Facts of the Case

  • The Revenue challenged an order dated 24 March 2006 passed by the Income Tax Appellate Tribunal, Delhi Bench “B”.
  • The dispute related to Assessment Years 1999-2000 and 2000-2001.
  • During the hearing before the High Court, it was acknowledged that the controversy raised in the appeal stood covered by the judgment of the Supreme Court in Commissioner of Income Tax v. Infosys Technologies Ltd.
  • The Revenue was unable to demonstrate any distinguishing feature or independent substantial question of law requiring adjudication. 

Issues Involved

  1. Whether any substantial question of law arose for consideration under Section 260A of the Income-tax Act.
  2. Whether the issues raised in the appeal were already concluded by the Supreme Court decision in Commissioner of Income Tax v. Infosys Technologies Ltd.
  3. Whether the Revenue’s appeal could survive once the legal issue stood settled by the Supreme Court.

Petitioner’s Arguments (Revenue)

The Revenue challenged the order of the Income Tax Appellate Tribunal and sought interference by the High Court.

However, during the proceedings, it was admitted that the controversy involved in the appeal was governed by the ratio laid down by the Supreme Court in Commissioner of Income Tax v. Infosys Technologies Ltd.

Respondent’s Arguments (Assessee)

The assessee relied upon the Supreme Court decision in Commissioner of Income Tax v. Infosys Technologies Ltd. and contended that:

  • The legal issue involved in the present appeal was no longer res integra.
  • The Tribunal’s decision was consistent with the law declared by the Supreme Court.
  • Consequently, no substantial question of law survived for adjudication under Section 260A.

Court Findings

The Delhi High Court observed that:

  • The parties accepted that the controversy was fully covered by the Supreme Court judgment in Commissioner of Income Tax v. Infosys Technologies Ltd.
  • Once the legal position stood conclusively settled by the Supreme Court, no independent substantial question of law arose.
  • The High Court exercising jurisdiction under Section 260A could entertain only those appeals involving substantial questions of law.
  • In the absence of any surviving legal issue requiring determination, the appeal was not maintainable.

Court Order / Findings

  • The Delhi High Court held that no substantial question of law arose for consideration.
  • The Court relied upon the binding precedent of the Supreme Court in Commissioner of Income Tax v. Infosys Technologies Ltd.
  • The appeal filed by the Revenue was dismissed.

Important Clarification

This judgment reinforces the principle that where the issue raised in an appeal is already conclusively settled by a decision of the Supreme Court, the High Court will not entertain the appeal under Section 260A in the absence of any distinct or substantial question of law. The decision highlights the binding nature of Supreme Court precedents and the limited scope of appellate jurisdiction under Section 260A.

The Supreme Court explained the concept of a “substantial question of law” and laid down the principles governing appellate jurisdiction.

Sections Involved

  • Section 80HHE of the Income-tax Act, 1961 – Deduction in respect of profits from export of computer software and related services
  • Section 260A of the Income-tax Act, 1961 – Appeal to the High Court
  • Principles laid down by the Supreme Court in Commissioner of Income Tax v. Infosys Technologies Ltd. [(2008) 297 ITR 167 (SC)]

Link to download the order -
https://delhihighcourt.nic.in/app/case_number_pdf/2008:DHC:12046-DB/MBL27022008ITA3672007_152510.pdf

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