PRINCIPAL COMMISSIONER OF I vs. HINDUJA FOUNDRIES LTD

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TCA/343/2021HC Madras25 August 2022Bench: Hon`ble Mr Justice R. MAHADEVAN4 pages
AI SummaryWithdrawn

What did the High Court hold?

The High Court noted that the learned Standing Counsel for the appellant/Revenue brought to its notice Circular No.17/2019 dated 08.08.2019, issued by the Central Board of Direct Taxes. This circular stipulates that appeals shall not be filed or pursued by the Department before the High Court if the tax effect does not exceed Rs.1,00,00,000/- (Rupees One Crore). The Standing Counsel submitted that the tax effect in the present appeal was less than this threshold limit. Consequently, the High Court, in light of the aforementioned submission and the tax effect being below the monetary limit, dismissed the appeal as withdrawn. The substantial questions of law were kept open for determination in an appropriate case. No costs were awarded.

What were the facts?

The Revenue, represented by the Principal Commissioner of Income Tax, Corporate Circle-2(2), Chennai, filed a Tax Case Appeal before the High Court of Judicature at Madras. The appeal challenged an order dated 02.05.2018 passed by the Income Tax Appellate Tribunal (ITAT), 'C' Bench, Chennai, concerning Assessment Year 2011-12. The respondent is M/s. Hinduja Foundries Ltd., which has since merged with M/s. Ashok Leyland Ltd. The High Court admitted the appeal on two substantial questions of law on 06.07.2021.

What were the issues?

1. Whether, on the facts and in the circumstances of the case, the ITAT was right in ignoring Explanation 1(f) to Section 115JB(2) of the Income Tax Act, 1961, which mandates that disallowances made are to be increased for the purpose of computing book profit? The Revenue contended that the ITAT erred in not considering this explanation. 2. Whether, on the facts and in the circumstances of the case, the ITAT was correct and justified in holding that belated remittance of employees' contribution to PF & ESI, made before the due date of filing the Income Tax return under the IT Act, is in contravention of the provisions of Section 36(1)(va) of the Act? The Revenue argued that the ITAT's finding on this point was incorrect.

Which sections of the Income-tax Act were involved?

Section 115JB(2),Section 36(1)(va),Section 260A

AI-generated summary — verify with the full judgment below

T.C.A.No.343 of 2021 IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED 25.08.2022 CORAM THE HON'BLE Mr. JUSTICE R. MAHADEVAN AND THE HON'BLE Mr. JUSTICE MOHAMMED SHAFFIQ Tax Case Appeal No.343 of 2021 The Principal Commissioner of Income Tax Corporate Circle-2(2) Chennai-34 .. Appellant Vs. M/s.Hinduja Foundries Ltd. (Merged with M/s.Ashok Leyland Ltd.) Kathivakkam High Road, Ennore Chennai 600 057 PAN : AAA CE 1078K .. Respondent Tax Case Appeal filed under Section 260A of the Income Tax Act, 1961 against the order dated 02.05.2018 passed by the Income Tax Appellate Tribunal, 'C' Bench, Chennai, in I.T.A.No.2691/Mds/2017. For Appellant : Mr.Karthik Ranganathan

Standing Counsel 1/4 https://www.mhc.tn.gov.in/judis T.C.A.No.343 of 2021 J U D G M E N T (Judgment was delivered by R. MAHADEVAN, J.) This tax case appeal has been filed by the appellant/Revenue, calling in question the correctness of the order dated 02.05.2018 passed by the Income Tax Appellate Tribunal, 'C' Bench, Chennai, in I.T.A.No.2691/Mds/2017, relating to the assessment year 2011-12. 2. By order dated 06.07.2021, this Court admitted the aforesaid tax case appeal on the following substantial questions of law : “1. Whether on the facts and in the circumstances of the case in law the ITAT was right in ignoring the Explanation 1(f) to Section 115JB(2) of the Act where such disallowances made are to be increased for the purpose of computing book profit? 2. Whether on the facts and in the circumstances of the case in law the ITAT was correct and justified in holding that the belated remittance of employees contribution to PF & ESI as per relevant Act, but before the due date of filing of the IT return in accordance with IT Act, which is in contravention of provisions of Section 36(1)(va) of the Act?” 3. When the matter was taken up for consideration, the learned Standing Counsel for the appellant/Revenue brought to the notice of this court the Circular No.17/2019 dated 08.08.2019, issued by the Central Board Direct 2/4 https://www.mhc.tn.gov.in/judis T.C.A.No.343 of 2021 Taxes, wherein, it is stipulated that appeal 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). It is also submitted that the tax effect in this appeal is less than the threshold limit. 4. In the light of the aforesaid submissions made by the learned Standing Counsel for the appellant/Revenue, the present appeal, wherein, the tax effect is said to be less than the monetary limit imposed, is dismissed as withdrawn, keeping open the substantial questions of law for determination in an appropriate case. No costs. [R.M.D,J.] [M.S.Q, J.] 25.08.2022 Internet : Yes gya To 1.The Deputy Commissioner of Income Tax Corporate Circle 2(2), Chennai-34 2.The Commissioner of Income Tax (Appeals)-6 Chennai-34 3.The Income Tax Appellate Tribunal 'C' Bench, Chennai 3/4 https://www.mhc.tn.gov.in/judis T.C.A.No.343 of 2021 R. MAHADEVAN, J. AND MOHAMMED SHAFFIQ, J. gya Tax Case Appeal No.343 of 2021 25.08.2022

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