M/S.CHENNAI PETROLEUM CORPOR vs. THE DEPUTY COMMISSIONER OF I

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TCA/112/2020HC Madras14 October 2020Bench: Hon`ble Mr Justice T. S. SIVAGNANAM4 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that there was no error in the order of remand passed by the Tribunal and therefore, no interference was warranted in the appeal. The Court found that the Tribunal had considered the facts regarding the community welfare expenses and had remanded the matter to the Assessing Officer for fresh adjudication. Consequently, the Court concluded that there was no substantial question of law arising for consideration in the appeal. The appeal was dismissed on this ground. The Court did not express any opinion on the merits of the allowability of the expenditure itself, as the primary reason for dismissal was the absence of a substantial question of law.

What were the facts?

The assessee, M/s. Chennai Petroleum Corporation Limited, filed a Tax Case Appeal before the High Court of Judicature at Madras against an order dated 20.03.2019 passed by the Income Tax Appellate Tribunal ('the Tribunal') in I.T.A.No.884/Chny/2013. The appeal pertains to the assessment year 2007-08. The Revenue was represented by the Deputy Commissioner of Income-tax, Larger Tax Payer Unit - Appeals. The appeal challenged the Tribunal's decision regarding the allowability of social and community welfare expenses and the subsequent remand of the issue to the Assessing Officer.

What were the issues?

1. Whether the order of the Tribunal in not allowing the social and community welfare expenses incurred for winning the goodwill of the people of the locality under Section 37(1) of the Income Tax Act, 1961 is perverse? 2. Whether the Tribunal was right in law in remitting the issue to the assessing officer to adjudicate the issue of allowability of the expenditure applying the test of commercial expediency with reference to the evidence on record when the same has been considered by the CIT(Appeals)? Assessee's Contentions: The assessee argued that the social and community welfare expenses were incurred for business purposes, specifically to win the goodwill of the local community, and thus should be allowed under Section 37(1). The assessee also questioned the Tribunal's decision to remand the issue, arguing that the CIT(Appeals) had already considered the evidence and the commercial expediency of the expenditure. Revenue's Contentions: The judgment does not record specific contentions made by the Revenue. However, the fact that the Tribunal remanded the issue suggests that the Revenue may have raised concerns about the allowability of these expenses.

Which sections of the Income-tax Act were involved?

Section 37(1),Section 260A

AI-generated summary — verify with the full judgment below

T.C.A.No.112 of 2020 IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED : 14.10.2020 CORAM THE HON'BLE MR.JUSTICE T.S.SIVAGNANAM AND THE HON'BLE MRS.JUSTICE V.BHAVANI SUBBAROYAN T.C.A.No.112 of 2020 and C.M.P.No.3892 of 2020 M/s.Chennai Petroleum Corporation Limited, 536, Anna Salai, Teynampet, Chennai-600 018. PAN : AAACM4392C ... Appellant -vs- The Deputy Commissioner of Income-tax, Larger Tax Payer Unit - Appeals, Chennai-600 101.

... Respondent Tax Case Appeal filed under Section 260A of the Income Tax Act, 1961 against the order dated 20.03.2019 made in I.T.A.No.884/Chny/2013 on the file of the Income Tax Appellate Tribunal 'B' Bench, Chennai for the assessment year 2007-08. For Appellant : Mr.R.Vijayaraghavan for M/s.Subbaraya Aiyar Padmanabhan For Respondent : Mr.T.Ravikumar Senior Standing counsel 1/4 http://www.judis.nic.in T.C.A.No.112 of 2020 JUDGMENT (Judgment of the Court was delivered by T.S.Sivagnanam, J.) This appeal has been filed by the assessee under Section 260 A of the Income Tax Act, 1961 ('the Act' for brevity), is directed against the order dated 20.03.2019 made in I.T.A.No.884/Chny/2013 on the file of the Income Tax Appellate Tribunal 'B' Bench, Chennai ('the Tribunal' for brevity) for the assessment year 2007-08. 2.This appeal has been filed by raising the following substantial questions of law:- "1.Whether the order of the Tribunal in not allowing the social and community welfare expenses incurred for winning the goodwill of the people of the locality u/s.37(1) of the Act is perverse? and 2.Whether the Tribunal was right in law in remitting the issue to the assessing officer to adjudicate the issue of allowability of the expenditure applying the test of the commercial expediency with reference to the evidence on record when the same has been considered by the CIT(Appeals)?" 2/4 http://www.judis.nic.in T.C.A.No.112 of 2020 3.We have heard Mr.R.Vijayaraghavan, learned counsel appearing for the appellant and Mr.T.Ravikumar, learned Senior Standing Counsel appearing for the respondent. 4.With regard to Community Welfare expenses incurred by the assessee, the Tribunal had after considering the facts remanded the matter to the Assessing Officer for fresh adjudication. We find that there is no error in the order of remand for us to interfere in this appeal. Accordingly, we hold that there is no substantial question of law arising for consideration on the said issues. 5.In the result, the tax case appeal is dismissed on the ground that there is no substantial question of law arising for consideration. No costs. Consequently, connected miscellaneous petition is closed. (T.S.S., J.) (V.B.S., J.) 14.10.2020 [4/5] Index : Yes/No Speaking Order/Non-speaking Order cse 3/4 http://www.judis.nic.in T.C.A.No.112 of 2020 T.S.Sivagnanam, J. and V.Bhavani Subbaroyan, J. cse T.C.A.No.112 of 2020 and C.M.P.No.3892 of 2020 14.10.2020 [4/5] 4/4 http://www.judis.nic.in

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