Commissioner of Income Tax vs. M/s. Master Developers

TCA/170/2024HC Madras21 October 2024Bench: Honourable Mr Justice R. SURESH KUMAR4 pages

AI SummaryDismissed

What did the High Court hold?

The High Court, by R. Suresh Kumar, J. and C. Saravanan, J., dismissed the Tax Case Appeal filed by the Revenue. The dismissal was based on a submission made by the learned Standing Counsel for the appellant Revenue that the tax effect in the instant case was less than the monetary limit imposed by CBDT's Circular No.9 of 2024 dated 17.09.2024. Consequently, the Court decided to dispose of the appeal without adjudicating on the substantial questions of law raised. The substantial questions of law were kept open for adjudication at an appropriate stage. No costs were awarded. The Tribunal's order, which was under challenge, is not detailed in terms of its findings on the issues, as the High Court did not delve into the merits of the case.

What were the facts?

The Revenue, Commissioner of Income Tax, Chennai, filed a Tax Case Appeal before the High Court of Judicature at Madras against an order of the Income Tax Appellate Tribunal, 'A' Bench, Chennai, dated 22.02.2023 in I.T.A.No.873/Chny/2020. The appeal concerned the assessment year(s) not explicitly stated in the provided text. The dispute revolved around whether gains earned by the assessee, M/s. Master Developers, from the sale of property, after converting it into plots and incurring improvement costs, constituted business income or capital gains, and the allowability of costs for land improvement. The procedural history leading to this appeal involved the Tribunal's decision which the Revenue is challenging.

What were the issues?

The Tribunal had to decide two substantial questions of law: 1. Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the gains earned by the assessee from the sale of property after converting the land into plots by spending on improvement to land in the course of the assessee's real estate business is not business income and should be treated as income from capital gains? 2. Whether, on the facts and in the circumstances of the case, the Tribunal was right in allowing the assessee's claim for cost on improving the land? The Revenue argued that the gains should be treated as business income and the costs for land improvement were not allowable. The judgment does not record specific arguments or reliance on authorities by the assessee. The Revenue's submission regarding the tax effect was based on CBDT's Circular No.9 of 2024 dated 17.09.2024.

Which sections of the Income-tax Act were involved?

Section 260A

AI-generated summary — verify with the full judgment below

T.C.A.No.170 of 2024 IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 21.10.2024 CORAM THE HON'BLE MR.JUSTICE R.SURESH KUMAR AND THE HON'BLE MR.JUSTICE C.SARAVANAN Tax Case Appeal No.170 of 2024 Commissioner of Income Tax Chennai. .... Appellant Vs. M/s.Master Developers 123, Mint Street, Sowcarpet Chennai 600 079. (PAN AARFM5470B) .... Respondent ----- Tax Case Appeal filed under Section 260A of the Income Tax Act, 1961 against the order of the Income Tax Appellate Tribunal, 'A' Bench Chennai, dated 22.02.2023 made in I.T.A.No.873/Chny/2020. For Appellant : Mr.J.Narayanaswamy Senior Standing Counsel ----- J U D G M E N T (Delivered by R.SURESH KUMAR, J.) This Tax Case Appeal has been filed by the Revenue calling in question the correctness of the order passed by the Income Tax Appellate Tribunal, Chennai by raising the following substantial questions of law: https://www.mhc.tn.gov.in/judis T.C.A.No.170 of 2024 1. Whether on the facts and in the circumstances of the case the Tribunal was right in holding that the gains earned by the assessee from the sale of property after converting the land into plots by spending on improvement to land in the course of assessee real estate business is not a business income of the assessee and the said income is to be treated income from capital gains? 2. Whether on the facts and in the circumstances of the case, the tribunal was right in allowing the assessee's claim for cost on improving the land? 2. It is brought to our notice by the learned Standing Counsel for the appellant Revenue that in the instant case, as per the CBDT's Circular No.9 of 2024 dated 17.09.2024 the tax effect is said to be less than the monetary limit imposed and therefore, the appeal can be disposed of, keeping the substantial questions of law raised in this appeal open for adjudication at a later point of time. https://www.mhc.tn.gov.in/judis T.C.A.No.170 of 2024 3. Recording the aforesaid submission made by the learned Standing Counsel for the appellant Revenue, this Tax Case Appeal is dismissed for low tax effect, keeping open the substantial questions of law for adjudication at appropriate stage. No costs. (R.S.K.,J.) (C.S.N.,J.) 21.10.2024 NCS : Yes/No KST To The Income Tax Appellate Tribunal 'A' Bench, Chennai. https://www.mhc.tn.gov.in/judis T.C.A.No.170 of 2024 R.SURESH KUMAR, J. AND C.SARAVANAN, J. KST T.C.A.No.170 of 2024 21.10.2024 https://www.mhc.tn.gov.in/judis

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