THE COMMISSIONER OF INCOME T vs. M/S.BHARAT COAL CHEMICALS LTD

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TCA/110/2019HC Madras26 August 2022Bench: Hon`ble Mr Justice R. MAHADEVAN4 pages
AI SummaryWithdrawn

What did the High Court hold?

The High Court dismissed the appeal as withdrawn. The Revenue's counsel brought to the court's notice CBDT Circular No. 17/2019 dated August 8, 2019, which stipulates that appeals shall not be filed or pursued by the Department before the High Court if the tax effect does not exceed Rs. 1,00,00,000/-. The counsel submitted that the tax effect in this appeal was below this threshold limit. In light of this submission, the court dismissed the appeal as withdrawn, keeping the substantial questions of law open for determination in an appropriate case. No costs were awarded.

What were the facts?

The Revenue, Commissioner of Income Tax, Chennai, filed an appeal under Section 260A of the Income Tax Act, 1961, before the High Court of Judicature at Madras. The appeal challenged an order dated July 17, 2018, passed by the Income Tax Appellate Tribunal, Madras 'A' Bench, concerning assessment year 2014-15. The assessee is M/s. Bharat Coal Chemicals Ltd. The appeal pertains to the taxability of pre-operative interest income from fixed deposits.

What were the issues?

1. Whether the Tribunal ought to have applied the decisions of the Supreme Court in Tuticorin Alkalis and Fertilizers Limited (227 ITR 172) and Auto Cast (248 ITR 110) which held that interest income from bank fixed deposits is assessable only as income from other sources? (Question of law) 2. Whether pre-operative income in the form of interest income from Fixed Deposits is taxable under the head 'income from other sources' under Section 56(1) of the Income Tax Act, 1961? (Question of law) 3. Whether the interest income received before the commencement of business could be set off against capital expenditure? (Question of mixed law and fact) Assessee's contentions: Not recorded. Revenue's contentions: The Revenue argued that the Tribunal should have applied the Supreme Court decisions in Tuticorin Alkalis and Fertilizers Limited and Auto Cast, which classify bank fixed deposit interest as income from other sources. The Revenue also contended that pre-operative interest income is taxable under Section 56(1) and that such income received before business commencement cannot be set off against capital expenditure.

Which sections of the Income-tax Act were involved?

Section 260A,Section 56(1)

AI-generated summary — verify with the full judgment below

T.C.A.No.110 of 2019 IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED : 26.08.2022 CORAM : THE HON'BLE MR. JUSTICE R. MAHADEVAN AND THE HON'BLE MR. JUSTICE MOHAMMED SHAFFIQ T.C.A.No.110 of 2019 The Commissioner of Income Tax, Chennai. ... Appellant Versus M/s.Bharat Coal Chemicals Ltd., 1st Floor, Sigappi Aachi Building, No.18/3, Ruckmani Lakshmipathy Salai, Egmore, Chennai - 600 008. ... Respondent (PAN No.AACCH2455F) Appeal preferred under Section 260A of the Income Tax Act, 1961, against the order of the Income Tax Appellate Tribunal, Madras “A” Bench, dated 17.07.2018 in I.TA.No.329/Chny/2018. For Appellant : Mr.T.Ravi Kumar Senior Standing Counsel For Respondent : Mr.R.Sivaraman Page 1/4 https://www.mhc.tn.gov.in/judis T.C.A.No.110 of 2019 J U D G M E N T (Judgment was delivered by R.MAHADEVAN, J.) This tax case appeal has been filed by the appellant / Revenue, challenging the order dated 17.07.2018 passed by the Income Tax Appellate Tribunal, Madras 'A' Bench in I.T.A.No.329/Chny/2018, relating to the assessment year 2014-15, by raising the following substantial questions of law:- "(i) Whether the Tribunal ought to have applied the decision of the Supreme Court in the case of Tuticorin Alkalis Chemicals and Fertilizers Limited reported in 227 ITR Page 172 and that of Auto Cast reported in 248 ITR page 110 which clearly held that interest income received from the fixed deposits made with the Bank are assessable as income from other sources only? (ii) Whether Pre-Operative income in the form of interest income from Fixed Deposits is taxable under the head income from other sources under Section 56(1) of the Income Tax Act, 1961? (iii) Whether the interest income received before the commencement of business could be set off against capital expenditure? " 2. When the matter was taken up for consideration, the learned counsel for the appellant / Revenue brought to the notice of this court the Circular No.17/2019 dated 08.08.2019 issued by the Central Board Direct Taxes, Page 2/4 https://www.mhc.tn.gov.in/judis T.C.A.No.110 of 2019 wherein, it is stipulated that appeal shall not be filed/pursued by the Department before the High Court in cases where the tax effect does not exceed Rs.1,00,00,000/- (Rupees One Crore). It is also submitted that the tax effect in this appeal is less than the threshold limit. 3. In the light of the aforesaid submissions made by the learned counsel for the appellant / Revenue, the present appeal, wherein, the tax effect is said to be less than the monetary limit imposed, is dismissed as withdrawn, keeping open the substantial questions of law for determination in an appropriate case. No costs. (R.M.D., J.) (M.S.Q., J.) 26.08.2022 r n s

Internet : Yes.

Index : Yes / No. Page 3/4 https://www.mhc.tn.gov.in/judis T.C.A.No.110 of 2019 R. MAHADEVAN, J. and MOHAMMED SHAFFIQ, J. r n s To 1. The Income Tax Appellate Tribunal Madras 'A' Bench, Chennai. 2. The Commissioner of Income Tax (Appeals)-1, Chennai. 3. The Income Tax Officer, Corporate Ward 1(2), Chennai. T.C.A.No.110 of 2019 26.08.2022 Page 4/4 https://www.mhc.tn.gov.in/judis

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