Commissioner of Income Tax vs. M/S.CAI INDUSTRIES PRIVATE LIMITED

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TCA/270/2022HC Madras15 October 2024Bench: Honourable Mr Justice R. SURESH KUMAR3 pages
AI SummaryDismissed

What did the High Court hold?

The High Court dismissed the appeal filed by the Revenue. The dismissal was based on the submission by the Revenue that the matter was covered under the 'Low Tax Effect' as per Circular No. 9/2024 dated 17.09.2024. The Court explicitly stated that the substantial questions of law arising in the appeal were kept open to be decided at a later point in time. Therefore, there was no decision on the merits of the questions of law. No operative directions were issued, and no costs were awarded.

What were the facts?

The Commissioner of Income Tax, Corporate Circle 1, Coimbatore (the Revenue) filed an appeal under Section 260-A of the Income Tax Act, 1961, against an order of the Income Tax Appellate Tribunal (ITAT), Madras Bench, Chennai. The ITAT's order, dated 25.05.2022, was passed in ITA No. 2510/Chny/2019. The appeal concerns M/s. CAI Industries Private Limited (the assessee). The High Court admitted the appeal on 12.09.2022, framing two substantial questions of law. Subsequently, the Revenue submitted that the matter is covered under the 'Low Tax Effect' as per the CBDT's Circular No. 9/2024 dated 17.09.2024.

What were the issues?

1. Whether, on the facts and circumstances of the case and in law, the Tribunal was justified in holding that money advanced by a sister concern of the assessee company is not loans and advances for the purpose of invoking Section 2(22)(e) of the Income Tax Act, 1961? The Revenue likely argued that the advances constituted deemed dividends under Section 2(22)(e). The assessee likely contended that the advances were not loans or advances within the ambit of the said section. 2. Whether, on the facts and circumstances of the case and in law, the Tribunal was right in appreciating that the Board's Circular No. 19/2017, which provides illustrations of trade advances/commercial transactions not covered under Section 2(22)(e), applies to the assessee's case? The assessee likely argued that its transactions fell within the exceptions illustrated by the Circular, while the Revenue likely argued otherwise.

Which sections of the Income-tax Act were involved?

Section 260-A,Section 2(22)(e)

AI-generated summary — verify with the full judgment below

T.C.A.No.270 of 2022 IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 15.10.2024 CORAM : THE HONOURABLE MR.JUSTICE R. SURESH KUMAR AND THE HONOURABLE MR.JUSTICE C. SARAVANAN T.C.A.No.270 of 2022 The Commissioner of Income Tax Corporate Circle 1, Coimbatore. .. Appellant Vs. M/s.CAI Industries Private Limited 1547-A, Avinashi Road, Peelamedu Coimbatore – 641 004 PAN: AABCC 2146 F .. Respondent Prayer: Appeal filed under Section 260-A of the Income Tax Act, 1961, against the order of Income Tax Appellate Tribunal, Madras “D”

Bench,

Chennai

dated

25.05.2022

passed

in I.T.A.No.2510/Chny/2019. For the Appellant : Mr.Karthik Ranganathan Senior Standing Counsel For the Respondent : Mr.A.S.Sriraman JUDGMENT (Order of the Court was made by R.SURESH KUMAR, J.) The present tax case appeal was admitted on 12.09.2022 by this Court on the following substantial questions of law:- "1. Whether on the facts and circumstances of Page 1 of 3 https://www.mhc.tn.gov.in/judis T.C.A.No.270 of 2022 the case and in law, the Tribunal was justified in holding that the money advanced by the sister concern of the assessee company, is not loans and advances for the purpose of invoking Section 2(22)(e) of the I.T. Act, 1961? 2. Whether on the facts and circumstances of the case and in law, the Tribunal was right in appreciating that the Board's Circular No.19/2017 which states some illustration/examples of trade advances/commercial transactions held to be not covered u/s2(22)(e) of the Act, the assessee's case does not fall under anyone of the situations cited in the said Circular?" 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 arising 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) 15.10.2024 Neutral Citation:Yes/No drm Page 2 of 3 https://www.mhc.tn.gov.in/judis T.C.A.No.270 of 2022 R. SURESH KUMAR, J. AND C. SARAVANAN

, J.

(drm) T.C.A.No.270 of 2022 15.10.2024 Page 3 of 3 https://www.mhc.tn.gov.in/judis

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