THE COMMISSIONER OF INCOM TAX vs. M/S. ARUN EXCELLO HOMES PVT

TCA.No.340 of 2010 IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 30.09.2020 CORAM: THE HONOURABLE MR.JUSTICE T.S.SIVAGNANAM and THE HONOURABLE Mrs.JUSTICE V.BHAVANI SUBBAROYAN Tax Case Appeal No.340 of 2020 The Commissioner of Income Tax, Chennai .. Appellant Vs. M/s.Arun Excello Homes Pvt., Ltd., 18, Bhattad Towers, West Cott Road, Royapettah, Chennai - 600 014 .. Respondent Tax Case Appeal filed under Section 260-A of the Income Tax Act, 1961, against the order made in ITA No.2911/Chny/2018 dated 18.03.2019 passed by the Income Tax Appellate Tribunal, Madras 'C' Bench, Chennai, for the Assessment Year 2014-2015. For Appellant : Ms.R.Hemalatha Senior Standing Counsel

For Respondent : Ms.Vandhana Viyaz for Mr.R.Sivaraman 1/5 http://www.judis.nic.in TCA.No.340 of 2010 J U D G M E N T T.S.SIVAGNANAM, J. We have heard Ms.R.Hemalatha, learned Senior Standing Counsel for the appellant / revenue and Ms.Vandhana Viyaz, learned counsel for Mr.R.Sivaraman, learned counsel for the respondent / assessee. 2. This appeal, at the instance of the revenue filed under Section 260A of the Income Tax Act, 1961 (the 'Act' for brevity), is directed against the order passed by the Income Tax Appellate Tribunal, Madras 'C' Bench, Chennai in ITA No.2911/Chny/2018 dated 18.03.2019 for the Assessment Year 2014-2015. 3. The following Substantial Questions of Law were raised for consideration. “1. Whether on the facts and in the circumstances of the case, the Tribunal was right in deleting the disallowance made u/s.40(a)(i) on the payments made to non-resident company without deduction of tax at source, especially when the payments made to the non-resident company is nothing but interest payment paid under the guise of discount on optionally convertible debentures which are liable to be taxed u/s. 195 of the Incometax Act? 2/5 http://www.judis.nic.in TCA.No.340 of 2010 2. Is not the finding of the Tribunal bad by deleting the disallowance made u/s. 40(a)(i) of the Act without appreciating the fact that the payments made to non- resident company over and above the investments are only in the nature of interest which requires tax deduction at source u/s 195 of the Incometax Act? 3. Whether the Tribunal ought to have applied the ratio of the decision of the Hon'ble Supreme Court in the case of Taparia Tools Limited reported in 55 Taxmann.com page 361 wherein it was held that the upfront payment made on debentures is allowable interest expenditure which facts applies to the present case? 4. Whether the reasoning and finding of the Tribunal is proper by refusing to lift the corporate veil and look into the transaction with the Mauritius non-resident investors through the Land Owing Affiliate?" 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 08.8.2019 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 3/5 http://www.judis.nic.in TCA.No.340 of 2010 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 is dismissed on account of the low tax effect. The substantial question of law raised is left open. In the event the tax effect 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 [T.S.S.J.,] [V.B.S.J.,] 30.09.2020 Internet: Yes To The Income Tax Appellate Tribunal, Madras 'C' Bench, Chennai ssd 4/5 http://www.judis.nic.in TCA.No.340 of 2010 T.S.SIVAGNANAM,J AND V.BHAVANI SUBBAROYAN,J ssd Tax Case Appeal No.340 of 2020 30.9.2020 5/5 http://www.judis.nic.in