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

REPORTABLE 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)                   J U D G M E N T 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 Digitally signed by ASHOK RAJ SINGH Date: 2019.03.15 17:52:21 IST Reason: by the appellant herein.                             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 7