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Judgment
Jasbir Singh, J.—In this appeal, the appellant has prayed for determination of the following questions of law :
"(a) Whether, in the facts and circumstances of the case, the orders Annex. PI and P3 are legally sustainable ?
(b) Whether, in the facts and circumstances of the case, the addition of Rs. 1,81,282 made on account of expenses incurred to earn incentive bonus is legally sustainable in view of the clarificatory letter written by the CBDT, dt. 19th Dec., 1996?
(c) Whether, in the facts and circumstances of the case, the addition of Rs. 1,81,282 on account of expenses incurred to earn incentive bonus is legally sustainable in view of the decision of the Hon''ble Gujarat High Court reported in Commissioner of Income Tax Vs. Kiranbhai H. Shelat and Others, ?"
On 28th Oct., 2002, a Division Bench of this Court admitted the appeal qua question No. (b) only.
The appellant, who was working as Development Officer in the services of the Life Insurance Corporation of India (for short, ''the Corporation'') at Rohtak, filed return for the asst. yr. ''1993-94 declaring an income, of Rs. 1,63,281. The AO ''-finalised the assessment u/s 143(1)(a) of the IT Act, 1961 (for short, ''the Act''), at a total income of Rs. 4,38,670. While doing so, he rejected the appellant''s claim for deduction of Rs. 1,81,282 which he had spent to earn incentive bonus. On appeal, the Commissioner of Income Tax (Appeals), Rohtak [for short, ''the CIT(A)''], granted relief to the appellant including deduction of Rs. 1,81,282.
Feeling aggrieved with the order of the CIT(A), the Revenue filed further appeal before the Income Tax Appellate Tribunal, Delhi Bench ''SMC-II'', New Delhi (for short, ''the Tribunal''). By order dt. 1st June, 2001, the Tribunal partly allowed the Revenue''s appeal and deleted the deduction of Rs. 1,81,282. The observations made by the Tribunal on this issue are as under:
"Since this issue is covered against the assessee by various decisions of different High Courts including that of Andhra Pradesh High Court and Punjab & Haryana High Court as reported in the case of B.M. Parmar Vs. Commissioner of Income Tax, following the same I set aside the order of learned CIT(A) and restore that of AO."
We have heard the learned Counsel for the parties and perused the record. In our opinion, no substantial question of law arises for determination in this appeal. Section 260A of the Act under which the present appeal has been filed reads as under:
"260A. (1) An appeal shall lie to the High Court from every order passed in appeal by the Tribunal, if the High Court is satisfied that the case involves a substantial question of law.
(2) The Chief CIT or the CIT or an assessee aggrieved by any order passed by the Tribunal may file an appeal to the High Court and such appeal under this Sub-section shall be--
(a) filed within one hundred and twenty days from the date on which the order appealed against is received by the assessee or the Chief CIT or CIT ....
(c) in the form of a memorandum of appeal precisely stating therein the substantial question of law involved :
(3) Where the High Court is satisfied that a substantial question of law is involved in any case, it shall formulate that question.
(4) The appeal shall be heard only on the question so formulated, and the respondents shall, at the hearing of the appeal, be allowed to argue that the case does not involve such question :
Provided that nothing in this Sub-section shall be deemed to take away or abridge the power of the Court to hear, for reasons to be recorded, the appeal on any other substantial question of law not formulated by it, if it is satisfied that the case involves such question.
(5) The High Court shall decide the question of law so formulated and deliver such judgment thereon containing the grounds on which such decision is founded and may award such cost as it deems fit.
(6) The High Court may determine any issue which--
(a) has not been determined by the Tribunal; or
(b) has been wrongly determined by the Tribunal, by reason of a decision on such question of law as is referred to in Sub-section (1).
(7) Save as otherwise provided in this Act, the provisions of the CPC, 1908 (5 of 1908), relating to appeals to the High Court shall, as far as may be, apply in the case of appeals under this section."
Sub-section (1) of Section 260A of the Act is substantially similar to Section 100(1) of the CPC, which reads as under :
"100. Second appeal.--(1) Save as otherwise expressly provided in the body of this code or by any other law for the time being in force, an appeal shall lie to the High Court from every decree passed in appeal by any Court subordinate to the High Court, if the High Court is satisfied that the case involves a substantial question of law."
The expression "substantial question of law" which appears in Sub-sections. (1), (2)(c) and (3) of Section 260A of the Act and Sub-Section (1) of Section 100 of the CPC has not been defined in either of the statutes. Therefore, it will be appropriate to notice the judicial precedents in which the said expression has been interpreted in the context of Section 100 of the CPC (as amended in 1976).
In Commissioner of Income Tax Vs. Ms. Monica Oswal, Jawahar Lal Oswal and Miss Ruchika Oswal, 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 making reference 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., , the Court 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 AO 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."
By an order passed today in IT Ref. No. 247 of 1995 [reported as CIT v. S.C. Wadhwa], a question similar to the one of which determination has been sought by the appellant in this case has been answered in favour of the Revenue and against the assessee.
In view of the law laid down in B.M. Parmar Vs. Commissioner of Income Tax, on which the Tribunal had also placed reliance for restoring the order of the AO, we hold that no substantial question of law arises for determination in this appeal. Consequently, the appeal is dismissed.