Section 261

Section 261 — the law in short

What the courts have decided on section 261, in one screen. Read this first; open an entry when you need the facts, the reasoning and the source.

• Kunhayammed v State of Kerala Supreme CourtHelps department
  The department's SLP against a High Court judgment in my favour was dismissed. Is that judgment now a Supreme Court decision?
  No. Refusal of special leave, whether by a non-speaking order or a speaking one, is not an exercise of appellate jurisdiction and does not attract the doctrine of merger - the High Court's order remains the operative order. If the refusal gives reasons, those reasons are a declaration of law under Article 141 and bind the courts below, but the High Court judgment does not become a Supreme Court judgment. It is only once leave is granted and the appeal is decided that the order below merges in the Supreme Court's order.
• CIT v Subhulaxmi Mills Ltd Supreme CourtHelps taxpayer
  The officer has invoked s.79 after a change in our shareholding and struck out everything brought forward, including unabsorbed depreciation. Does s.79 reach unabsorbed depreciation?
  No. The Supreme Court agreed with the Gujarat High Court that when s.79 speaks of loss, it does not include unabsorbed depreciation or unabsorbed development rebate. Only the brought forward business loss is at risk under s.79; unabsorbed depreciation continues to be governed by s.32(2).
• Sir Chunilal V. Mehta and Sons Ltd v Century Spinning and Manufacturing Co Ltd Supreme CourtCuts both ways
  The High Court says my appeal raises no substantial question of law because the principles are settled and only their application is in dispute. What actually makes a question of law substantial?
  The test the Supreme Court laid down is whether the question is of general public importance, or directly and substantially affects the rights of the parties, and if so whether it is an open question in the sense that it has not been finally settled by the Supreme Court, the Privy Council or the Federal Court, or is not free from difficulty, or calls for discussion of alternative views. A question settled by the highest court, or one where settled general principles have merely to be applied, or a plea that is palpably absurd, is not substantial. This is a contract case, not a tax case.

Listed strongest first: Supreme Court, then High Court, then Tribunal, then CBDT. Nothing here has yet been read in full by a chartered accountant — open an entry to see where it came from.