appeal is lost to the aggrieved party. But this result has been avoided by the enactment of Article 135 under which a right of appeal is given to the Supreme Court in such cases in the same circumstances in which an appeal would have lain to the Federal Court if the Federal Court had continued in existence and the Constitution had not been brought into force (See also Janardhan Reddi v. The State : 1SCR940 .
14. A reference may be made in this connection to the decision of the Supreme Court reported in Premchand Satramdas v. The State of Bihar : 19ITR108(SC) . In this case it was held that no appeal lay to the Federal Court from an order dismissing an application under Section 21 (3) of the Bihar Sales Tax Act 1944, to direct the Board of Revenue. Bihar, to state a case and refer it to the High Court. It was pointed out in that case that such an order was not ''final order' within the meaning of Clause 31 of the Letters Patent of the Patna High Court, inasmuch as an order of the High Court under Section 21 (3) was advisory, and standing byitself did not bind or affect the rights of the parties, though the ultimate order passed by the Board of Revenue might be based on the opinion expressed by the High Court, nor was such an order passed by the High Court in the exercise either of its appellate or original jurisdiction within the meaning of the said clause. A reference was made by Fazl Ali, J. in the course of his judgment to the decision of the Privy Council in the case of Tata Iron and Steel Co. Ltd. v. Chief Revenue Authority Bombay, 50 Ind App 2l2 : (AIR 1923 PC 148), where Lord Atkinson pointed out,
Where a statute provided that a case might be stated for the decision of the. Court, it was held that though the language might prima facie import that there has to be the equivalent of a judgment or order, yet when the context was looked at it appeared that the jurisdiction of the Court appealed to was only consultative, and that there was nothing which amounted to a judgment or order'.
It is thus clear from this decision of the Supreme Court that an appeal would not lie to the Fedral Court from such an order passed by the High Court in exercise of its advisory or consultative jurisdiction and it is to get round the effect of this Privy Council decision in 50 Ind App 212: (AIR 1923 PC 148) that Section 66A(2) was enacted.
15. This being the position, it cannot be said that solely by virtue of the provisions of Article 135 of the Constitution an appeal lies to the Supreme Court from a decision or order refusing an application under Section 66(2) of the Indian Income Tax Act. We are, therefore, constrained to take the view that no appeal lies to the Supreme Court in the facts and circumstances of this case, and, therefore, this application for certificate under Article 135 of the Constitution must be refused and it is accordingly dismissed with costs.
Debabrata Mookerjee, J.
16. I agree.