COMMISSIONER OF INCOME TAX, vs. M/S POWER SOAPS P.LTD.,

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TCA/161/2016HC Madras02 March 2021Bench: Hon`ble Mr Justice M.DURAISWAMY5 pages
AI SummaryWithdrawn

What did the High Court hold?

The High Court did not decide the substantial questions of law framed for consideration. This was due to subsequent developments, specifically the enactment of the Direct Tax Vivad Se Vishwas Act, 2020. The learned counsel for the respondent/assessee submitted that the assessee had availed the Vivad Se Vishwas Scheme and had been issued Form-3 on 16.12.2020. Recording this submission, the Court found that nothing further survived for adjudication in the appeal. Consequently, the Tax Case Appeal was disposed of without deciding the merits of the substantial questions of law. No costs were awarded. The specific findings or reasoning of the Tribunal on the original issues are not detailed as the appeal was disposed of on procedural grounds.

What were the facts?

The Revenue, Commissioner of Income Tax, Central I, filed an appeal under Section 260A of the Income Tax Act, 1961, against the order dated 16.09.2015 passed by the Income Tax Appellate Tribunal, Chennai "A" Bench, in I.T.A.No.306/Mds/2015 for the assessment year 2010-11. The appeal was admitted on 23.02.2016, raising two substantial questions of law. During the pendency of the appeal, the Direct Tax Vivad Se Vishwas Act, 2020, was enacted. The assessee, M/s. Power Soaps P. Ltd., availed the Vivad Se Vishwas Scheme and was issued Form-3 on 16.12.2020, indicating their participation in the scheme.

What were the issues?

The Tribunal had to decide two substantial questions of law. The first question was whether the amount paid to a sister concern as trade discount through a book entry constituted an expenditure for the purpose of Section 40A(2)(a) of the Income Tax Act. The second question was whether the return of income filed by the assessee under Section 139(1) claiming depreciation could be considered an exercise of option before the due date prescribed in the Second Proviso to Rule 5(1A) of the Income Tax Rules. The Revenue argued that the trade discount paid to a sister concern was not a genuine expenditure and thus should be disallowed under Section 40A(2)(a). The Revenue also contended that the assessee had not exercised the option for depreciation within the prescribed time. The assessee's arguments are not explicitly recorded in the provided text, beyond their submission regarding availing the Vivad Se Vishwas Scheme.

Which sections of the Income-tax Act were involved?

Section 260A,Section 40A(2)(a),Section 139(1)

AI-generated summary — verify with the full judgment below

Tax Case Appeal No.161 of 2016 IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED : 02.03.2021 CORAM THE HON'BLE MR.JUSTICE M. DURAISWAMY AND THE HON'BLE MRS.JUSTICE T.V. THAMILSELVI Tax Case Appeal No.161 of 2016 Commissioner of Income Tax Central I, 108, Nungambakkam High Road, Chennai – 600 034. ... Appellant Vs. M/s.Power Soaps P. Ltd., R.S.No.94/1, Embalam Main Road, Sembiambalayam Village, Korkadu PO, Pondicherry – 605 110.

... Respondent Tax Case Appeal filed under Section 260A of the Income Tax Act, 1961 against the order of the Income Tax Appellate Tribunal, Chennai "A" Bench, dated 16.09.2015 passed in I.T.A.No.306/Mds/2015. For Appellant : Mr.T.R.Senthil Kumar Senior Standing Counsel and Mrs.K.G.Usharani Standing Counsel For Respondent : Ms.Sri Niranjani Srinivasan for Mr.G.Baskar Page 1/5 https://www.mhc.tn.gov.in/judis/ Tax Case Appeal No.161 of 2016 J U D G M E N T (Delivered by M.DURAISWAMY, J.) This appeal filed by the Revenue under Section 260A of the Income Tax Act, 1961 ('the Act' for brevity), is directed against the order dated 16.09.2015 passed by the Income Tax Appellate Tribunal, Chennai "A" Bench, ('the Tribunal' for brevity) in I.T.A.No.306/Mds/2015 for the assessment year 2010-11. The Revenue has raised the following substantial questions of law in the appeal : “1.Whether on the facts and circumstances of the case, the Appellate Tribunal was right in holding that the amount paid to sister concern under the head trade discount through book entry does not constitute as an expenditure for the purpose of Section 40A(2)(a) of the Income Tax Act ? 2.Whether the return of income filed by the assessee under Section 139(1) of the Income Tax Act claiming depreciation can be rated as exercising of option before the due date as prescribed in the Second Proviso to Rule 5(1A) of the Income Tax Rules?” The above appeal has been admitted on 23.02.2016 on the above stated first question of law. Page 2/5 https://www.mhc.tn.gov.in/judis/ Tax Case Appeal No.161 of 2016 2.We have heard Mr.T.R.Senthil Kumar, learned Senior Standing Counsel and Mrs.K.G.Usharani, learned Standing Counsel, for the appellant/Revenue and Ms.Sri Niranjani Srinivasan for Mr.G.Baskar learned counsel for the respondent/assessee. 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. 4.Learned counsel for the respondent/assessee submitted that the assessee had availed the Vivad Se Vishwas Scheme and that the respondent/assessee had already been issued with Form–3 on 16.12.2020.

5.Since the respondent/assessee had been issued with Form-3, Page 3/5 https://www.mhc.tn.gov.in/judis/ Tax Case Appeal No.161 of 2016 nothing survives for adjudication in the above appeal. Recording the submission made by the learned counsel for the respondent/assessee, the Tax Case Appeal stands disposed of. No costs. [M.D., J.] [T.V.T.S., J.] Index : Yes/No 02.03.2021 Internet : Yes

mkn To 1.The Income Tax Appellate Tribunal, Chennai "A" Bench 2.The Commissioner of Income Tax Central I, 108, Nungambakkam High Road, Chennai – 600 034. Page 4/5 https://www.mhc.tn.gov.in/judis/ Tax Case Appeal No.161 of 2016 M. DURAISWAMY, J. and T.V. THAMILSELVI, J. mkn Tax Case Appeal No.161 of 2016

02.03.2021 Page 5/5 https://www.mhc.tn.gov.in/judis/

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