THE COMMISSIONER OF INCOME T vs. CONSOLIDATED CONSTRUCTION CO

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TCA/299/2021HC Madras14 June 2021Bench: Hon`ble Mr Justice M.DURAISWAMY5 pages
AI SummaryWithdrawn

What did the High Court hold?

The High Court dismissed the appeal as withdrawn on account of low tax effect, citing CBDT Circular No. 17/2019. The Court noted that the Revenue's Senior Standing Counsel submitted that the appeal was not being pursued because the tax effect was less than the increased monetary threshold for High Court appeals. Consequently, the substantial questions of law were left open. The Court granted liberty to the Revenue to seek restoration of the appeal if the tax effect was found to be above the threshold limit. No costs were imposed, and the connected miscellaneous petition was closed.

What were the facts?

The Commissioner of Income Tax, Chennai-34 (the Revenue) filed an appeal under Section 260A of the Income Tax Act, 1961, challenging an order dated 27.12.2016 passed by the Income Tax Appellate Tribunal, Chennai, 'A' Bench. The appeal pertains to Assessment Year 2010-2011 and concerns M/s. Consolidated Construction Consortium Ltd. (the assessee). The Revenue's appeal was preferred against the Tribunal's decision on two substantial questions of law. However, the Revenue subsequently submitted that the appeal was not being pursued due to low tax effect, as per CBDT Circular No. 17/2019, which increased the monetary limit for High Court appeals to Rs. 1 crore. The tax effect in this case was stated to be below this threshold.

What were the issues?

The Tribunal had to decide two substantial questions of law: 1. Whether the Tribunal was correct in holding that disallowance under Section 40A(2)(b) was not attracted, despite facts indicating excessive payments to related parties. 2. Whether the Tribunal was correct in allowing additional depreciation to the assessee, a construction contract company, which is not engaged in manufacturing or production. The Revenue contended that the disallowance under Section 40A(2)(b) should have been made as payments were excessive and made to related parties. The Revenue also questioned the allowability of additional depreciation for a non-manufacturing entity. The judgment does not record specific arguments from the assessee on these issues, but the Revenue's decision to withdraw the appeal indicates a potential lack of strong grounds or a low tax effect overriding the merits of the case.

Which sections of the Income-tax Act were involved?

Section 260A,Section 40A(2)(b)

AI-generated summary — verify with the full judgment below

T.C.A.No.299 of 2021 IN THE HIGH COURT OF JUDICATURE AT MADRAS DATE: 14.06.2021 CORAM: THE HON'BLE MR. JUSTICE M.DURAISWAMY AND THE HON'BLE MRS.JUSTICE R.HEMALATHA T.C.A.No.299 of 2021 The Commissioner of Income Tax, Chennai - 34. ... Appellant v. M/s. Consolidated Construction Consortium Ltd., No.3, second Link Street, Commissioner of Income Tax Colony, Mylapore, Chennai – 600 004. PAN : AAACC4214B ... Respondent Appeal preferred under Section 260A of the Income Tax Act, 1961, against the order of the Income Tax Appellate Tribunal, Madras, "A" Bench, dated 27.12.2016in ITA.No.830/Mds/2016 for the Assessment Year 2011-2012. Page 1/5 http://www.judis.nic.in T.C.A.No.299 of 2021 For Appellant :Mr.T.Ravikumar Senior Standing Counsel Assisted by Mrs. R.Hemalatha Junior Standing Counsel For Respondent : Mr.M.Kaushik for Mr.S.Sridhar JUDGMENT (Judgment was delivered by M. DURAISWAMY, J.) We have heard Mr.T.Ravikumar learned Senior Standing Counsel for the appellant/Revenue and Mr.Kaushik, learned counsel for the respondent/assessee. 2.The appeal, filed by the Revenue under Section 260A of the Income Tax Act, 1961 (for short, the Act) is directed against the order dated 27.12.2016 made in I.TA.No.830/Mds/2016 on the file of the Income Tax Appellate Tribunal, Chennai, "A" Bench (for brevity, the Tribunal) for the Assessment Year 2010-2011. 3. The appellant has raised the following substantial question of Page 2/5 http://www.judis.nic.in T.C.A.No.299 of 2021 law in the above appeal:- "(i) Whether on the facts and in the circumstances of the case, the Tribunal was right in holding that the disallowance made under Section 40A(2)(b) are not attracted especially when the facts on record clearly point that the payments made were excessive and are made to relative parties? (ii) Whether on the facts and in the circumstances of the case, the Tribunal was right in holding that the additional depreciation is allowable to the Assessee's Company which is engaged in the business of construction contract and is not engaged in the process of manufacture or production?"

4.

The learned Senior Standing Counsel appearing for the appellant submits that the above appeal is not pursued by the Revenue on account of the Low Tax Effect in terms of Circular No.17/2019 dated 08.08.2019 issued by the Central Board of Direct Taxes. By the said Circular, the monetary limit for filing or pursuing an appeal before the High Court has been increased to Rs.1 crore. It is further submitted that the tax effect in this case is less than the threshold limit. 5.In the light of the said submissions, the above Tax Case Appeal Page 3/5 http://www.judis.nic.in T.C.A.No.299 of 2021 is dismissed as withdrawn on account of the Low Tax Effect. The substantial questions of law framed is left open. In the event the tax effect in this case is above the threshold limit fixed in the said Circular, liberty is granted to the Revenue to make a mention to this Court to restore the appeal to be heard and decided on merits. No costs. Consequently, the connected Miscellaneous Petition is closed. [M.D., J.] [R.H., J.] Index : Yes/No 14.06.2021 Internet : Yes Rj To The Income Tax Appellate Tribunal, Chennai,"A" Bench Page 4/5 http://www.judis.nic.in T.C.A.No.299 of 2021 M. DURAISWAMY, J. and R.HEMALATHA,J Rj T.C.A.No.299 of 2021 14.06.2021

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