PRINCIPAL COMMISSIONER OF vs. M/S GAJAANANDA JEWELLERY

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TCA/181/2017HC Madras15 October 2024Bench: Honourable Mr Justice R. SURESH KUMAR3 pages
AI SummaryDismissed

What did the High Court hold?

The High Court dismissed the appeal filed by the Revenue. The dismissal was based on the ground that the matter was covered under the Low Tax Effect as per Circular No. 9/2024 dated 17.09.2024. The Court explicitly stated that the substantial questions of law arising in this appeal are kept open to be decided at a later point of time. Therefore, no finding was rendered on whether the consideration for carbon credits was a capital or revenue receipt, nor on whether the derivative losses were business or speculative losses. No operative directions were issued as the appeal was dismissed on procedural grounds related to tax effect. No issue was expressly left undecided, but the substantive issues were not adjudicated.

What were the facts?

The Revenue, represented by the Principal Commissioner of Income Tax, filed an appeal under Section 260-A of the Income Tax Act, 1961, against an order of the Income Tax Appellate Tribunal (ITAT), Madras "D" Bench, dated 24.03.2016. The appeal was admitted by the High Court on 14.03.2017. The assessee is M/s. Gajaananda Jewellery Maart P. Ltd. (formerly TCS Textiles Pvt. Ltd.). The appeal concerns the assessment of consideration received on the sale of carbon credits and losses incurred on derivative transactions for hedging foreign currency fluctuations. The amount in dispute is not specified.

What were the issues?

The High Court was to decide the following substantial questions of law: 1. Whether the consideration received on sale of carbon credits by the assessee ought to be treated as a capital receipt or a revenue receipt (Section 2(24), Section 45)? 2. Whether the losses suffered by the assessee qua derivative transactions, entered into for hedging foreign currency fluctuations, are in the nature of business losses or speculative losses (Section 43(5))? The Revenue contended that the matter is covered under the Low Tax Effect as per Circular No. 9/2024 dated 17.09.2024. The judgment does not record any specific arguments from the assessee on the substantial questions of law, but their position would be contrary to the Revenue's classification if they sought to treat the receipts as capital or losses as business.

Which sections of the Income-tax Act were involved?

Section 260-A,Section 2(24),Section 45,Section 43(5)

AI-generated summary — verify with the full judgment below

T.C.A.No.181 of 2017 IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 15.10.2024 CORAM : THE HONOURABLE MR.JUSTICE R. SURESH KUMAR AND THE HONOURABLE MR.JUSTICE C. SARAVANAN T.C.A.No.181 of 2017 Principal Commissioner of Income Tax 3 No.63, Race Course Road Coimbatore. .. Appellant Vs. M/s. Gajaananda Jewellery Maart P. Ltd. Formerly known as TCS Textiles Pvt. Ltd. No.68, College Road, Tirupur – 641 602 PAN: AAB CT 7921 K .. Respondent Prayer: Appeal filed under Section 260-A of the Income Tax Act, 1961, against the order of Income Tax Appellate Tribunal Madras “D” Bench dated 24.03.2016 passed in I.T.A.No.1192/Mds/2015. For the Appellant : Mr.Karthik Ranganathan Senior Standing Counsel For the Respondent : Mr.N.V.Balaji JUDGMENT (Order of the Court was made by R.SURESH KUMAR, J.) The present tax case appeal was admitted on 14.03.2017 by this Court on the following substantial questions of law:- "1. Whether the consideration received on sale of Page 1 of 3 https://www.mhc.tn.gov.in/judis T.C.A.No.181 of 2017 carbon credits by the assessee, ought to be treated as a capital receipt or a revenue receipt? 2. Whether the losses suffered by the assessee qua derivative transactions, which are entered into for the purpose of hedging of foreign currency fluctuations are in the nature of business losses or speculative losses?" 2. It is submitted by the learned Senior Standing Counsel appearing for the appellant Revenue that this matter is covered under the Low Tax Effect as per the recent Circular dated 17.09.2024, in Circular No.9/2024. 3. Hence, this appeal stands dismissed, as covered under the low tax effect and the substantial questions of law arising in this appeal are kept open to be decided at the later point of time. There shall be no order as to costs. (R.S.K., J.) (C.S.N, J) 15.10.2024 Neutral Citation:Yes/No drm R. SURESH KUMAR, J. Page 2 of 3 https://www.mhc.tn.gov.in/judis T.C.A.No.181 of 2017 AND C. SARAVANAN

, J.

(drm) T.C.A.No.181 of 2017 15.10.2024 Page 3 of 3 https://www.mhc.tn.gov.in/judis

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