Allowing the appeal of the revenue  , the Court held that the law laid down in various decisions cannot be applied in the abstract, but needs to be applied to the facts and circumstances of the case. Therefore, the cardinal principle is that law is applied to each and every case after considering the facts. The parties to the proceedings are entitled to know why the authority or the Tribunal or the court does not agree with their submissions. Thus, an order without reasons is arbitrary and unreasonable and would amount to violation of the principles of natural justice. Court also held observed  that  on a reading of the order passed by the Commissioner (Appeals), it could be seen that the order of the Assessing Officer was not referred to in the preamble portion of the order except for the grounds raised by the assessee. There was no discussion as to the finding rendered by the Assessing Officer after examining the nature of transaction. All that the Commissioner (Appeals) did was to note down the facts, and refer to two decisions. No reasons were given as to how those two decisions would apply to the assessee’s case. Further without discussing about the transaction and without rendering any findings why, in the opinion of the Commissioner (Appeals), the Assessing Officer was wrong, the Commissioner (Appeals) allowed the appeal. To say the least, the manner in which the appeal was allowed by the Commissioner (Appeals) was erroneous. The Tribunal also did not consider the matter in the proper perspective. Its order upholding the decision of the Commissioner (Appeals) was not supported by reasons. Both the orders were invalid. Matter remanded to the Commissioner (Appeals). ( AY.2010-11)

Obiter dicta : In the appeal before the Commissioner (Appeals) none appeared for the Department. The Principal Chief CIT  shall ensure that in all cases, the Department is represented before the first appellate authority and the Tribunal not only to defend the cases of the Department, but also to assist in the decision making process.