PREMIER BREWERIES LTD., KARNATAKA versus COMMISSIONER OF INCOME TAX, COCHIN

Citation: [2015] 3 S.C.R. 365 · Decided: 10-03-2015 · Supreme Court of India · Bench: RANJAN GOGOI · Disposal: Dismissed

Judgment (excerpt)

[2015] 3 S.C.R. 365 
PREMIER BREWERIES LTD., KARNATAKA 
A 
v. 
COMMISSIONER OF INCOME TAX, COCHIN 
(Civil Appeal No. 1569 of 2007) 
MARCH 10, 2015 
[RANJAN GOGOi AND PRAFULLA C. PANT, JJ.] 
Income Tax Act, 1961- s.256(2)- Scope of- Issue 
regarding entitlement of assessee to the claim of deduction 
B 
c 
uls 37 of the Act~ Income Tax Appellate Tribunal gave the 
finding in favour of the assessee - Reference uls 265(2) 
framing twelve questions - High Court reframed those o 
questions and answering the same reversed the finding of 
the Tribunal- On appeal, held: While hearing the reference, 
High Court exercises advisory jurisdiction hence in exercise 
of reference jurisdiction, order of Tribunal cannot be set aside 
- However, in the present case, the judgment of the High E 
Court shows that the questions arising in the reference had. 
specifically been answered- Therefore, the error was of form 
and not of su_bstance - The High Court was not at fault by 
reframing the initially referred twelve questions because the 
reframing did not disturb or reverse the primary facts as found F 
by the Tribunal- The reframing of the questions were to the 
effect of drawing legal inference from the already recorded 
facts - Legal inference drawn from primary facts is eminently 
a question of law- No fault can be found with the questions G 
reframed or the answers provided. 
Dismissing the appeals and the Special Leave 
Petition, the Court 
365 
H 
366 
SUPREME COURT REPORTS 
[2015] 3 S.C.R. 
A 
HELD: 1. Setting aside the order of the Tribunal in 
exercise of the Reference Jurisdiction of the High Court 
is inappropriate. While hearing a Reference under the 
Income Tax Act, the High Court exercises advisory 
jurisdiction and does not sit in appeal over the judgment 
B of the Tribunal. The High Court has no power to set aside 
the order of the Tribunal even if it is of the view that the 
conclusion recorded by the Tribunal is not correct. [para 
7] [372-A-C] 
C 
C.P. Sarathy Mudaliar vs. Commissioner of Income 
Tax, Andhra Pradesh 1966 Vol. LXll ITR 576- relied 
on. 
2. In the present case, the High Court while 
D hearing the Reference made under Section 256 (2) of the 
Act had set aside the order of the Tribunal. Undoubtedly, 
in the exercise of its Reference Jurisdiction the High 
Court was not right in setting aside the order of the 
Tribunal. However, reading the ultimate paragraph of the 
E order of the High Court it is found that the error is one of 
form and not of substance inasmuch as the question 
arising in the Reference has been specifically answered. 
[para 9) [373-D-F] 
F 
Sudarshan Silks & Sarees vs. Commissioner of 
Income Tax, Kamataka 2008 (6) SCR 456 = 2008 
(12) sec 458 - held inapplicable. 
3. A reading of the twelve questions initially 
G framed, and subsequently reframed show that what was 
done by the High Court was to retain three out of twelve 
questions, as initially framed, while discarding the rest. 
Some of the questions discarded by the High Court were 
H actually more proximate to the question of perversity of 
PREMIER BREWERIES LTD., KARNATAKA v. COMM. OF 367 
INCOME TAX 
the findings of fact recorded by the Tribunal, than the A 
questions retained. The High Court did not disturb or 
reverse the primary facts as found by the Tribunal. 
Rather, the exercise performed by the High Court was 
one of the correct legal inferences that should be-drawn 
on the facts already recorded by the Tribunal. The B 
questions reframed were to the said effect. The legal 
inference that should be drawn from the primary facts is 
eminently a question of law. No question of perversity 
was required to be framed or gone into to ans~ver the C 
issues arising. In fact, the questions relatable to 
perversity were consciously discarded by the High 
Court. Therefore, no fault can be found with the 
questions reframed by the High Court or the answers 
provided. [para 11-12) [376-G-H; 377-A; 378-E-G] 
o 
M. Janardhana Rao vs. Joint Commissioner of Income 
Tax 2005 (1) SCR 87 4 = 2005 (2) SCC 324; Swadeshi 
Cotton Mills Co. Ltd. Vs. Commissioner of Income Tax 
1967 (63) ITR 57 and Lachminarayan Madan Lal vs. 
E 
Commissioner of Income Tax West Bengal 1972 (86) 
ITR 439 - referred to. 
Case Law Reference 
2005 (1) SCR 874 
referred to 
para 6 
F 
1966 Vol. LXll ITR 576 
relied on 
para 7 
2008 (6) SCR 456 
held inapplicable para 8 
1967 (63) ITR 57 
referred to 
para 11 
G 
1972 (86) ITR 439 
referred to 
para 11 
CIVILAPPELLATE JU

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