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

6                        [2019]
             SUPREME COURT      5 S.C.R. 6
                           REPORTS                      [2019] 5 S.C.R.


A       THE PRINCIPAL COMMISSIONER OF INCOME TAX-8
                                     v.
                          M/S YES BANK LTD.
                      (Civil Appeal No. 3148 of 2019)
B                            MARCH 15, 2019
                   [ABHAY MANOHAR SAPRE AND
                      DINESH MAHESHWARI, JJ.]
          Income Tax Act, 1961 – ss.35-D, 260-A and 263 – Issue was
C   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
D   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
E   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 Act to the respondent is already pending consideration before
    the High Court at the instance of the respondent in another appeal
F   – Accordingly, appeal remanded to the High Court for its decision
    on merits in accordance with law along with another appeal, if
    pending – No opinion expressed on the merits of the case.

          Allowing the appeal, the Court

G         HELD: 1.1 The High Court did not frame any substantial
    question of law as is required to be framed under Section 260-A
    of the Income Tax Act, 1961 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

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                                     6
      PRINCIPAL COMMISSIONER OF INCOME TAX-8 v.                         7
                  M/S YES BANK LTD.

substantial question of law. The High Court dismissed the appeal        A
without deciding any issue arising in the case saying that it is not
necessary. 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 35-D of the 1961 Act to the
respondent-assessee (Bank). It was, however, not decided.
                                                                        B
[Paras 12, 13] [9-C-E]

      1.2 The High Court should have framed the substantial
question of law on the applicability of Section 35-D of the 1961
Act in addition to other questions and then should have answered
them in accordance with law rather than to leave the question(s)        C
undecided. [Para 14] [9-E-F]

      1.3 The impugned order is set aside. It was brought to
Court’s notice that the issue with regard to applicability of Section
35-D of the 1961 Act to the respondent-Bank is already pending
consideration before the High Court at the instance of the              D
respondent in one appeal. 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. No opinion is
expressed on the merits of the case having formed an opinion to
                                                                        E
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 observations made in the impugned order
and this order. [Paras 15, 17, 18] [9-F-H; 10-A-C]

      CIVIL APPELLATE JURISDICTION: Civil Appeal No. 3148               F
of 2019

      From the Judgment and Order dated 01.08.2017 of the High
Court of Judicature at Bombay in ITA No. 599 of 2015.

       Vikramjit Banerjee, ASG, S. S. Roy, Ms. Seema Bengani, Anas      G
Zaidi, Mrs. Anil Katiyar, Advs. for the Appellant.

      Kunal Cheema, Ajit Wagh, Advs. for the Respondent.


                                                                        H
8            SUPREME COURT REPORTS                         [2019] 5 S.C.R.


A         The Judgment of the Court was delivered by
          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
B   No.599/2015 whereby the High Court dismissed the appeal filed by the
    appellant herein.
           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)
C
    and the respondent-Bank is the assessee.
           5. In the course of assessment proceedings of the respondent-
    assessee(Bank) for the Assessment Year 2007-2008, the question arose
    as to whether the respondent-assessee(Bank) was entitled to claim
    deduction under Section 35-D of the Income Tax Act, 1961 (for short,
D
    “the Act”) for the Assessment Year in question. In other words, the
    question arose as to whether the respondent-Bank is an industrial
    undertaking so as to entitle them to claim deduction under Section 35-D
    of the Act.

E         6. The case of the respondent was that they, being an industrial
    undertaking, are entitled to claim the deduction under Section 35-D of
    the Act. 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.
F
          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 260-A of the Act.
G
          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.


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      PRINCIPAL COMMISSIONER OF INCOME TAX-8 v.                                   9
     M/S YES BANK LTD. [ABHAY MANOHAR SAPRE, J.]

      9. So, the short question that arises for consideration in this appeal,     A
is whether the High 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                B
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        C
law as is required to be framed under Section 260-A 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 dismissed the appeal
without deciding any issue arising in the case saying that it is not necessary.   D
(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 35-D of the Act to the respondent-assessee(Bank). It was,
however, not decided.                                                             E
       14. In our view, the High Court should have framed the substantial
question of law on the applicability of Section 35-D 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.
                                                                                  F
      15. It was brought to our notice that the issue with regard to
applicability of Section 35-D of the Act to the respondent-Bank is already
pending consideration before the High Court at the instance of the
respondent in one appeal. If that be so, both the appeals, in our view,
should be decided together.
                                                                                  G
       16. It is for all these reasons, we are of the view that the impugned
order is not legally sustainable.



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10             SUPREME COURT REPORTS                        [2019] 5 S.C.R.


A           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.
B           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 observations made in the impugned order
     and this order.
C
     Divya Pandey                                               Appeal allowed.




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