PRINCIPAL COMMISSIONER OF IN vs. M/S MAINETTI INDIA PVT LTD

PDF · subscribers
TCA/116/2019HC Madras26 August 2022Bench: Hon`ble Mr Justice R. MAHADEVAN5 pages
AI SummaryWithdrawn

What did the High Court hold?

The High Court did not decide the substantial questions of law on merits. Instead, the Court noted that during the pendency of the appeal, the assessee had availed the benefit of the Direct Tax Vivad Se Vishwas Act, 2020. The assessee filed the necessary declarations, which were accepted, and a Form 5 order for full and final settlement of tax arrears was issued by the Income Tax Department on 20.04.2021. The learned Standing Counsel for the appellant/Revenue submitted this fact, and it was fairly conceded by the learned counsel for the respondent/assessee. In view of this subsequent development, the Court was of the opinion that nothing further survived for adjudication in the appeal. Therefore, the Tax Case Appeal was disposed of based on the submissions made by both parties, without any decision on the merits of the substantial questions of law.

What were the facts?

The Revenue, represented by the Principal Commissioner of Income Tax, filed a Tax Case Appeal before the High Court of Judicature at Madras. The appeal challenged an order dated 08.04.2014 passed by the Income Tax Appellate Tribunal (ITAT), 'C' Bench, Chennai, for the Assessment Year 2006-2007. The dispute concerned an overseas commission payment of Rs.1,08,01,999/- made without deducting tax at source. During the pendency of the appeal, the assessee, M/s.Mainetti India Pvt. Ltd., availed the benefit of the Direct Tax Vivad Se Vishwas Act, 2020, and filed necessary declarations. The Income Tax Department accepted these declarations and issued a Form 5 order for full and final settlement of tax arrears on 20.04.2021. Both parties conceded to this subsequent development.

What were the issues?

The Tribunal had to decide two substantial questions of law: 1. Whether the ITAT was justified in holding that an overseas commission payment of Rs.1,08,01,999/-, without deduction of tax at source, does not entail disallowance under Section 40(a)(i) read with Section 195 of the Income Tax Act, 1961, without considering the applicability of Explanation 4 to Section 9(1)(i) and Explanation Section 2 to Section 195(1) to the facts of the case? 2. Whether the Tribunal was correct in not appreciating that the earlier occasions it relied upon are no longer valid after the introduction of Explanation 4 to Section 9(1)(i) and Explanation Section 2 to Section 195(1) by the Finance Act, 2012, with retrospective effect from 01.04.1962? The Revenue contended that the ITAT erred in its decision by not considering the retrospective amendments to the Income Tax Act. The Assessee's contentions are not recorded in the judgment, other than their concession regarding the Vivad Se Vishwas settlement.

Which sections of the Income-tax Act were involved?

Section 260A,Section 40(a)(i),Section 195,Section 9(1)(i)

AI-generated summary — verify with the full judgment below

Tax Case Appeal No.116 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 Tax Case Appeal No.116 of 2019 The Principal Commissioner of Income Tax, No.121, Nungambakkam High Road, Chennai - 600 034. ... Appellant Vs.

M/s.Mainetti India Pvt. Ltd., 3rd Floor, Florida Towers, No.138/30, Nelson Manickam Road, Chennai - 600 029. ... Respondent (PAN No.AAA CM 6894 M)

Tax Case Appeal filed under Section 260A of the Income Tax Act, 1961 against the order of the Income Tax Appellate Tribunal, “C” Bench, Chennai, dated 08.04.2014 passed in I.T.A.No.106/Mds/2014. For Appellant : Mr.Karthik Ranganathan Standing Counsel For Respondent : Mr.M.P.Senthilkumar Page 1/5 https://www.mhc.tn.gov.in/judis Tax Case Appeal No.116 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 08.04.2014 passed by the Income Tax Appellate Tribunal, 'C' Bench, Chennai in I.T.A.No.106/Mds/2014 for the Assessment Year 2006-2007, by raising the following substantial questions of law:- "(i) Whether the ITAT was justified in holding that overseas commission payment of Rs.1,08,01,999/-, without deduction of the tax at source, does not entail disallowance under Section 40(a)(i) read with Section 195 of the Income Tax Act, 1961, without taking cognizance of Explanation 4 to Section 9(1)(i) and Explanation Section 2 to Section 195(1) squarely apply to the facts of the present case? (ii) Whether the Tribunal was right in not appreciating the fact that the earlier occasions, relied upon by it, are no longer good law, after introduction of Explanation 4 to Section 9(1)(i) and Explanation Section 2 to Section 195(1) in the statue book, by the Finance Act, 2012 with retrospective effect from 01.04.1962? " Page 2/5 https://www.mhc.tn.gov.in/judis Tax Case Appeal No.116 of 2019 2. When the matter was taken up for consideration, the learned Standing Counsel appearing for the appellant / Revenue submitted that during the pendency of these tax case appeal, the assessee has availed the benefit conferred under the Direct Tax Vivad Se Vishwas Act, 2020 and filed necessary declarations, which were accepted and Form 5 / order for full and final settlement of tax arrears, was also issued by the Income tax department on 20.04.2021. 3. The aforesaid submission made by the learned Standing Counsel for the appellant/Revenue has also been fairly conceded by the learned counsel appearing for the respondent/ assessee. 4. In view of the subsequent development, this Court is of the opinion that nothing survives for adjudication in this appeal. Recording the submission so made by the learned counsel on either side, the Tax Case Appeal stands disposed of. No costs. [R.M.D, J.] [M.S.Q, J.] 26.08.2022

r n s Internet : Yes.

Page 3/5 https://www.mhc.tn.gov.in/judis Tax Case Appeal No.116 of 2019 Index : Yes. To 1. The Deputy Commissioner of Income-Tax, Company Circle-IV (1), Chennai. 2. The Commissioner of Income Tax (Appeals)-IV, Chennai – 600 034. 3.The Income Tax Appellate Tribunal, Chennai, “C” Bench. Page 4/5 https://www.mhc.tn.gov.in/judis Tax Case Appeal No.116 of 2019 R. MAHADEVAN, J. and MOHAMMED SHAFFIQ, J. r n s Tax Case Appeal No.116 of 2019

26.08.2022 Page 5/5 https://www.mhc.tn.gov.in/judis

More judgments on Section 40(a)(i)

All 2,009 judgments and leading authorities on Section 40(a)(i) →

Recent GST High Court judgments

Search GST case law →