THE PRINCIPAL COMMISSIONER OF INCOME TAX-8 vs. M/S YES BANK LTD.

CIVIL APPEAL No. 3148/2019Supreme Court[2019] 5 S.C.R. 615 March 2019Bench: 2 JudgesAuthor: ABHAY MANOHAR SAPRE, DINESH MAHESHWARI SUPREME COURT REPORTS5 pages
AI SummaryRemanded

What were the facts?

The assessee, M/s Yes Bank Ltd., for Assessment Year 2007-2008, claimed deduction under Section 35-D of the Income Tax Act, 1961, on the basis that it was an industrial undertaking. The Assessing Officer passed an order, which was subsequently reviewed by the Commissioner under Section 263, resulting in an adverse order against the assessee. The Income Tax Appellate Tribunal (ITAT) allowed the assessee's appeal. The Revenue (Principal Commissioner of Income Tax-8) appealed to the High Court under Section 260-A. The High Court dismissed the Revenue's appeal without framing any substantial question of law or deciding the issues.

What did the Supreme Court hold?

The Supreme Court held that the High Court committed an error by not framing any substantial question of law as required under Section 260-A of the Income Tax Act, 1961, despite hearing the appeal. Furthermore, the High Court dismissed the appeal without deciding any of the issues, including the main issue concerning the applicability of Section 35-D of the Act to the respondent-Bank, stating it was not necessary. The Court found this approach legally unsustainable. Consequently, the Supreme Court set aside the impugned order of the High Court and remanded the appeal back to the High Court for a fresh decision on merits. The High Court is directed to frame proper substantial questions of law and decide the appeal accordingly, along with any other pending appeals on the same issue, uninfluenced by any prior observations. No opinion was expressed on the merits of the case.

What were the issues?

1. Whether the High Court was justified in dismissing the Revenue's appeal under Section 260-A of the Income Tax Act, 1961, without framing any substantial question of law and without deciding the issues arising in the case? Assessee's Contentions: The judgment does not record any specific contentions made by the assessee before the Supreme Court. However, the procedural history indicates the assessee's position was that it was entitled to deduction under Section 35-D as an industrial undertaking, and the ITAT had ruled in its favour. Revenue's Contentions: The Revenue contended that the High Court erred by dismissing its appeal without framing substantial questions of law and without deciding the merits of the case, particularly the applicability of Section 35-D to the respondent-Bank.

Which sections of the Income-tax Act were involved?

Section 35-D,Section 260-A,Section 263

AI-generated summary — verify with the full judgment below

A B C D E F G H 6 SUPREME COURT REPORTS [2019] 5 S.C.R. THE PRINCIPAL COMMISSIONER OF INCOME TAX-8 v. M/S YES BANK LTD. (Civil Appeal No. 3148 of 2019) MARCH 15, 2019 [ABHAY MANOHAR SAPRE AND DINESH MAHESHWARI, JJ.] Income Tax Act, 1961 – ss.35-D, 260-A and 263 – Issue was as to whether the respondent-Bank (assessee) is an industrial undertaking so as to entitle them to claim deduction u/s.35-D of the 1961 Act – After the Assessing Officer passed order, adverse order was passed by the Commissioner – Income Tax Appellate Tribunal (ITAT) allowed the appeal filed by the respondent – Appeal by the appellant-Revenue in the High Court u/s.260-A of the 1961 Act – Dismissed – On appeal, held: High Court did not frame any substantial question of law as is required to be framed u/s.260-A of the 1961 Act – High Court dismissed the appeal without deciding any issue arising in the case saying that it is not necessary – Main issue involved in this appeal, as rightly taken note of by the High Court, was with regard to the applicability of s.35-D of the 1961 Act to the respondent, it was however, not decided – Impugned order set aside – Issue with regard to applicability of s.35-D of the 1961 A

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