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

TCA/178/2024HC 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 Revenue's Senior Standing Counsel regarding CBDT's Circular No. 9 of 2024. This circular indicates that the tax effect in the present case is below the prescribed monetary limit for filing appeals. Consequently, the Court decided to dispose of the Tax Case Appeal on the ground of low tax effect. The substantial questions of law raised in the appeal were kept open for adjudication at an appropriate future stage. The Court made no order as to costs. The specific findings of the ITAT on the merits of the disallowance were not adjudicated by the High Court.

What were the facts?

The Revenue, identified as the Principal Commissioner of Income Tax-3, Chennai, has filed a Tax Case Appeal against an order of the Income Tax Appellate Tribunal (ITAT), 'B' Bench, Chennai, dated April 26, 2023. The appeal pertains to the assessment year 2009-10 and concerns the disallowance of discount on the sale of vehicles by the assessee, M/s. VST Motors Ltd. The ITAT had sustained a disallowance of 1% of the total discount amount. The Revenue's appeal challenges the ITAT's decision on the grounds that the assessee failed to provide sufficient evidence to support the passing on of these discounts to its customers.

What were the issues?

The Tribunal was asked to decide 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 1% 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 customers? 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 its customers while sustaining the disallowance to 1% of the total discount amount, and it is for the taxpayer to establish by proper evidence that a particular allowance is justified to be allowed? Contentions: Assessee: The judgment does not record any specific contentions made by the assessee before the High Court. Revenue: The Revenue argued that the Assessee could not furnish any evidence for passing on the discount amounts to its customers. The Revenue also relied on CBDT's Circular No. 9 of 2024 dated September 17, 2024, stating that the tax effect in this case is less than the monetary limit imposed, and therefore, the appeal can be disposed of without adjudicating the substantial questions of law.

Which sections of the Income-tax Act were involved?

Section 260A

AI-generated summary — verify with the full judgment below

T.C.A.No.178 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.178 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.968/Chny/2018 for the assessment year 2009-10. 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.178 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 1% 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 its customers while sustaining the disallowance to 1% of the total discount amount and it is for the tax payer to establish by proper evidences that a particular allowance is justified to be allowed? 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 point of time. 2/4 https://www.mhc.tn.gov.in/judis T.C.A.No.178 of 2024 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. (R.S.K., J.) (C.S.N., J.) 22.10.2024 (2/2) 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.178 of 2024 R.SURESH KUMAR, J. and C.SARAVANAN, J. vji T.C.A.No.178 of 2024 22.10.2024 (2/2) 4/4 https://www.mhc.tn.gov.in/judis

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