THE COMMERCIAL OFINCOME vs. M/S.RAJKUMAR IMPEX PVT.,

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TCA/250/2016HC Madras08 July 2021Bench: Hon`ble Mr Justice M.DURAISWAMY6 pages
AI SummaryWithdrawn

What did the High Court hold?

The High Court noted that it was not necessary to decide the substantial questions of law due to subsequent developments. The enactment of the Direct Tax Vivad Se Vishwas Act, 2020, provided a mechanism for resolving disputed tax. The Court was informed that the assessee had availed this scheme, with the Department issuing Form-3 and the assessee filing Form-4. In light of the assessee having availed the benefit under the Act, the Court found no useful purpose in keeping the appeal pending. The Tax Case Appeal was disposed of on the ground that the assessee had availed the Vivad Se Vishwas Scheme. The Court granted liberty to the assessee to restore the appeal in the event the ultimate decision on the declaration filed under Section 4 of the Vivad Se Vishwas Act was not in its favour. The substantial questions of law were left open. The Department was directed to process the application at the earliest.

What were the facts?

The Commissioner of Income Tax, Chennai (appellant/Revenue) filed an appeal under Section 260A of the Income Tax Act, 1961, against the order dated 26.08.2015 passed by the Income Tax Appellate Tribunal, Madras "D" Bench, in I.T.A.No.528/Mds/2014, pertaining to Assessment Year 2009-10. The appeal was admitted on substantial questions of law concerning whether forward contracts in respect of Forex transactions entered by M/s.Rajkumar Impex Pvt. Ltd. (respondent/assessee) with a bank constituted speculative transactions. The assessee had reportedly booked substantially higher amounts in forward contracts than impex orders and cancelled 96% of these contracts. During the pendency of the appeal, the Direct Tax Vivad Se Vishwas Act, 2020, was enacted. The assessee availed the Vivad Se Vishwas Scheme, with Form-3 issued by the Department on 08.12.2020 and Form-4 filed by the assessee on 05.05.2021.

What were the issues?

1. Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the forward contract in respect of Forex transactions entered by the assessee with the bank would not fall under the definition of speculative transaction? (Question of law turning on the definition of speculative transaction under the Income Tax Act, 1961). 2. Is not the finding of the Appellate Tribunal bad, especially when the assessee has booked substantially higher amounts of forward contracts than the impex orders but had also cancelled 96% of the forward contracts entered by it, which would clearly indicate that it was a speculative activity indulged by the assessee in foreign exchange? (Question of mixed law and fact). Assessee's contentions: The assessee submitted that it had availed the Vivad Se Vishwas Scheme, and the Department had issued Form-3, with the assessee filing Form-4. Revenue's contentions: The Revenue argued that the Tribunal's finding was bad as the assessee's actions indicated speculative activity.

Which sections of the Income-tax Act were involved?

Section 260A,Section 4

AI-generated summary — verify with the full judgment below

Tax Case Appeal No.250 of 2016 IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 08.07.2021 CORAM THE HON'BLE MR.JUSTICE M. DURAISWAMY AND THE HON'BLE MRS.JUSTICE R.HEMALATHA Tax Case Appeal No.250 of 2016 The Commissioner of Income Tax, Chennai. ... Appellant Vs.

M/s.Rajkumar Impex Pvt. Ltd., Old No.93, New No.119, 4th Floor, St.Mary's Road, Abhiramapuram, Chennai – 600 018.

... Respondent

Appeal filed under Section 260A of the Income Tax Act, 1961 against the order of the Income Tax Appellate Tribunal, Madras "D" Bench, dated 26.08.2015 passed in I.T.A.Nos.518/Mds/2014. For Appellant : Mrs.R.Hemalathan, Senior Standing Counsel For Respondent : Mr.R.Sivaraman Page 1/6 https://www.mhc.tn.gov.in/judis/ Tax Case Appeal No.250 of 2016 J U D G M E N T (Delivered by M.DURAISWAMY, J.) The above appeal filed by the Department under Section 260A of the Income Tax Act, 1961 ('the Act' for brevity), is directed against the order dated 26.08.2015 passed by the Income Tax Appellate Tribunal, Madras "D" Bench, ('the Tribunal' for brevity) in I.T.A.No.528/Mds/ 2014 for the Assessment Year 2009-10. 2.The above appeal was admitted on the following Substantial Questions of Law: “1)Whether on the facts and in the circumstances of the case, the Tribunal was right in holding that the forward contract in respect of Forex transaction entered by the assessee with the bank would not fall under the definition of speculative transaction? 2)Is not the finding of the Appellate Tribunal bad especially when the assessee has booked substantially higher amount of forward contract than the impex orders but had also cancelled 96% of the forward contracts entered by it,would clearly indicate that it was a speculative activity indulged by the assessee is foreign exchange?” Page 2/6 https://www.mhc.tn.gov.in/judis/ Tax Case Appeal No.250 of 2016 3.We have heard Mrs.R.Hemalatha, learned Senior Standing counsel for the appellant/Revenue and Mr.R.Sivaraman, learned counsel for the respondent/assessee. 4. It may not be necessary for this Court to decide the Substantial Questions of Law framed for consideration on account of certain subsequent developments. The Government of India enacted the Direct Tax Vivad Se Vishwas Act, 2020 (Act 3 of 2020) to provide for resolution of disputed tax and for matters connected therewith or incidental thereto. The Act of the Parliament received the assent of the President on 17th March 2020 and published in the Gazette of India on 17th March 2020. 5.The learned counsel for the respondent/assessee submitted that the respondent/assessee had availed Vivad Se Vishwas Scheme and that the Department had also issued Form – 3 on 08.12.2020 and the assessee had filed Form – 4 on 05.05.2021. Page 3/6 https://www.mhc.tn.gov.in/judis/ Tax Case Appeal No.250 of 2016 6.In the light of the fact that the assessee has already availed the benefit under the Act, no useful purpose would be served in keeping this appeal pending. At the same time, safeguarding the interest of the assessee, in the event, the order of the Department under the Act is not in favour of the assessee. Accordingly, the Tax Case Appeal stands disposed of on the ground that the assessee has already been issued with Form – 3 and that the assessee has also filed Form – 4 and the Department shall process the application at the earliest in accordance with the said Act and communicate the decision to the assessee at the earliest. As observed, the assessee is given liberty to restore this appeal in the event the ultimate decision to be taken on the declaration filed by the assessee under Section 4 of the said Act is not in favour of the assessee. If such a prayer is made, the Registry shall entertain the prayer without insisting upon any application to be filed for condonation of delay in restoration of the appeal and on such request made by the assessee by filing a Miscellaneous Petitino for restoration, the Registry shall place such petition before the Division Bench for orders. Page 4/6 https://www.mhc.tn.gov.in/judis/ Tax Case Appeal No.250 of 2016 7.With this observation, the Tax Case Appeal stands disposed of with the aforementioned liberty and consequently, the Substantial Questions of Law are left open. No costs.

Index : Yes/No [M.D., J.] [R.H., J.] Internet : Yes 08.07.2021 va

To 1. Income Tax Appellate Tribunal, Madras "D" Bench Page 5/6 https://www.mhc.tn.gov.in/judis/ Tax Case Appeal No.250 of 2016 M. DURAISWAMY, J. and R.HEMALATHA , J. va Tax Case Appeal No.250 of 2016

08.07.2021 Page 6/6 https://www.mhc.tn.gov.in/judis/

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