DERBYSHIRE, C.J. - This Rule must be discharged with costs. In the letter with Income Tax Commissioner has sent to this Court under the rules of this Court showing cause against the Rule which we ordered to issue, the first question submitted is 'Whether a lease deed stipulating an annual rental of a house property is not conclusive evidence to prove the bona fide annual value as stipulated by Section 9(1) of the Income Tax Act'. The Commissioner of Income tax submits that the question is altogether one of fact and that a lease deed stipulating an annual rental value, though one piece of evidence is not conclusive evidence of the bona fide annual value of the property and that in determining that value of the property all the circumstances of the cases must be considered. Mr. Banerji who appears in support of this Rule admits that that contention is right.
The second question submitted 'is whether or not there was a succession within the meaning of Section 26(2) of the Act to the Jute Mill of the assessees which was sold without transferring the account books, debts and outstandings etc.' The Income Tax Commissioner has set out the facts relating to transfer of building machinery stocks and stores and the land on which he built. H submits this again as a question of fact. I think that it is a question of fact and Mr. Banerji dies not argue to the contrary. So, that question goes.
The third question with regard to which the commissioner of Income Tax is asked to show cause why he should not state a case is as follows : 'Whether assuming that there was a succession under section 26(2) of the act the assessee was entitled to the deduction for the losses incurred by him in the business'. The Commissioner of Income Tax says that that question was never raised before in this form and in his submission the assessee ought not to be allowed to raise it at this stage when it was not in the this form either before the Income Tax Officer, the Assistant Commissioner of Income Tax or the Commissioner of Income Tax.
Now, this Rule was issued under the provisions of Section 66 of the Income Tax Act. Section 66 sub-section (1) is as follows : 'If in the course of any assessment under this Act or any proceedings in connection therewith other than a proceeding under Chapter VIII, question of law arises, The Commissioner may, either on his own motion or on reference from any income-tax authority subordinate to him, draw up a statement of the case and refer it with his own opinion thereon to the High Court.' The Rule was not issued under that section. The rule was applied for under the next sub-section, sub-Section (2) of Section 66, which says 'within sixty days of the date on which he is served with notice of an order under Section 31 or Section 32 or of an order under Section 33 enhancing an assessment or otherwise prejudicial to him or of a decision by a Board of referees under Section 33-A the assessee in respect of whom the order or decision was passed my, by application accompanied by a fee of one hundred rupees or such lesser sum as may be prescribed, require the Commissioner to refer to the High Court any question of law arising out of such order or decision, and the Commissioner shall, within the sixty days of the receipt of such application draw up a statement of the case and refer with his own opinion thereon to the High Court. Provided that a reference shall life from an order under Section 33 only on question of law arising out of that order itself and not on a question of law arising out of a previous order under Section 31 or Section 32, revised by the order under Section 33. Provided further that if in exercise of his power of revision under section 33, the Commissioner rejects the application on the ground that it is time barred or otherwise incompetent, or if, in exercise of his powers under sub-section (3), the commissioner refuses to state the case, the assessee may within thirty days from the date on which he receives notice of the order passed by the Commissioner withdraw his application, and if he does so, the fee paid shall be refunded.' Then sub-section (3) says 'If on any application being made under sub-section (2) the Commissioner refuses to state the case on the ground that no question of law arises the assessee may apply within sixty months from the date on which he is served with notice of the refusal to the High court, and the High Court, if it is not satisfied of the correctness of the Commissioners decision, may require the Commissioner to state the case and to refer it, and on receipt of any such requisition, the Commissioner shall state and refer the case accordingly.' The rest of the sub-section is not relevant.
On the 22nd December, 1934, the assessee purported to make an application under section 66(2) of the Income-tax Act headed 'For the assessment year 1933-34', saying 'Your petitioner most humbly prays that the following points of law which arise out of the assessment proceedings to the assessee named above, may kindly be referred to the High Court of Judicature at Calcutta, under Section 66(2) of the Indian Income Tax Act, XI of 1922, for determination with reference to the facts and circumstances of the case referred to above.
(1) Whether a lease deed stipulating an annual rental value of a house property is not a conclusive evidence to prove the bona fide annual value as contemplated by section 9 (1) of the Income Tax Act ?
(2) Whether the Income Tax Officer was right in assessing to income tax the same income under section 9 twice, viz., once in the hands of the lessor and for the second time in the hands of the lessee ?
(3) Whether or not there was a succession within the meaning of section 26(2) of the Act to the Jute Mill of the assessee which was sold without transferring the account books, debts and outstandings, etc. ?
Your petitioner would be much pleased to withdraw the above application if the points of law were decided under Section 33 of the act no prejudicial to the interests of the assessee.
The question we are concerned with now, as I read out before is whether assuming that there was a succession under Section 25 (2) of the Act of the assessee was entitled to deduction for the losses incurred by him in the business. It is quite clear when the application made by the assessee under Section 66(2), which is the foundation of this proceeding, was made, that the question which is now sought to be raised was never mentioned at all. It is another matter due to an after-thought, which has been raised since. Under those circumstances it appears to us that the assessee is not, to use the words of the Act, entitled to require the Commissioner to refer to this court this particular question of law. If he were in a position to do that he should have raised it in his application under Section 66(2). That he did not do. Consequently we do not order that the Income Tax Commissioner should state a case on this particular question.
The result is that the Rule issued in this matter is discharged with costs. The total costs of the Income Tax Commissioner are assessed with the consent of the applicant at Rupees one hundred and fifty.
COSTELLO, J. - I agree.