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TMI Blog1943 (9) TMI 16X X X X Extracts X X X X X X X X Extracts X X X X ..... eign losses. So far as the first question is concerned, the Income Tax Officer made his assessment, and there was an appeal to the Assistant Commissioner, who agreed with the Income Tax Officers order. Then an application was made to the Commissioner to refer a case under Section 66(2) of the Act, but he refused to do so. The assessee did not then apply to the Court to direct the Commissioner to refer a case under Section 66(3), as he might have done, but applied to the Commissioner to revise the order of the Assistant Commissioner under Section 33. The Commissioner heard the parties at length, and made an order declining to interfere with the Assistant Commissioners order. Section 33 of the Income Tax Act, before the Amendment of 193 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cases on the subject are not altogether in agreement. A Bench of three Judges of the Madras High Court in Venkatachalam Chettiar v. Commissioner of Income Tax, held that Section 33 contemplates an order made by the Commissioner which alters the position of an assessee or that if the Commissioner acting under Section 33 merely declines to interfere, his order, which leaves the assessee in the same position as formerly, is not an order prejudicial to the assessee. But in Voora Sreeramulu Chetty v. Commissioner of Income Tax, a Bench of five Judges of the Madras High Court overruled or purported to overrule that decision, and held that an order of the Commissioner upholding an order of an Income Tax authority subordinate to him, which was p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... record and decides to take no action he has not made an order, prejudicial or otherwise. But if he hears the parties and rejects the application, it does not, in my opinion, matter whether he rejects it in express terms, or declines to interfere, as he did in this case. That is merely a matter of form. However in none of those cases was it necessary to consider the effect of the proviso. Now, looking to the wording of the proviso, apart from authority, the scheme of the Act seems to be that where the Assistant Commissioner has made an order, the assessee can within the time limited under Section 66(2) apply to the Commissioner to refer a case raising a question of law arising out of the Assistant Commissioners decision, and if the Commis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sioner of Income Tax, where the whole question was discussed. The decision arrived at by the Patna High Court is also in accordance with dictum of the Nagpur High Court in Central India Spinning, Weaving and Manufacturing Co. Ltd. v. Commissioner of Income Tax, in which the learned Judges stated : Our present impression is that the true intent of the first proviso to the second sub-section of Section 66 is that a question of law that is common to both Assistant Commissioners and the Commissioners order is not a proper subject-matter of a reference unless the question of law is raised on a reference from the decision of the Assistant Commissioner which is not the case here. I think that is the right view. Sir Jamshedji Kanga has cont ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ifficulty in answering it if it arose. The third question relates to income which the assessee says was held on charitable trust, and was a therefore, exempt from tax under Section 4 (3) (i) of the Income Tax Act. On the point the Commissioner acting under Sec. 33, varied as against the assessee the order of the Assistant Commissioner. Therefore, so far as relates to that question it is not disputed that the order was a prejudicial one, and was one properly referred. But the question really one of fact. The Commissioner has held that the income in question was received by the assessee in July 1935, and a trust of the property out of which the income was received was not made until November 1935. The assessee maintains that ever since 193 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nguished from the order made in that case on the ground that the order made here is : I therefore decline to interfere on this issue also. Now what we must really look at is the substance of the order and not merely its form, and I do not think in substance there is any distinction whether the Commissioner confirms the order of the subordinate Income Tax Officer or refuses or declines to interfere with that order it in fact he has gone into the merits of the application, has heard the application and then has made the order declining to interfere with the order of the subordinate Income Tax Officer. It is not disputed in this case that the Commissioner did go into the merits of the application. The matter was heard at great length, and th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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