Principal Commissioner of Income Tax-3 vs. M/s. Sicagen India Limited

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TCA/261/2024HC Madras18 November 2024Bench: Honourable Mr Justice R. SURESH KUMAR3 pages
AI SummaryDismissed

What did the High Court hold?

The High Court did not decide the substantial questions of law on merits. The Revenue submitted that the present Tax Case Appeal is covered under the 'Low Tax Effect' as per the Circular No. 9/2024 dated 17.09.2024. Recording this submission, the High Court dismissed the appeal on the ground of low tax effect. The Court explicitly stated that the questions of law raised in this appeal are kept open to be decided at a later point in time. Therefore, there is no finding on the merits of whether the disallowance under Section 14A forms part of book profit under Section 115JB, nor is there any reasoning or ratio decidendi on this substantive issue. The operative direction was to dismiss the appeal.

What were the facts?

The assessee is M/s. Sicagen India Ltd. The appeal is filed by the Principal Commissioner of Income Tax - 3, Chennai (Revenue) against the order of the Income Tax Appellate Tribunal (ITAT) "C" Bench, Chennai, dated 17.10.2022 in I.T.A.No.271/Chny/2022. The assessment years are not explicitly stated in the provided text. The dispute revolves around whether a disallowance made under Section 14A of the Income Tax Act, 1961, should be included in the book profit computation under Section 115JB of the Act. The Revenue is challenging the ITAT's decision to quash an order passed under Section 263. The procedural history indicates that the ITAT had previously ruled in favour of the assessee.

What were the issues?

The Tribunal had to decide the following substantial questions of law: 1. Whether, on the facts and in the circumstances of the case and in law, the Tribunal was right in holding that a disallowance under Section 14A shall not form part of the book profit under Section 115JB of the Act and consequently quashed the order passed under Section 263. 2. Whether, on the facts and in the circumstances of the case and in law, the Tribunal was right in holding that the disallowance under Section 14A shall not form part of the book profit under Section 115JB, when clause (f) of Explanation 1 to Section 115JB warrants additions of expenditure relatable to exempt income. The Revenue contended that the disallowance under Section 14A should be included in book profits under Section 115JB, citing clause (f) of Explanation 1 to Section 115JB. The assessee's contentions are not recorded in the provided text. The Tribunal's prior decision favoured the assessee.

Which sections of the Income-tax Act were involved?

Section 14A,Section 115JB,Section 263,Section 260A

AI-generated summary — verify with the full judgment below

T.C.A.No.261 of 2024 IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 18.11.2024 CORAM : THE HONOURABLE MR.JUSTICE R. SURESH KUMAR AND THE HONOURABLE MR.JUSTICE C. SARAVANAN T.C.A.No.261 of 2024 Principal Commissioner of Income Tax - 3 Chennai.

.. Appellant Vs. M/s.Sicagen India Ltd. 4th Floor SPIC House 88 Mount Road, Guindy Chennai 600 032 PAN: AAKCS5770J .. Respondent Prayer: Appeal filed under Section 260A of the Income Tax Act, 1961, against the order of the Income Tax Appellate Tribunal "C" Bench, Chennai, dated 17.10.2022 in I.T.A.No.271/Chny/2022. For the Appellant : Mr.J.Narayanasamy Senior Standing Counsel JUDGMENT (Order of the Court was made by R.SURESH KUMAR, J.) The substantial questions of law raised in the present tax case appeal are:- (i) Whether on the facts and in the circumstances of the case and in law, the Tribunal was right in holding that disallowance u/s. 14A shall not form part of the book profit under Section 115JB of the Act and quashed the order passed u/s.263? (ii) Whether on the facts and in the Page 1 of 3 https://www.mhc.tn.gov.in/judis T.C.A.No.261 of 2024 circumstances of the case and in law, the Tribunal was right in holding that the disallowance u/s.14A shall not form part of the book profit u/s.115JB when clause (f) of explanation 1 to Section 115JB warrants additions of such expenditure relatable to exempt income? 2. It is submitted by Mr.J.Narayanasamy, learned Senior Standing Counsel appearing for the appellant Revenue that the present Tax Case Appeal is covered under the Low Tax Effect as per the recent Circular dated 17.09.2024, in Circular No.9/2024. 3. Recording the same, the present appeal stands dismissed as Low Tax Effect. The 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) 18.11.2024 Neutral Citation:Yes/No drm Page 2 of 3 https://www.mhc.tn.gov.in/judis T.C.A.No.261 of 2024 R. SURESH KUMAR, J. AND C. SARAVANAN

, J.

(drm) T.C.A.No.261 of 2024 18.11.2024

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