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of <h1>Interpretation of 'prejudicial' in Indian Income-tax Act clarified by Chief Justice (2)</h1> <h3>Voora Sreeramulu Chetty Versus Commissioner of Income Tax, Madras</h3> Voora Sreeramulu Chetty Versus Commissioner of Income Tax, Madras - [1939] 7 ITR 263 (Mad) Issues:Interpretation of the word 'prejudicial' in Section 66(2) of the Indian Income-tax Act.Analysis:The judgment in question revolves around the interpretation of the term 'prejudicial' in Section 66(2) of the Indian Income-tax Act. Section 66(2) allows an assessee to require the Commissioner of Income-tax to refer any question of law arising from an order enhancing an assessment or otherwise prejudicial to the assessee to the High Court. The case discussed involved a petitioner who sought a refund of income tax, but the Commissioner refused to interfere with the Income-tax Officer's decision. The petitioner then requested the Commissioner to refer the matter to the High Court under Section 66(2) as it involved a question of law. The Commissioner dismissed the application, stating that his order was not prejudicial to the applicant. The interpretation of whether an order must be more prejudicial than the original decision complained of to come under Section 66(2) was at the heart of the issue.The Chief Justice disagreed with the interpretation that the Commissioner's order must be more prejudicial than the original decision to fall under Section 66(2). He argued that if the original order was prejudicial, an order confirming or rejecting it would also be prejudicial. The judgment highlighted the importance of considering the impact of the Commissioner's order on the assessee's position and the need to address any prejudicial aspects of the decision. The judgment also discussed the first proviso to Section 66(2), emphasizing that a reference can only be made on a question of law arising from the order under Section 33 itself, not on a question arising from a previous order under Sections 31 or 32.The judgment further referenced a previous case where a similar interpretation was followed, but it did not provide further clarity on the issue. The judgment concluded that the case in question was wrongly decided, and an order dismissing an application seeking revision of a prejudicial order must be considered prejudicial under Section 66(2). The costs of the reference were also addressed, with a specific amount being fixed. The judges unanimously agreed with the Chief Justice's interpretation and answered the reference accordingly.
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