COMMISSIONER OF INCOME vs. M/S RM.K.V. TEXTILES

T.C.A.Nos.204 to 207 of 2017 IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED : 29.08.2022 CORAM : THE HONOURABLE MR. JUSTICE R. MAHADEVAN AND THE HONOURABLE MR. JUSTICE MOHAMMED SHAFFIQ T.C.A.Nos.204 to 207 of 2017 The Commissioner of Income Tax, Central Circle IV, Chennai. ... Appellant in all TCAs Versus M/s. Rm.K.V.Textiles, No.176F Trivandrum Road, Tirunelveli 627 003. PAN: AABFR 1308 P ... Respondent in all TCAs Appeals preferred under Section 260A of the Income Tax Act, 1961, against the order dated 01.06.2016 passed by the Income Tax Appellate Tribunal, “B” Bench, Chennai, in I.T.A.Nos.1781, 1782, 1783 and 1874/Mds/2014. For Appellant : Mr.M.Swaminathan

Senior Standing Counsel in all TCAs For Respondent : Mr.Venkatanarayan for M/s. Subbaraya Aiyar in all TCAs Page 1/7 https://www.mhc.tn.gov.in/judis T.C.A.Nos.204 to 207 of 2017

COMMON JUDGMENT (Judgment of the Court was delivered by R.MAHADEVAN, J.) These tax case appeals have been filed by the appellant / Revenue, challenging the common order dated 01.06.2016 passed by the Income Tax Appellate Tribunal, “B” Bench, Chennai, in I.T.A.Nos.1781, 1782, 1783 and 1874/Mds/2014, relating to the assessment years 2007-08, 2008-09 and 2009-10, by raising the following substantial questions of law:- T.C.A.Nos.204 and 205 of 2017: “(i) Whether on the facts and in the circumstances of the case and in law the Income Tax Appellate Tribunal was legally justified in holding that the deduction of adhoc provision from the book value of stock to arrive the closing stock is permissible? (ii) Whether on the facts and in the circumstances of the case and in law the Income Tax Appellate Tribunal was correct in holding that assessee's method of valuation is acceptable when the Income Tax Appellate Tribunal itself has given a finding that such valuation is based on assessee's perception only and not based on any acceptable standard of accounting? (iii) Whether on the facts and in the circumstances of the case and in law the Income Tax Appellate Tribunal is right in giving relief on the ground that Assessing Officer failed to Page 2/7 https://www.mhc.tn.gov.in/judis T.C.A.Nos.204 to 207 of 2017 reconcile such stock with the by-numbers given when the assessee itself failed to do so during the course of search, and thus the burden remains un discharged on the assessee who made the said assertion?" T.C.A.No.206 of 2017:- “(i) Whether on the facts and in the circumstances of the case and in law the Income Tax Appellate Tribunal was legally justified in holding that the deduction of adhoc provision from the book value of stock to arrive the closing stock is permissible? (ii) Whether on the facts and in the circumstances of the case and in law the Income Tax Appellate Tribunal was correct in holding that assessee's method of valuation is acceptable when the Income Tax Appellate Tribunal itself has given a finding that such valuation is based on assessee's perception only and not based on any acceptable standard of accounting? (iii) Whether on the facts and in the circumstances of the case and in law the Income Tax Appellate Tribunal is right in giving relief on the ground that Assessing Officer failed to reconcile such stock with the by-numbers given when the assessee itself failed to do so during the course of search, and thus the burden remains un discharged on the assessee who made the said assertion? (iv) Whether on the facts and in the circumstances of the case the Income Tax Appellate Tribunal was right in holding that Page 3/7 https://www.mhc.tn.gov.in/judis T.C.A.Nos.204 to 207 of 2017 the lease commitment charges which was initially paid by the partner of the assessee firm in his individual capacity and subsequently disclosed as expenditure in the books of accounts of the firm as donations to various temples business expenditure and hence allowable as revenue expenditure? (v) Whether on the facts and in the circumstances of the case and in law the Income Tax Appellate Tribunal was right in holding that the tenancy rights acquired by the assessee through donation is not capital asset and not covered under Section 55(2) of the Income Tax Act 1961? (vi) Whether on the facts and in the circumstances of the case and in law the Income Tax Appellate Tribunal was correct in deleting the addition made towards stock discrepancy which was taken with the active participation of the assessee's staff under their own supervision and valuation thereof by relying on their own statement? " T.C.A.No.207 of 2017:- "(i) Whether on the facts and in the circumstances of the case and in law the Income Tax Appellate Tribunal was right in holding that explanation 1 to section 32 will not apply for the repair and renovation expenditure incurred by the assessee on the leasehold land towards interior decoration, flooring, painting and temporary partition etc.? " Page 4/7 https://www.mhc.tn.gov.in/judis T.C.A.Nos.204 to 207 of 2017 2. When the matters were taken up for consideration, the learned counsel for the appellant / Revenue brought to the notice of this court the Circular No.17/2019 dated 08.08.2019 issued by the Central Board Direct Taxes, wherein, it is stipulated that appeals shall not be filed/pursued by the Department before the High Court in cases where the tax effect does not exceed Rs.1,00,00,000/- (Rupees One Crore). It is also submitted that the tax effect in these appeals is less than the threshold limit. 3. In the light of the aforesaid submissions made by the learned counsel for the appellant / Revenue, the present appeals, wherein, the tax effect is said to be less than the monetary limit imposed, are dismissed as withdrawn, keeping open the substantial questions of law for determination in appropriate cases. No costs. (R.M.D., J.) (M.S.Q., J.) 29.08.2022

Internet : Yes

Index : Yes / No av Page 5/7 https://www.mhc.tn.gov.in/judis T.C.A.Nos.204 to 207 of 2017 R. MAHADEVAN, J. and MOHAMMED SHAFFIQ, J. av To 1. The Income Tax Appellate Tribunal, “B” Bench, Chennai. 2. The Commissioner of Income Tax, Central Circle IV, Chennai. 3. The Deputy Commissioner of Income-tax, Central Circle - IV(1), Chennai - 600 034. 4. The Commissioner of Income Tax (Appeals), Central-1, Chennai. T.C.A.Nos.204 to 207 of 2017 Page 6/7 https://www.mhc.tn.gov.in/judis T.C.A.Nos.204 to 207 of 2017 29.08.2022 Page 7/7 https://www.mhc.tn.gov.in/judis