COMMISSIONER OF INCOME TAX vs. M/S GANDHIMATHI APPLIANCES L

TCA/266/2015HC Madras13 August 2020Bench: THE HON'BLE DR.JUSTICE VINEET KOTHARI4 pages

AI SummaryDismissed

What did the High Court hold?

The High Court dismissed the appeal filed by the Revenue. The primary reason for dismissal was the issuance of Circular No.17/2019 by the Central Board of Direct Taxes (CBDT) dated August 8, 2019. This circular stipulates that the Department shall not file or pursue appeals before the High Court where the tax effect does not exceed Rs.1,00,00,000/- (Rupees One Crore). The Court noted that in the present case, the tax effect was less than this monetary limit. Consequently, the appeal was dismissed as withdrawn. The Court explicitly stated that the substantial questions of law were kept open for determination in appropriate cases. No costs were awarded. The operative direction was to dismiss the appeal.

What were the facts?

The Revenue, Commissioner of Income Tax (CIT), Chennai, filed an appeal against an order of the Income Tax Appellate Tribunal (ITAT), Chennai Bench, dated November 28, 2013, in ITA No.944/Mds/2013. The appeal concerned the assessment year(s) not explicitly stated but related to the ITAT's decision on market development expenses claimed by the assessee, M/s. Gandhimathi Appliances Ltd. The ITAT had deleted an addition of Rs.2.20 crores out of a total claim of Rs.5.01 crores, directing the Assessing Officer to verify the remaining portion of Rs.2.81 crores. The actual debit in the profit and loss account was Rs.94.56 lakhs. The High Court was hearing the appeal.

What were the issues?

The Tribunal had to decide the following substantial questions of law: 1. Whether, in the facts and circumstances, the Tribunal was legally correct in deleting the addition of Rs.2.20 crores towards market development expenses, out of a total claim of Rs.5.01 crores (against an actual debit of Rs.94.56 lakhs), and directing the Assessing Officer to verify the remaining Rs.2.81 crores, referencing the ratio in M/s. Brilliant Tutorials P Ltd.? 2. Whether, in the facts and circumstances, the Tribunal was legally correct in holding the assessee eligible for a claim of Rs.2.20 crores against the Rs.94.56 lakhs debited in the profit and loss account, without evidence supporting the Rs.2.20 crores expenditure for the year? 3. Whether, in the facts and circumstances, the Tribunal was legally correct in directing the Assessing Officer to inquire and verify details regarding Rs.2.81 crores, when the assessee admitted eligibility for only Rs.2.20 crores out of the Rs.5.01 crores claimed? The Revenue argued that the Tribunal erred in its deletion and directions. The judgment does not record specific arguments from the assessee.

AI-generated summary — verify with the full judgment below

Order dt.13.08.2020 in T.C.A.No.266 of 2015 C.I.T vs. Gandhimadhi Appliances Ltd. 1/4 IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 13.08.2020 CORAM THE HON'BLE DR.JUSTICE VINEET KOTHARI AND THE HON'BLE MR.JUSTICE KRISHNAN RAMASAMY T.C.A.No.266 of 2015 Commissioner of Income Tax, Chennai ... Appellant vs. M/s.Gandhimathi Appliances Ltd. 377, Anna Salai, Teynampet, Chennai 600 018 ... Respondent Prayer ::- Appeal filed against the order of the Income Tax Appellate Tribunal, Madras C Bench, dated 28.11.2013 in ITA No.944/Mds/2013. For appellant : Mr.Karthik Ranganathan ORDER (Made by DR.VINEET KOTHARI, J.) The Court was held by Video Conference, as per the Resolution of the Full Court dated 3 July 2020, by Judges at their respective residence and the counsel, staff of the Court appearing from their respective residences. http://www.judis.nic.in Order dt.13.08.2020 in T.C.A.No.266 of 2015 C.I.T vs. Gandhimadhi Appliances Ltd. 2/4 2. This Tax Case Appeal has been filed by the Revenue, calling in question the correctness of the order passed by the Income Tax Appellate Tribunal, C Bench, ITA No.944/Mds/2013 by raising the following substantial questions of law: "1. Whether in the facts and circumstances of the case, the Tribunal was right in law in deleting the addition made towards market development expenses to the extent of RS.2.20 crores out of the total claim of Rs.5.01 crores as against the actual debit of Rs.94.56 lakhs in the profit and loss account and directing the Assessing Officer to verify the remaining portion of RS.2.81 crores in the light of the ratio laid down in the case of MIs. Brilliant Tutorials P Ltd.? 2. Whether in the facts and circumstances of the case, the Tribunal was right in law in holding the assessee is eligible for the claim of Rs.2.20 crores as against Rs.94.56 lakhs debited in the profit and loss account without any evidence in support of its claim of Rs.2.20 crores for incurring the expenditure in the year under consideration? 3. Whether in the facts and circumstances of the case, the Tribunal was right in directing the Assessing officer to enquire and verify the details with regard to a sum of Rs.2.81 crores when the assessing himself has admitted that it is eligible for a claim of Rs.2.20 crores only out of the sum of http://www.judis.nic.in Order dt.13.08.2020 in T.C.A.No.266 of 2015 C.I.T vs. Gandhimadhi Appliances Ltd. 3/4 Rs.5.01 crores claimed in its returns? 3. When the matter is taken up for hearing, learned Standing Counsel brought to our notice the Circular issued by the Central Board of Direct Taxes vide Circular No.17/2019 dated 8 August 2019, 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). 4. In the instant case, the tax effect is said to be less than the monetary limit imposed and therefore, the Appeal filed by the Revenue is dismissed as withdrawn, keeping open the substantial questions of law for determination in appropriate cases. No costs. 5 Registry is directed to send a copy of the judgment to the Respondent / Assessee in the address given in the Appeal. (V.K.,J.) (K.R.,J.) 13.08.2020

tar DR.VINEET KOTHARI, J. http://www.judis.nic.in Order dt.13.08.2020 in T.C.A.No.266 of 2015 C.I.T vs. Gandhimadhi Appliances Ltd. 4/4 and

KRISHNAN RAMASAMY, J. (tar) To M/s.Gandhimathi Appliances Ltd. 377, Anna Salai, Teynampet, Chennai 600 018 T.C.A.No.266 of 2015 13.08.2020 http://www.judis.nic.in

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