Principal Commissioner of Income Tax vs. M/s. IL and FS Tamil Nadu Power Company Ltd

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TCA/217/2024HC Madras12 November 2024Bench: Honourable Mr Justice R. SURESH KUMAR4 pages
AI SummaryDismissed

What did the High Court hold?

The High Court dismissed the appeal on the ground that the matter was covered under the Low Tax Effect as per Circular No.9/2024 dated 17.09.2024. Consequently, the substantial questions of law raised in the appeal were kept open to be decided at a later point of time. The Court made no findings on the merits of the substantial questions of law. There were no operative directions regarding remand or deletion, and no relief was granted on the merits. The issue of retrospective applicability of the amendment to Section 14A was expressly left undecided.

What were the facts?

The appeal is filed by the Principal Commissioner of Income Tax, Corporate Circle – 2(2), Chennai (Revenue) against the order of the Income Tax Appellate Tribunal (ITAT), 'A' Bench, Chennai, dated 03.08.2022, passed in I.T.A.No.2018/CHNY/2019. The assessee is M/s. IL & FS Tamil Nadu Power Company Ltd. The appeal was admitted on 04.10.2024 on several substantial questions of law. The Revenue submitted that the matter is covered under the Low Tax Effect as per Circular No.9/2024 dated 17.09.2024. Consequently, the appeal was dismissed without deciding the substantial questions of law.

What were the issues?

The Tribunal had to decide the following substantial questions of law: 1. Whether the ITAT erred in applying the decision of the Supreme Court in CIT Vs. Bokaro Steel Ltd. (2003) 236 ITR 315 (SC) to the assessee's case where the facts are different? 2. Whether the ITAT erred in applying the decision of the Supreme Court in CIT Vs. Karnal Cooperative Sugar Mills [2000] 243 ITR 2 (SC) to the assessee's case where the facts are different? 3. Whether the ITAT erred in holding interest earned by the assessee as capital receipts instead of 'income from other sources', given that the deposits were sourced from borrowed funds? 4. Whether the ITAT erred in not applying the decision of the Supreme Court in Tuticorin Alkali Chemicals & Fertilizers Ltd. Vs. CIT [1997] 227 ITR 172 (SC), which is stated to be squarely applicable? 5. Whether the ITAT erred in applying the decisions of the Madras High Court in CIT Vs. Chettinad Logistics (P) Ltd. [2017] 80 taxmann.com 221 and Redington (India) Ltd. Vs. Addl. CIT [2017] 77 taxmann.com 257, ignoring the amendment to Section 14A by the Finance Act, 2022? 6. Whether the amendment to Section 14A by the Finance Act, 2022, by way of insertion of an explanation, is applicable retrospectively as it is clarificatory? The Revenue argued that the matter is covered under the Low Tax Effect as per Circular No.9/2024. No specific arguments for the assessee were recorded in relation to the substantial questions of law.

Which sections of the Income-tax Act were involved?

Section 14A,Section 260-A

AI-generated summary — verify with the full judgment below

T.C.A.No.217 of 2024 IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 12.11.2024 CORAM : THE HONOURABLE MR.JUSTICE R. SURESH KUMAR AND THE HONOURABLE MR.JUSTICE C. SARAVANAN T.C.A.No.217 of 2024 Principal Commissioner of Income Tax Corporate Circle – 2(2) Chennai – 600 034. .. Appellant Vs. M/s.IL & FS Tamil Nadu Power Company Ltd. New No.2, (Old No.21) 4th Floor, KPR Tower 1st Street, Subba Rao Avenue College Road, Chennai – 600 006. PAN: AABCF 1176A .. Respondent Prayer: Appeal filed under Section 260-A of the Income Tax Act, 1961, against the order of Income Tax Appellate Tribunal “A” Bench,

Chennai,

dated

03.08.2022

passed

in I.T.A.No.2018/CHNY/2019. For the Appellant : Mrs.R.Hemalatha Senior Standing Counsel For the Respondent : Mr.Joseph Prabakar JUDGMENT (Order of the Court was made by R.SURESH KUMAR, J.) The present tax case appeal was admitted on 04.10.2024 on the following substantial questions of law:- "i. In the facts and circumstances of the case and Page 1 of 4 https://www.mhc.tn.gov.in/judis T.C.A.No.217 of 2024 in law, whether the Ld.ITAT had committed an error in applying the decision of the Hon'ble Supreme Court of India in the case of M/s.CIT Vs. Bokaro Steel Ltd., 236 ITR 315 (SC) to the case of the assessee where the facts are completely different? ii. In the facts and circumstances of the case and in law, whether the Ld.ITAT had committed an error in applying the decision of the Hon'ble Supreme Court of India in the case of M/s.CIT Vs.Karnal Cooperative Sugar Mills, [2000] 243 ITR 2 to the case of the assessee where the facts are completely different? iii. In the facts and circumstances of the case and in law, whether the Ld.ITAT had committed an error in holding the interest earned by the assessee as capital receipts instead of "income from other sources" as the deposits from which interest was earned was sourced from borrowed funds? iv. In the facts and circumstances of the case and in law, whether the Ld.ITAT had committed an error in not applying the decision of the Hon'ble Supreme Court of India in the case of Tuticorin Alkali Chemicals & Fertilizers Ltd. Vs. CIT [1997] 227 ITR 172 (SC) which is squarely applicable to the case? v. In the facts and circumstances of the case and in law, whether the Ld.ITAT had committed an error in applying the decision of the Hon'ble Madras High Court in the case of CIT Vs. Chettinad Logistics (P) Ltd., [2017] 80 taxmann.com 221 and Redington (India) Ltd., Vs. Addl. CIT, [2017] 77 taxmann.com 257 to the case of the assessee ignoring the amendment brought in by Finance Act, 2022 in Section 14A by way of insertion of an explanation? vi. Whether the amendment made to Section 14A Page 2 of 4 https://www.mhc.tn.gov.in/judis T.C.A.No.217 of 2024 by Finance Act, 2022 by way of insertion of explanation is applicable retrospectively as it is only clarificatory in nature?" 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 raised 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) 12.11.2024 Neutral Citation:Yes/No drm Page 3 of 4 https://www.mhc.tn.gov.in/judis T.C.A.No.217 of 2024 R. SURESH KUMAR, J. AND C. SARAVANAN

, J.

(drm) T.C.A.No.217 of 2024 12.11.2024 Page 4 of 4 https://www.mhc.tn.gov.in/judis

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