Commissioner of Income Tax vs Saraswati Industrial Syndicate Ltd.

G.S. Singhvi, J.—This is an appeal by the revenue u/s 260A of the income tax Act, 1961 (for short, "the Act") for determination of the following question of law : Whether, on the facts and in the circumstances of the case, the Hon''ble income tax Appellate Tribunal was right in directing the Assessing Officer to allow relief by excluding from the taxable income the sum of Rs. 8,27,296 on account of Molasses storage fund by treating it as capital receipt ?

At the hearing, learned counsels for the parties made an agreed statement that the question of law framed by the revenue is identical to the questions referred to this Court in ITR Nos. 19 of 1992, 63 and 64 of 1991 and 547 of 1995, which has been answered against the revenue.

In CIT v. Ms. Monica Oswal [2004] 267 ITR 308 1 (Punj. & Har.)(FB) one of us (G.S. Singhvi, J.) to whom the matter was referred on account of difference of opinion amongst the members of the Division Bench interpreted section 260A of the Act, after adverting to the relevant statutory provisions and the judgments of the Supreme Court in Panchugopal Barua and others Vs. Umesh Chandra Goswami and others, ; Ram Prasad Rajak Vs. Nand Kumar and BOrs. and Another, Kondiba Dagadu Kadam Vs. Savitribai Sopan Gujar and Others, ; Hari Singh Vs. Kanhaiya Lal, and Santosh Hazari Vs. Purushottam Tiwai (Dead) by Lrs., , laid down the following propositions :

(a) An appeal u/s 260A of the Act cannot be entertained unless a substantial question of law arises for consideration by the High Court.

(b) To be substantial, a question of law must be debatable and must have a material bearing on the decision of the case and the rights of the parties. Where a question of law is fairly arguable or where there is a difference of opinion on the question of law, the same has to be treated as a substantial question of law.

(c) A point of law which admits of no two opinions may be a proposition of law but cannot be treated as a substantial question of law.

(d) If the question raised in the appeal is already settled by the highest Court of the country or the jurisdictional High Court, then the same cannot be regarded as a substantial question of law. Similarly, if the general principles to be applied in determining the question are well-settled and the only issue relates to application of those principles to the particular facts of the case, then no substantial question of law can be said to arise in the appeal.

(e) If the conclusions recorded by the Tribunal in the particular facts of the case are plausible, then it would not be a case of substantial question of law.

(f) The finding of fact recorded by the Assessing Officer or the first appellate authority or the Tribunal cannot be disturbed by the High Court in exercise of powers u/s 260A of the Act unless such finding is perverse or is such which no person of reasonable prudence could arrive at in the given facts of the case.

In view of the principles laid down in Ms. Monica Oswal''s case (supra) and the fact that similar question referred by the income tax Appellate Tribunal, Delhi Bench "C", New Delhi has already been answered by this Court against the revenue and in favour of the assessee, the question raised in this appeal cannot be treated as substantial question of law. Consequently, the appeal is dismissed.