The Supreme Court noted that the appeal filed by the Revenue u/s. 260A of the Income-tax Act, 1961 had been admitted by the High Court and two substantial questions of law were framed for consideration of the appeal.
The grievance of the Revenue before the Supreme Court was that by necessary implication, the other questions raised in the memo of appeal before the High Court stood rejected.
The Supreme Court held that the Revenue was under some misconception. The proviso following the main provision of section 260A(4) of the Act states that nothing stated in s/s. (4), i.e., “The appeal shall be heard only on the question so formulated” 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.
According to Supreme Court, therefore, the High Court’s power to frame substantial questions of law at the time of hearing of the appeal other than the questions on which appeal had been admitted remains u/s. 260A(4). This power is subject, however, to two conditions, (one) the court must be satisfied that appeal involves such questions, and (two) the court has to record reasons therefore.
In view of the above legal position, the Supreme Court did not find any justifiable reason to entertain the special leave petitions. Accordingly, the special leave petitions were dismissed.