Matter is remitted to the High Court for de novo consideration in the light of the judgment in CIT vs. Sri Mangayarkarasi Mills (P) Ltd. (2009) 224 CTR (SC) 513 : (2009) 26 DTR (SC) 58 : (2009) 315 ITR 114 (SC) and also to consider the tests laid down in CIT vs. Saravana Spinning Mills (P) Ltd. (2007) 211 CTR (SC) 281 : (2007) 293 ITR 201 (SC) and CIT vs. Ramaraju Surgical Cotton Mills & Ors. (2007) 212 CTR (SC) 345 : (2007) 294 ITR 328 (SC).

Heard learned counsel on both sides.

Delay condoned.

Leave granted.

By consent, the matter is taken up for final hearing.

The narrow controversy is – whether, on facts and circumstances of this case, the respondent [assessee herein] was not entitled to deduction in view of the law laid down in the judgement of the Division Bench of this Court in the case of Commissioner of Income Tax vs. Sri Mangayarkarasi Mills Private Limited, reported in [2009] 315 I.T.R. 114?

According to the learned counsel appearing on behalf of the assessee, the judgement of this Court in the case of Sri Mangayarkarasi Mills Private Limited [supra] does not lay down the law across the board and that the said judgement has to be seen in the facts of each case. We express no opinion on the said submission.

Accordingly, we remit this matter to the High Court for de novo consideration in the light of the judgement in the case of Sri Mangayarkarasi Mills Private Limited [supra], which has been delivered only on 21st July, 2009. The High Court would also consider the tests laid down by this Court in the cases of Commissioner of Income Tax vs. Saravana Spinning Mills Private Limited reported in [2007] 293 I.T.R. 201, and Commissioner of Income Tax vs. Ramaraju Surgical Cotton Mills, reported in [2007] 294 I.T.R. 328, while disposing of this case on merits. We express no opinion on merits.

Subject to what is stated herein, the appeal is allowed with no order as to costs.

[S.H. KAPADIA]

[DR. B.S. CHAUHAN]

New Delhi,

November 16, 2009.