Income Tax Law | Updated 27 October 2026

Section 260 of the Income-tax Act, 1961: Court Decisions and Effect of Judgments

Section 260 addresses how the High Court or Supreme Court decides a stated case, how the decision is communicated and implemented, and who determines the costs of a reference. Its reference-based provisions must be read in their historical context.

Current-law distinction: Section 260(1) and (2) concern the older reference procedure. Appeals to the High Court under Section 260A are distinct. The Income-tax Act, 2025, effective from 1 April 2026, reorganises the appellate provisions; the official section mapping treats old Section 260 as redundant, while savings provisions preserve applicable older proceedings.

Meaning and scope of Section 260

A statement of case is a statement of relevant facts and legal questions referred for judicial determination under the former reference mechanism. The Appellate Tribunal is the Income-tax Appellate Tribunal (ITAT). An Assessing Officer is the income-tax authority responsible for making or giving effect to assessments as authorised by law.

Section 260(1): Decision on a stated case

Where a case is referred to the High Court or Supreme Court under the reference procedure, the Court decides the questions of law and delivers a reasoned judgment. A copy, under the Court's seal and Registrar's signature, is transmitted to the Appellate Tribunal. The Tribunal must then make the orders necessary to dispose of the case in accordance with that judgment.

This provision concerns a reference of legal questions, not a fresh factual assessment by the Court. Its practical operation is confined to cases in which the old reference procedure remains applicable.

Section 260(1A): Effect of a High Court appeal judgment

Where the High Court delivers judgment in an appeal filed under Section 260A, the Assessing Officer gives effect to the appellate order on the basis of a certified copy of the judgment. This provision was inserted with effect from 1 October 1998 and should not be confused with the historical reference procedure under Section 256.

Section 260(2): Costs of a reference

The High Court or Supreme Court has discretion over the costs of a reference. The statutory provision excludes the fee for making the reference from those costs.

How the decision takes effect

The Court decides the questions of law and gives reasons.
For a stated case, the authenticated judgment is sent to the ITAT.
The ITAT passes the consequential order required by the judgment.
For a High Court appeal under Section 260A, the Assessing Officer gives effect to the order on the basis of a certified judgment.
Any consequential tax demand or refund is determined under the applicable law and order.

Income-tax Act, 2025: Position from 1 April 2026

The current appellate framework is organised under Sections 365 to 368 of the Income-tax Act, 2025: appeal to the High Court, hearing before the High Court, appeal to the Supreme Court, and hearing before the Supreme Court. The official legislative mapping lists Section 260 of the 1961 Act as redundant, rather than assigning it a direct replacement section. It would therefore be inaccurate to describe Section 365 as a direct renumbering of Section 260.

Under Section 536 of the 2025 Act, proceedings for earlier tax years and pending matters may continue under the saved provisions of the 1961 Act. The applicable enactment depends on the relevant tax year, the nature of the proceeding and the transitional rules.

Section 256 - Historical reference to the High Court.
Section 257 - Direct reference to the Supreme Court in certain historical cases.
Section 258 - Alteration of an insufficient statement of case.
Section 259 - Bench hearing in referred cases.
Section 260A - Appeals to the High Court involving substantial questions of law.
Section 260B - High Court bench procedure in appeals.
Sections 261 and 262 - Supreme Court appeals and hearing.

Legislative history

Sub-section (1A) was inserted by the Finance (No. 2) Act, 1998, effective 1 October 1998. The National Tax Tribunal Act, 2005 contemplated amendments to Section 260, but the National Tax Tribunal scheme was struck down by the Supreme Court in Madras Bar Association v. Union of India (2014). The uncommenced replacement text should not be presented as the operative Section 260.

Frequently asked questions

What does Section 260 of the Income-tax Act, 1961 provide?

It deals with decisions on cases referred to the High Court or Supreme Court, implementation of High Court appeal judgments, and costs of references.

Does Section 260 apply to every modern income-tax appeal?

No. The reference procedure is historical. High Court appeals under Section 260A follow a separate route, while Section 260(1A) addresses giving effect to those judgments.

What is the position under the Income-tax Act, 2025?

The new appellate framework includes Sections 365 to 368. Section 260 is listed as redundant in the official legislative section mapping, subject to transitional savings for older proceedings.

Official sources

This article is general legal information. The governing statutory text and court orders should be checked for a specific proceeding.