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The High Court held that the substantial questions of law that formed the basis for admitting the present appeals had already been definitively answered in the case of M/s Agriculture Produce Market Committee Vs. Commissioner of Income Tax, Shimla, decided on April 19, 2012. Therefore, the Court found no need to re-examine these issues. The principle applied was that of judicial precedent, where a court is bound by its previous decisions on identical or substantially similar questions of law. As a result, the appeals were disposed of in terms consistent with the earlier judgment. The operative direction was to dispose of the appeals on the same terms as the prior decision, implying that the outcome would mirror the relief or decision granted in I.T.A. No. 68 of 2008 and its companion cases. No specific issue was left undecided; rather, the entire set of substantial questions of law were considered resolved by the prior ruling.
The High Court held that the appeals raised a substantial question of law concerning whether the provision for leave encashment is an unascertained liability to be added to book profit under Section 115JB. The Court noted that the Appellate Tribunal had overturned the Assessing Officer's finding, accepting the assessee's argument that the provision was for an ascertained and definite liability. The Tribunal's decision was based on the Supreme Court's ruling in Bharat Earth Movers vs. Commissioner of Income Tax. The High Court found that it was not open to them to overturn the Tribunal's finding of fact, especially when the issue was covered by the Apex Court's decision. The Apex Court's exposition stated that if a business liability has definitely arisen in the accounting year, deduction should be allowed even if quantified and discharged later, provided the incurring of the liability is certain and estimable with reasonable certainty. The High Court dismissed the appeals, stating the substantial question of law was already answered by the Apex Court.