THE PRINCIPAL COMMISSIONER OF INCOME TAX - 3 vs. VST MOTORS LIMITED

TCA/177/2024HC Madras22 October 2024Bench: Honourable Mr Justice R. SURESH KUMAR4 pages

AI SummaryDismissed

What did the High Court hold?

The High Court noted the submission by the learned Senior Standing Counsel for the appellant Revenue that, as per CBDT's Circular No.9 of 2024 dated 17.09.2024, the tax effect in the instant case is less than the monetary limit imposed. Consequently, the Revenue requested that the appeal be disposed of, keeping the substantial questions of law open for adjudication at a later point in time. Recording this submission, the High Court dismissed the Tax Case Appeal for low tax effect. The substantial questions of law were kept open for adjudication at an appropriate stage. No order as to costs was made. The connected miscellaneous petition was also closed.

What were the facts?

The Revenue, represented by the Principal Commissioner of Income Tax-3, Chennai, filed a Tax Case Appeal against M/s.VST Motors Ltd., Chennai, for the assessment year 2010-11. The appeal challenges an order of the Income Tax Appellate Tribunal ('B' Bench, Chennai) dated 26.04.2023, which was passed in ITA No.19/Chny/2021. The core of the dispute revolves around the disallowance of a portion of the discount on the sale of vehicles claimed by the assessee. The assessee is M/s.VST Motors Ltd., and the Revenue is the Principal Commissioner of Income Tax-3, Chennai. The assessment year in question is 2010-11. The order under challenge is the ITAT's order dated 26.04.2023.

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 justified in sustaining the disallowance in respect of discount on sale of vehicles at 2% of the total discount amount shown by the Assessee, overlooking the fact that the Assessee could not furnish any evidence for passing on the discount amounts to its customer? 2. Is not the reasoning and finding of the Tribunal bad, especially when the Assessee could not file any evidence to show that the discount on sale of vehicles had been actually passed on to the customers while sustaining the disallowance to 2% of the total discount amount, and it is for the taxpayer to establish by evidence that a particular allowance is justified? The Revenue argued that the assessee failed to furnish evidence to prove that the discount on sale of vehicles was passed on to customers. The assessee's contentions are not explicitly recorded in the provided judgment, beyond the fact that the Tribunal sustained a disallowance of 2% of the total discount amount.

Which sections of the Income-tax Act were involved?

Section 260A

AI-generated summary — verify with the full judgment below

T.C.A.No.177 of 2024 IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED : 22.10.2024 CORAM THE HONOURABLE MR.JUSTICE R.SURESH KUMAR and THE HONOURABLE MR.JUSTICE C.SARAVANAN T.C.A.No.177 of 2024 and C.M.P.No.18757 of 2024 The Principal Commissioner of Income Tax-3, Chennai. ... Appellant -Vs- M/s.VST Motors Ltd., Gove Building, No.199, (Old No.144), Anna Salai, Chennai - 600 002. PAN:AABCV6244R ... Respondent PRAYER : Tax Case Appeal filed under Section 260 A of the Income Tax Act, 1961, against the order of the Income Tax Appellate Tribunal 'B' Bench, Chennai dated 26.04.2023 in I.T.A.No.19/Chny/2021 for the assessment year 2010-11. For Appellant : Mr.J.Narayanaswamy Senior Standing Counsel For Respondent : Mr.R.Venkatanarayanan for M/s.Subbaraya AIyar Padmanabhan 1/4 https://www.mhc.tn.gov.in/judis T.C.A.No.177 of 2024 J U D G M E N T (Judgment of the Court was 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: 1. Whether on the facts and in the circumstances of the case the Tribunal was justified in sustaining the disallowance in respect of discount on sale of vehicles at 2% of the total discount amount shown by the Assessee, overlooking the fact that the Asseessee could not furnish any evidences for passing on the discount amounts to its customer? 2. Is not the reasoning and finding of the Tribunal bad, especially when the Assessee could not file any evidences to show that the discount on sale of vehicles had been actually been passed on to the customers while sustaining the disallowance to 2% of the total discount amount and it is for the tax payer to establish by evidences that a particular allowance is justified? 2. It is brought to our notice by the learned Senior 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 2/4 https://www.mhc.tn.gov.in/judis T.C.A.No.177 of 2024 point of time. 3. Recording the aforesaid submission made by the learned Senior 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. However, there shall be no order as to costs. Consequently, connected miscellaneous petition is closed. (R.S.K., J.) (C.S.N., J.) 22.10.2024 (1/2) NCC : Yes / No Index : Yes / No Speaking Order : Yes / No vji To The Income Tax Appellate Tribunal 'B' Bench, Chennai. 3/4 https://www.mhc.tn.gov.in/judis T.C.A.No.177 of 2024 R.SURESH KUMAR, J. and C.SARAVANAN, J. vji T.C.A.No.177 of 2024 and C.M.P.No.18757 of 2024 22.10.2024 (1/2) 4/4 https://www.mhc.tn.gov.in/judis

Recent GST High Court judgments

Search GST case law →