Substantial Question of Law Threshold Bars Income-tax Appeal Where Tribunal's Interest Disallowance Finding Turned on Facts

Section 260A permits High Court interference only when the appeal raises a substantial question of law, and findings of fact are not ordinarily open to review unless perversity or jurisdictional error is shown. Applying this threshold, the Court held that the Tribunal's deletion of the interest disallowance rested on factual appreciation of the assessee's explanation, and the existence of a legal issue or prior admission on a similar point did not by itself create a substantial question of law. No legally sustainable substantial question was demonstrated, so the appeal was not entertainable and was dismissed in limine.

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Issues: Whether the appeal under section 260A of the Income-tax Act, 1961 disclosed a substantial question of law so as to warrant interference with the Tribunal's view deleting disallowance of interest.

Analysis: Section 260A permits an appeal to the High Court only if the case involves a substantial question of law, and the High Court must be satisfied that such question exists before entertaining the appeal. The provision is analogous to section 100 of the Code of Civil Procedure, 1908, under which second appeals are confined to substantial questions of law and findings of fact, even if arguable or erroneous, are not ordinarily open to interference. Applying the settled parameters, the Court held that the mere existence of a legal issue or prior admission of a reference on a similar point does not, by itself, convert the controversy into a substantial question of law. The assessee's explanation accepted by the appellate authorities involved factual appreciation, and no perversity, jurisdictional error, or other legally sustainable substantial question was shown.

Conclusion: No substantial question of law arose; the appeal was not entertainable under section 260A and was dismissed in limine.

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