Question about allowability of "issue management expenses" is substantial question of law; the assessee having succeeded before the High Court only on the basis of "rule of consistency", matter remanded for fresh consideration.

Delay condoned.

Leave granted.

In this case, substantial question of law arose before the High Court under Section 260-A (of Income Tax Act, 1961). The said question was as follows:

"Whether the assessee is entitled to deduction of Rs.1,16,89,327/- incurred as ’Issue Management Expenses’?"

Reading the judgments of the Tribunal and the High Court, we find that the assessee has succeeded only on the basis of ’Rule of Consistency’. In our view,the High Court should have examined the nature of the said expenses, namely,’Issue Management Expense’. In our view, substantial question of law did arise for determination.

Consequently, the impugned judgment of the High Court is set aside and the matter is remitted to the High Court for fresh consideration in accordance with law.

The Appeal is, accordingly, allowed.

No order as to costs.

In C.A.No.3170/2006:

Following our above order in the appeal arising out of S.L.P.(C) No.11507/2007, while setting aside the impugned judgment, we remit the matter to the High Court for fresh consideration in accordance with law.

The Appeal is allowed accordingly.

No order as to costs.

(S.H. KAPADIA)

(B. SUDERSHAN REDDY)

New Delhi,

February 01, 2008.