SC: HC’s jurisdiction u/s 260-A, Income Tax Act depends on a substantial question of law being involved

The Hon’ble Supreme Court, on 22nd July 2020, in the matter of Shiv Raj Gupta v. Commissioner of Income-Tax Delhi-IV pronounced that Section 260-A of the Income Tax Act, 1961 being modelled on a similar provision that is contained in Section 100 of the Code of Civil Procedure, makes it clear that the High Court’s jurisdiction depends upon a substantial question of law being involved in the appeal before it.

The Hon’ble Supreme Court observed that:

Section 260-A of the Income Tax Act, 1961 being modelled on a similar provision that is contained in Section 100 of the Code of Civil Procedure, makes it clear that the High Court’s jurisdiction depends upon a substantial question of law being involved in the appeal before it. First and foremost, it shall formulate that question and on the question so formulated, the High Court may then pronounce judgement, either by answering the question in the affirmative or negative or by stating that the case at hand does not involve any such question. If the High Court wishes to hear the appeal on any other substantial question of law not formulated by it, it may, for reasons to be recorded, formulate and hear such questions if it is satisfied that the case involves such question Under sub-section (6), the High Court may also determine any issue which, though raised, has not been determined by the Appellate Tribunal or has been wrongly determined by the Appellate Tribunal by reason of a decision on a substantial question of law raised. (Para 12)

Commercial expediency has to be adjudged from the point of view of the assessee and that the Income Tax Department cannot enter into the thicket of reasonableness of amounts paid by the assessee. (Para 15)

The revenue has no business to second guess commercial or business expediency of what parties at arms-length decide for each other. (Para 18)

Copy of judgement: Judgement_22-Jul-2020

-Adv. Tushar Kaushik

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