DIRECTOR OF INCOME TAX vs. HYUNDAI ENGINEERING CO. LTD.

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ITA/721/2009HC DelhiDLHC01091292200927 July 2016Bench: HON'BLE DR. JUSTICE S.MURALIDHAR,HON'BLE MR. JUSTICE NAJMI WAZIRI2 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that the first issue concerning the deletion of the addition of Rs. 3.58 crores made by the Assessing Officer on account of bogus head office expenses was not to be framed as a question of law, as decided by the Court on November 16, 2010. Regarding the second issue, the Court noted the submission by the Revenue's counsel that the tax effect was less than Rs. 20 lakhs. In light of CBDT Circular No. 21/2015, which mandates that appeals with a tax effect below Rs. 20 lakhs are to be treated as not pressed, the Court accepted this position. Consequently, the appeals were dismissed. The ratio decidendi is that appeals with a tax effect below the threshold specified in the relevant CBDT circular, and where the Revenue concedes to treat them as not pressed, will be dismissed on that ground without delving into the merits of the substantive issues.

What were the facts?

These are two appeals filed by the Director of Income Tax (Revenue) against Hyundai Engineering Co. Ltd. (Assessee) for assessment years not specified in the judgment. The appeals challenge an order or action by the Assessing Officer, specifically regarding the deletion of an addition of Rs. 3.58 crores made on account of alleged bogus head office expenses. The High Court had previously declined to frame a question of law on this issue on November 16, 2010. The Revenue also stated that the tax effect in these appeals is less than Rs. 20 lakhs.

What were the issues?

1. Whether the deletion of the addition of Rs. 3.58 crores made by the Assessing Officer on account of bogus expenses relating to the head office is a valid question of law for the Tribunal to decide. (Mixed question of law and fact, relating to the assessment of income). Assessee's Contention: Not recorded in the judgment. Revenue's Contention: The Revenue sought to challenge the deletion of the addition. However, the Court declined to frame a question of law on this issue. 2. Whether the appeals are to be treated as not pressed by the Revenue in view of the tax effect being less than Rs. 20 lakhs, as per CBDT Circular No. 21/2015. Assessee's Contention: Not recorded in the judgment. Revenue's Contention: The learned counsel for the Appellant (Revenue) stated that the tax effect is less than Rs. 20 lakhs, and therefore, in view of Circular No. 21/2015, the appeals should be treated as not pressed.

AI-generated summary — verify with the full judgment below

$-24 & 25 * IN THE HIGH COURT OF DELHI AT NEW DELHI + ITA 696/2009 DIRECTOR OF INCOME TAX Appellant Through: Mr. P. Raychaudhuri, Sr. Standing Counsel. versus HYUNDAI ENGINEERING CO. LTD. Respondent Through: Mr Kamal Sawhney and Mr Shikhar Garg, Advocates. ITA 721/2009 DIRECTOR OF INCOME TAX Appellant Through: Mr. P. Raychaudhuri, Sr. Standing Counsel. versus HYUNDAI ENGINEERING CO. LTD. .....Respondent Through: Mr Kamal Sawhney and Mr Shikhar Garg, Advocates. CORAM: JUSTICE S.MURALIDHAR JUSTICE NAJMI WAZIRI ORDER % 27.07.2016 1. Of the two issues raised in these appeals, one relates to the deletion of the addition of Rs. 3.58 crores made by the Assessing Officer allegedly on account of the bogus expenses relating to the head office. The Court has already declined to frame a question of law on the said issue by its order dated 16 th November, 2010. Digitally Signed By:AMULYA Signature Not Verified

As far as the remaining issue is concerned, it is covered against the Appellant Revenue by the decision of this Court dated 41h October, 2010 in ITA No. 1111/2010 (Commissioner of Income Tax v. MIs Dhingra Metal Works.) Additionally, the learned counsel for the Appellant states that the tax effect in these appeals is less than Rs.20 lakhs. Therefore, in view of Circular No. 21/2015 dated 10th December 2015 issued by the Central Board of Direct Taxes, these appeals have to be treated as not pressed by the Revenue. The appeals are accordingly dismissed. S.MURALIDHAR, J NAIAZIRI, J JULY 27, 2016 kk

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