Rajasthan H.C : For consideration in this intra court appeal is whether it involves any substantial question of law within the meaning of section 260A ibid

High Court Of Rajasthan

DCIT vs. Surya Credits Ltd.

Assessment Year : 1989-90

Section : 28(i)

A. M. Sapre And S. S. Kothari, JJ.

D.B. It Appeal No. 15 Of 1999

February 8, 2012

JUDGMENT

A.M. Sapre J. – This is an appeal filed by the Commissioner of Income-tax under section 260A of the Income-tax Act, 1961, against an order dated November 26, 1998, passed by the Income-tax Appellate Tribunal, Jaipur Bench, Jaipur (for short called “the Tribunal”), in I. T. A. No. 1974/JP/1992 for the assessment year 1989-90.

2. By the impugned order, the Tribunal allowed the assessee’s appeal in part and in consequence reversed the order of the Commissioner of Income-tax (Appeals) on the issue raised in this appeal.

3. So the question that arises for consideration in this intra court appeal is whether it involves any substantial question of law within the meaning of section 260A ibid ?

4. Having heard the learned counsel for the appellant and on a perusal of record of the case, we are inclined to dismiss the appeal in limine as, in our opinion, the appeal does not involve any substantial question of law as is required to be made out within the meaning of section 260A ibid.

5. The assessee is a public limited company engaged in the business of purchasing and selling shares.

6. The issue relates to disallowance of loss to the extent of Rs. 3,66,808 on account of sale of shares of one company during the year in question (1989-90). The Assessing Officer disallowed it and the Commissioner of Income-tax (Appeals) confirmed it. However, the Tribunal allowed the appeal and granted the benefit to the assessee.

7. Learned counsel for the appellant (Revenue) contended that, firstly, the Assessing Officer and the Commissioner of Income-tax (Appeals) were right in adding the impugned amount. His second submission was that there was no factual basis offered by the assessee for its deletion and in last, he contended that the finding recorded by the Tribunal is perverse. We do not agree to any of these submissions for more than one reason.

8. This is how the Tribunal dealt with the issue in question and answered it against the appellant (Revenue) and in the assessee’s favour :

“We have heard the rival submissions and find that the assessee is a limited company dealing in shares. Surya Power Ltd. and the assessee are not having common directors. The shares have been sold to Relan Bhai and Co., who is an income-tax assessee and not having any relation with the assessee. The shares are sold to Relan Bhai and Co. on principal to principal basis. The full detail of these transaction, contract note issued by Relan Bhai and Co. and being is on record. There is no evidence on record to show that any amount over and above the sale price was received for the sale of these shares. The transaction between Relan Bhai and Co. and the assessee is between two principals. There is no fiction in law that sales price is to be determined on the basis of any market value or break up value. Accordingly, we have no hesitation to hold the transaction is a real transaction and under the circumstances the action of the Assessing Officer is not justified in substituting the sale price by any other price. Accordingly, we hold that the loss disallowed to the extent of Rs. 3,66,804 is not correct and such disallowance made by the Assessing Officer is deleted.”

9. Similarly, so far as another transaction relating to disallowance of Rs.7,08,000 was concerned, the same was also probed by the Tribunal on facts and then while reversing the finding of the Commissioner of Income-tax (Appeals), held that the assessee is entitled to claim deduction of Rs.7,08,000 also.

10. This issue was dealt with by the Tribunal in paragraph 8 as under :

“We have considered the rival submissions and find that both the Assessing Officer and the Commissioner of Income-tax (Appeals) have gone on wrong footings. All the details of transaction with evidence are available on record. Secondly, the transaction has been held to be speculative by the Commissioner of Income-tax (Appeals) whereas evidence shows that not only physical delivery has taken place but transfer also took place. There is no evidence to conclude that the transaction is non-genuine or sham. Accordingly, we hold that the assessee is entitled to loss of Rs. 7,08,000 as business loss. The Assessing Officer is directed accordingly.”

11. In the first place, what is involved in the case is a pure question of fact and not any question of law much less substantial question of law. Secondly, this court cannot again in this appeal undertake the examination of factual issues nor can draw factual inferences on the basis of explanation offered by the assessee. Thirdly, once the explanation is accepted by the Tribunal, then in such event, a finding recorded on such explanation is binding on the High Court.

12. A perusal of the impugned finding would go to show that Tribunal did examine the issue in detail and then recorded a finding. Such finding when challenged does not constitute a substantial question of law within the meaning of section 260A ibid in an appeal arising out of such order.

13. In our opinion, therefore, once the Tribunal accepted the explanation of assessee and accordingly, deleted the additions in question made by the Assessing Officer and the Commissioner of Income-tax (Appeals), then it would not involve any substantial issue of law as such. In other words, this court in its appellate jurisdiction under section 260A ibid, would not again de novo hold yet another factual inquiry with a view to find out as to whether the explanation offered by assessee and which found acceptance to the Tribunal is good or bad, or whether it was rightly accepted, or not. It is only when the factual finding recorded had been entirely de hors the subject, or that it had been based on no reasoning, or based on absurd reasoning to the extent that no prudent man of average judicial capacity could ever reach to such conclusion, or that it had been found against any provision of law, then a case for formulation of substantial question of law on such finding can be said to have been made out, such it not the case here.

14. We thus, do not find any merit in the appeal. It falls and is dismissed in limine by holding that it does not involve any substantial question of law.

15. No costs.

[Citation : 346 ITR 3]

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