THE PRINCIPAL COMMISSIONER O vs. M/S.MARG LIMITED,

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TCA/338/2021HC Madras06 July 2021Bench: Hon`ble Mr Justice M.DURAISWAMY5 pages
AI SummaryWithdrawn

What did the High Court hold?

The High Court did not decide the substantial questions of law on merits. The Revenue submitted that it was not pursuing the appeal due to the Low Tax Effect, as per CBDT Circular No.17/2019, which increased the monetary limit for appeals to the High Court to Rs.1 crore. The tax effect in this case was stated to be below this threshold. Consequently, the High Court dismissed the appeal as withdrawn on account of the low tax effect. The substantial questions of law were left open. Liberty was granted to the Revenue to seek restoration of the appeal if the tax effect was found to be above the threshold limit.

What were the facts?

The appeal was filed by the Principal Commissioner of Income Tax, Corporate Circle – 4(1), Chennai (Revenue) against the order of the Income Tax Appellate Tribunal, Chennai, “B” Bench, dated 25.01.2017. The appeal pertains to Assessment Year 2010-11 and challenges the deletion of an addition made under Section 40A(2)(b) of the Income Tax Act, 1961. The assessee is M/s.Marg Limited. The Revenue's appeal was preferred under Section 260A of the Act. The High Court heard arguments from both the Revenue and the assessee.

What were the issues?

The Tribunal had to decide the following substantial questions of law: 1. Whether the ITAT was justified in deleting the addition made under Section 40A(2)(b) of the IT Act. 2. Whether the ITAT was right in holding that the amended provisions of Section 40A(2) are not applicable retrospectively. 3. Whether the ITAT was right in deleting the addition made under Section 40A(2)(b) when the assessee failed to prove the genuineness of the expenditure. The Revenue contended that the ITAT erred in deleting the addition. The assessee's arguments are not explicitly detailed in the provided text, but the issues framed by the Revenue suggest the assessee likely argued against the addition and in favor of the ITAT's deletion. The Revenue relied on the fact that the assessee allegedly failed to prove the genuineness of the expenditure.

Which sections of the Income-tax Act were involved?

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

AI-generated summary — verify with the full judgment below

T.C.A.No.338 of 2021 IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED : 06.07.2021 CORAM THE HON'BLE MR. JUSTICE M.DURAISWAMY AND THE HON'BLE MRS.JUSTICE R. HEMALATHA T.C.A.No.338 of 2021 The Principal Commissioner of Income Tax, Corporate Circle – 4(1), Chennai – 34. ... Appellant Vs. M/s.Marg Limited, Marg Axis, 4/318, Rajiv Gandhi Salai, Kottivakkam, Chennai – 600 041. ... Respondent Appeal preferred under Section 260A of the Income Tax Act, 1961, against the order of the Income Tax Appellate Tribunal, Madras, “B” Bench, dated 25.01.2017 in I.T.A.No.854/Mds/2016, Assessment Year 2010-11. For Appellant : Mr.Karthik Ranganathan Senior Standing Counsel For Respondent : Mr.R.Sivaraman Page 1/5 https://www.mhc.tn.gov.in/judis/ T.C.A.No.338 of 2021 JUDGMENT (Judgment was delivered by M.DURAISWAMY, J.) We have heard Mr.Karthik Ranganathan, learned Senior Standing Counsel for the appellant/Revenue and Mr.R.Sivaraman, 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 25.01.2017 made in I.T.A.No.854/Mds/2016 on the file of the Income Tax Appellate Tribunal, Chennai, “B” Bench (for brevity, the Tribunal) for the Assessment Year 2010-11. 3.The appellant/Revenue has raised the following substantial questions of law in the above appeal : “1.Whether on the facts and circumstances of the case and in law, the Hon'ble ITAT was justified in deleting the addition made u/s.40A(2)(b) of the IT Act? Page 2/5 https://www.mhc.tn.gov.in/judis/ T.C.A.No.338 of 2021 2.Whether on the facts and circumstances of the case and in law, the Hon'ble ITAT is right in holding that the amended provisions of section 40A(2) are not applicable retrospectively? 3.Whether on the facts and circumstances of the case and in law, the Hon'ble ITAT is right in deleting the addition made u/s.40A(2)(b) when the assessee failed to prove the genuineness of the expenditure?” 4.The learned Senior Standing Counsel 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. Page 3/5 https://www.mhc.tn.gov.in/judis/ T.C.A.No.338 of 2021 5.In the light of the said submissions, the above Tax Case Appeal is dismissed as withdrawn on account of the Low Tax Effect. The substantial questions of law framed are 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. [M.D., J.] [R.H., J.] 06.07.2021

Index : Yes/No Internet : Yes

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To The Income Tax Appellate Tribunal, Chennai, “B” Bench Page 4/5 https://www.mhc.tn.gov.in/judis/ T.C.A.No.338 of 2021 M.DURAISWAMY, J. and R. HEMALATHA, J. mkn T.C.A.No.338 of 2021 06.07.2021 Page 5/5 https://www.mhc.tn.gov.in/judis/

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