Merits-based disposal of tax appeals is required before a reference can be answered on section 80K relief.

A reference on entitlement to relief under section 80K was not answered because the Tribunal had dismissed the Revenue's appeals without deciding them on merits, relying instead on a similar relief granted to the company. The High Court stated that appeals filed within time under the Act must be adjudicated on their substance by the Tribunal, and if needed the hearing could be deferred until related references were decided. As no merits determination had been made in the underlying appellate order, the Court declined to pronounce on the referred question and left the parties to bear their own costs.

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Issues: Whether the reference question concerning entitlement to relief under section 80K of the Income-tax Act, 1961 could be answered when the Tribunal had dismissed the Revenue's appeals without examining their merits.

Analysis: The Tribunal had not adjudicated the Revenue's appeals on merits and had dismissed them only because a similar relief had been granted to the company. In a reference arising from such an order, the High Court declined to pronounce on the referred question, observing that appeals filed in time under the Act must be decided on merits by the Tribunal and that, if necessary, hearing could have been deferred until related references were decided.

Conclusion: The reference question was not answered.

Final Conclusion: No substantive determination was made on the assessee's entitlement to relief; the Court left the referred question unanswered and left the parties to bear their own costs.

Ratio Decidendi: A reference will not be answered where the appellate order under challenge has not been decided on merits, because the Tribunal must first adjudicate the appeals on their substance.

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