M/S. TAMILNADU PETROPRODUCTS vs. THE ASSISTANT COMMISSIONER

TCA/104/2017HC Madras21 April 2021Bench: Hon`ble Mr Justice M.DURAISWAMY5 pages

AI SummaryWithdrawn

What did the High Court hold?

The High Court noted that it was not necessary to decide the substantial questions of law due to subsequent developments. The Government of India enacted the Direct Tax Vivad Se Vishwas Act, 2020, to provide for the resolution of disputed tax. The learned counsel for the appellant/assessee informed the Court that Form-3 had been issued to the assessee on January 11, 2021, under this Act. Consequently, the assessee sought permission to withdraw the appeal. The High Court, in view of the submission made by the assessee's counsel, dismissed the Tax Case Appeal as withdrawn. No costs were awarded. The connected miscellaneous petition was also closed. The specific issues framed by the assessee were not adjudicated upon.

What were the facts?

The assessee, M/s. Tamil Nadu Petroproducts Ltd., filed an appeal before the High Court of Judicature at Madras against an order of the Income Tax Appellate Tribunal (ITAT), Madras "C" Bench, dated January 22, 2016. This order pertained to the assessment year 2001-02. The appeal was filed under Section 260A of the Income Tax Act, 1961. The dispute involved the validity of reassessment proceedings, the concept of 'borrowed satisfaction', and whether compensation received should be taxed as revenue. The High Court was to decide substantial questions of law framed by the assessee. However, due to subsequent developments, the appeal was disposed of without a decision on the merits.

What were the issues?

The High Court was to decide the following substantial questions of law: 1. Whether the reassessment proceedings were valid without considering the findings of the Commissioner of Income Tax (Appeals)? (Question of law) 2. Whether an assessment could be reopened based on 'borrowed satisfaction' without independent belief by the assessing officer? (Question of law) 3. Whether income tax authorities in Bombay, who allowed a deduction to the payer (CIBA India Ltd.), could direct the assessing officer to tax the receipt as income in the hands of the assessee? (Question of law) 4. Whether reopening the assessment to tax compensation as revenue receipt amounted to a change of opinion, given full disclosure in the return? (Question of law) Assessee's Contentions: The assessee argued that the reassessment proceedings were invalid, that 'borrowed satisfaction' was not permissible, and that taxing the receipt as income constituted a change of opinion. The assessee relied on the findings of the CIT(A) and the principle of independent belief for the assessing officer. Revenue's Contentions: The judgment does not record specific contentions made by the revenue on these issues.

Which sections of the Income-tax Act were involved?

Section 260A

AI-generated summary — verify with the full judgment below

Tax Case Appeal No.104 of 2017 IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED : 21.04.2021 CORAM THE HON'BLE MR.JUSTICE M. DURAISWAMY AND THE HON'BLE MR.JUSTICE KRISHNAN RAMASAMY Tax Case Appeal No.104 of 2017 and C.M.P.No.2020 of 2017 M/s.Tamil Nadu Petroproducts Ltd., 9, Manali Express Road, Manali, Chennai – 600 068.

... Appellant Vs.

The Assistant Commissioner of Income Tax, Large Taxpayer Unit, Chennai – 600 101. ... Respondent

Tax Case Appeal filed under Section 260A of the Income Tax Act, 1961 against the order of the Income Tax Appellate Tribunal, Madras "C" Bench, dated 22.01.2016 passed in I.T.A.No.904/Mds/2011, Assessment Year 2001-02. For Appellant : Mr.R.Venkata Narayanan for M/s.Subbaraya Aiyar Padmanabhan For Respondent : Mr.T.Ravikumar

Senior Standing Counsel Page 1/5 https://www.mhc.tn.gov.in/judis/ Tax Case Appeal No.104 of 2017 J U D G M E N T (Delivered by M.DURAISWAMY, J.) This appeal filed by the assessee under Section 260A of the Income Tax Act, 1961 ('the Act' for brevity), is directed against the order dated 22.01.2016 passed by the Income Tax Appellate Tribunal, Madras "C" Bench, ('the Tribunal' for brevity) in I.T.A.No.904/Mds/2011 for the assessment year 2001-02. The appellant/assessee has raised the following Substantial Questions of Law in the above appeal: "1.Whether on the facts and circumstances of the case and in law the Tribunal was right in holding that reassessment proceedings is valid without considering the findings given by the CIR (Appeals)? 2.Whether on facts and circumstances of the case and in law, an assessment can be reopened on the basis of 'borrowed satisfaction' in the absence of independent belief by the assessing officer having jurisdiction over the assessee? 3.Whether on the facts and circumstances of the case, the Income Tax authorities at Bombay who allowed deduction of revenue expenditure in the hands of payer i.e. CIBA India Ltd., can direct the Assessing Officer having Page 2/5 https://www.mhc.tn.gov.in/judis/ Tax Case Appeal No.104 of 2017 jurisdiction over Assessee to tax the receipt as income? 4.Whether the reopening of assessment to tax the compensation received as revenue receipt would not amount to change of opinion when there is a full disclosure in the return of income?” 2. We have heard Mr.R.Venkata Narayanan for M/s.Subbaraya Aiyar Padmanabhan, learned counsel for the appellant/assessee and Mr.T.Ravikumar, learned Senior Standing Counsel for the respondent/Revenue. 3. It may not be necessary for this Court to decide the Substantial Questions of Law framed for consideration on account of certain subsequent developments. The Government of India enacted the Direct Tax Vivad Se Vishwas Act, 2020 (Act 3 of 2020) to provide for resolution of disputed tax and for matters connected therewith or incidental thereto. The Act of the Parliament received the assent of the President on 17th March 2020 and published in the Gazette of India on 17th March 2020. Page 3/5 https://www.mhc.tn.gov.in/judis/ Tax Case Appeal No.104 of 2017 4. We are informed by the learned counsel for the appellant/ assessee that the assessee had already been issued with Form-3 on 11.01.2021 and the learned counsel for the appellant seeks permission of this Court to withdraw the appeal. 5. In view of the submission made by the learned counsel for the appellant, the Tax Case Appeal stands dismissed as withdrawn. No costs. Consequently, connected miscellaneous petition is closed. [M.D., J.] [K.R., J.] 21.04.2021

Index : Yes/No

Internet : Yes

mkn To 1. Income Tax Appellate Tribunal, Madras "C" Bench 2.The Assistant Commissioner of Income Tax, Large Taxpayer Unit, Chennai – 600 101. Page 4/5 https://www.mhc.tn.gov.in/judis/ Tax Case Appeal No.104 of 2017 M. DURAISWAMY, J. and KRISHNAN RAMASAMY, J. mkn Tax Case Appeal No.104 of 2017

21.04.2021 Page 5/5 https://www.mhc.tn.gov.in/judis/

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