THE COMMISSIONER OF INCOME T vs. C.S.HOLDINGS PVT LTD

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TCA/264/2021HC Madras01 August 2022Bench: HON`BLE MR. JUSTICE R. MAHADEVAN4 pages
AI SummaryWithdrawn

What did the High Court hold?

The High Court did not decide the substantial questions of law on merits. Instead, the Revenue brought to the court's notice CBDT Circular No. 17/2019, which mandates that appeals shall not be filed or pursued by the Department before the High Court if the tax effect does not exceed Rs. 1,00,00,000/-. The learned counsel for the Revenue submitted that the tax effect in the present appeal was less than this threshold limit. Consequently, the High Court dismissed the appeal as withdrawn, stating that the substantial questions of law were kept open for determination in an appropriate case. No costs were awarded. The specific findings of the ITAT or the reasoning behind the deletion of the disallowance by the ITAT are not detailed in this High Court judgment.

What were the facts?

The Revenue, the Commissioner of Income Tax, Chennai, filed an appeal under Section 260A of the Income Tax Act, 1961, against the order dated 04.11.2016 passed by the Income Tax Appellate Tribunal (ITAT), Madras 'D' Bench. The appeal pertained to assessment year 2008-09 and concerned the assessee M/s. C.S. Holdings Pvt. Ltd. The ITAT had deleted a disallowance made under Section 14A of the Act. The High Court was considering the substantial questions of law raised by the Revenue. However, during the proceedings, the Revenue brought to the court's notice CBDT Circular No. 17/2019, which stipulates that appeals shall not be filed or pursued if the tax effect does not exceed Rs. 1,00,00,000/-.

What were the issues?

The High Court was to decide the following substantial questions of law: 1. Whether the Tribunal was right in deleting the disallowance made under Section 14A of the Income Tax Act, 1961, considering the facts and circumstances of the case? 2. Whether the Tribunal's reasoning and finding were proper in holding that Section 14A is not applicable once income from trading of shares is offered to tax under the head capital gains, even if the shares are held as stock-in-trade? The Revenue argued that the Tribunal erred in deleting the disallowance under Section 14A. The Revenue also questioned the Tribunal's reasoning regarding the applicability of Section 14A when shares are treated as stock-in-trade and income is offered under capital gains. The judgment does not record specific arguments from the assessee regarding these issues, nor does it name any specific authorities, circulars, or precedents relied upon by either side in relation to the merits of the disallowance.

Which sections of the Income-tax Act were involved?

Section 14A,Section 260A

AI-generated summary — verify with the full judgment below

T.C.A.No.264 of 2021 IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED : 01.08.2022 CORAM : THE HON'BLE MR. JUSTICE R. MAHADEVAN AND THE HON'BLE MR. JUSTICE MOHAMMED SHAFFIQ T.C.A.No.264 of 2021 The Commissioner of Income Tax, Chennai. ... Appellant Versus M/s.C.S.Holdings Pvt. Ltd., New No.6, Old No.21, 1st Floor, Postal Colony, 4th Street, West Mambalam, Chennai - 600 035. (PAN:AACCC8370Q) ... Respondent Appeal preferred under Section 260A of the Income Tax Act, 1961, against the order of the Income Tax Appellate Tribunal, Chennai, Madras “D” Bench, dated 04.11.2016 in I.T.A.No.367/Mds/2015. For Appellant : Mr.T.Ravi Kumar For Respondent : Mr.R.Sivaraman Page 1/4 https://www.mhc.tn.gov.in/judis T.C.A.No.264 of 2021 J U D G M E N T (Judgment was delivered by R.MAHADEVAN, J.) This tax case appeal has been filed by the appellant / Revenue, challenging the order dated 04.11.2016 passed by the Income Tax Appellate Tribunal, Madras 'D' Bench, in I.T.A.No.367/Mds/2015, relating to the assessment year 2008-09, by raising the following substantial question of law:- "(i) Whether the facts and in the circumstances of the case, the Tribunal was right in deleting the disallowance made under Section 14A? (ii) Whether the reasoning and finding of the Tribunal is proper that once the income from trading of shares is offered to tax under the head capital gains, then provisions of Section 14A is not applicable even in cases where the shares are held as stock in trade?" 2. When the matter was 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, Page 2/4 https://www.mhc.tn.gov.in/judis T.C.A.No.264 of 2021 wherein, it is stipulated that appeal 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 this appeal 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 appeal, wherein, the tax effect is said to be less than the monetary limit imposed, is dismissed as withdrawn, keeping open the substantial questions of law for determination in an appropriate case. No costs. (R.M.D., J.) (M.S.Q., J.) 01.08.2022 r n s

Internet : Yes.

Index : Yes / No. Page 3/4 https://www.mhc.tn.gov.in/judis T.C.A.No.264 of 2021 R. MAHADEVAN, J. and MOHAMMED SHAFFIQ, J. r n s To 1. The Assistant Commissioner of Income Tax, Corporate Circle I (3), Chennai - 600 034. 2. The Income Tax Appellate Tribunal Madras 'D' Bench, Chennai. T.C.A.No.264 of 2021 01.08.2022 Page 4/4 https://www.mhc.tn.gov.in/judis

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