Scope of appellate power of court under Section 260A Income Tax Act: High Court of Delhi

The power invested in this Court under Section 260A of the Income Tax Act is to adjudicate upon the substantial questions of law. The court is not inclined to admit questions of law, which are no longer res integra as per the Court. This was held in COMMISSIONER OF INCOME TAX, Delhi V. HCL COMNET SYSTEMS & SERVICES LTD[ITA 81/2021] in the High Court of Delhi by division bench consisting of JUSTICE RAJIV SHAKDHER and JUSTICE TALWANT SINGH.

Facts of the case are that an appeal against the order passed by the Income Tax Appellate Tribunal concerning the assessment year 2010-2011 was  preferred under Section 260A of the Income Tax Act, 1961. The revenue in its appeal suggested six substantial questions to be adjudicated.

In respect of sixth substantial question which was, revenue’s contention that the disallowance of loss on account foreign fluctuation should not have been deleted by the Tribunal. The counsel for the revenue referred to, Commissioner of Income-tax, Delhi vs. Woodward Governor India (P.) Ltd, he contented the issue was whether the Tribunal had fulfilled conditions stated under the above mentioned precedent.

The court made reference to the Karnataka High Court judgement, with respect to non fulfillment of conditions, in Commissioner of Income-tax, Central Circle vs. Wipro Finance Ltd, wherein it was held that, “The view taken by the Supreme Court in this judgment is to the effect that while even a notional loss can be claimed by way of a business loss and as a deductible item in computing the income of the assessee for the year, as it is a computation on notional basis, it is made dependent on the manner of conduct of the assessee in respect of the earlier assessment period and particularly as to the assessee has been following this uniformly over a period of years and the test being when there was a notional gain as to whether it had been offered for tax.”

Considering the precedent and the facts of the case court held that, the assessing officer has raised not concern as to the non-fulfillment of the conditions stipulated in the judgment of the Supreme Court rendered in Woodward Governor India(Supra) as a substantial question, thus the same cannot be decided by the court. In respect of the other five substantial questions, they have already been decided on by various income tax tribunals.  Thus court under sec 290A cannot entertain the appeal.

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