Principal Commissioner Of Income Tax 8 vs M/S Yes Bank Ltd

IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION CIVIL APPEAL No.3148 OF 2019 (Arising out of S.L.P.(C) No.7118 of 2018)

The Principal Commissioner of Income Tax­8 ….Appellant(s)

VERSUS

M/s Yes Bank Ltd. ….Respondent(s)

JUDGMENT

Abhay Manohar Sapre, J.

1. Leave granted.

2. This appeal is filed against the final judgment

and order dated 01.08.2017 passed by the High

Court of Judicature at Bombay in ITA No.599/2015

whereby the High Court dismissed the appeal filed Signature Not Verified

by the appellant herein.

Digitally signed by ASHOK RAJ SINGH Date: 2019.03.15 17:52:21 IST Reason: 1

3. This appeal involves a short point as would be

clear from the facts stated infra.

4. The appellant is the Union of India (Income

Tax Department) and the respondent­Bank is the

assessee.

5. In the course of assessment proceedings of the

respondent­assessee(Bank) for the Assessment Year

2007­2008, the question arose as to whether the

respondent­assessee(Bank) was entitled to claim

deduction under Section 35­D of the Income Tax

Act, 1961 (for short, “the Act”) for the Assessment

Year in question. In other words, the question arose

as to whether the respondent­Bank is an industrial

undertaking so as to entitle them to claim deduction

under Section 35­D of the Act.

6. The case of the respondent was that they,

being an industrial undertaking, are entitled to

claim the deduction under Section 35­D of the Act.

2 The Assessing Officer passed an order dated

31.10.2009 which gave rise to the proceedings

before the Commissioner under Section 263 of the

Act which resulted in passing of an adverse order

dated 14.11.2011 by the Commissioner.

7. This gave rise to filing of the appeal by the

respondent before the ITAT against the order of the

Commissioner. By order dated 05.12.2014, the ITAT

allowed the appeal which gave rise to filing of the

appeal by the Revenue (Income Tax Department) in

the High Court under Section 260­A of the Act.

8. By impugned order, the High Court dismissed

the appeal after hearing both the parties giving rise

to filing of this appeal by way of special leave in this

Court.

9. So, the short question that arises for

consideration in this appeal, is whether the High

3 Court was justified in dismissing the appellant's

appeal.

10. Having heard the learned counsel for the

parties and on perusal of the record of the case, we

are constrained to allow the appeal, set aside the

impugned order and remand the case to the High

Court for deciding the appeal afresh on merits in

accordance with law.

11. In our view, the need to remand the case to

the High Court is called for due to the following

reasons.

12. First, the High Court did not frame any

substantial question of law as is required to be

framed under Section 260­A of the Act though

heard the appeal bipartite. In other words, the High

Court did not dismiss the appeal in limine on the

ground that the appeal does not involve any

substantial question of law; Second, the High Court

4 dismissed the appeal without deciding any issue

arising in the case saying that it is not necessary.

(see para 6).

13. Third, the main issue involved in this appeal,

as rightly taken note of by the High Court in para 6,

was with regard to the applicability of Section 35­D

of the Act to the respondent­assessee(Bank). It was,

however, not decided.

14. In our view, the High Court should have

framed the substantial question of law on the

applicability of Section 35­D of the Act in addition to

other questions and then should have answered

them in accordance with law rather than to leave

the question(s) undecided.

15. It was brought to our notice that the issue with

regard to applicability of Section 35­D of the Act to

the respondent­Bank is already pending

consideration before the High Court at the instance

5 of the respondent in one appeal. If that be so, both

the appeals, in our view, should be decided

together.

16. It is for all these reasons, we are of the view

that the impugned order is not legally sustainable.

17. In view of the foregoing discussion, the appeal

succeeds and is accordingly allowed. The impugned

order is set aside. The appeal is accordingly

remanded to the High Court for its decision on

merits in accordance with law along with another

appeal, if pending, after framing proper substantial

question(s) of law arising in the case.

18. We have not expressed any opinion on the

merits of the case having formed an opinion to

remand the appeal to the High Court for its disposal

on the merits afresh. The High Court will

accordingly decide the appeal uninfluenced by any

6 observations made in the impugned order and this

order.

………...................................J. [ABHAY MANOHAR SAPRE]

…...……..................................J. [DINESH MAHESHWARI]

New Delhi;

March 15, 2019

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