THE COMMISSIONER OF INCOME T vs. SIMPSON AND CO LTD

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TCA/371/2021HC Madras25 August 2022Bench: Hon`ble Mr Justice R. MAHADEVAN4 pages
AI SummaryWithdrawn

What did the High Court hold?

The High Court did not decide the substantial questions of law on their merits. Instead, the Court took note of the submission by the Revenue's Standing Counsel regarding CBDT Circular No. 17/2019. This circular mandates that appeals should not be filed or pursued by the Department before the High Court if the tax effect does not exceed Rs. 1,00,00,000/-. The Revenue confirmed that the tax effect in the present appeal was below this monetary threshold. Consequently, the High Court dismissed the appeal as withdrawn, stating that the substantial questions of law were kept open for determination in an appropriate case. No costs were awarded.

What were the facts?

The Commissioner of Income Tax, Chennai-LTU (the Revenue) filed a Tax Case Appeal before the High Court of Judicature at Madras, challenging an order dated 06.06.2016 passed by the Income Tax Appellate Tribunal (ITAT), 'D' Bench, Chennai. The appeal pertained to assessment year 2008-09 and concerned M/s. Simpson and Co. Ltd. (the assessee). The Revenue raised two substantial questions of law regarding the ITAT's decision on the applicability of Section 14A and the grant of additional depreciation under Section 32(1)(iia). During the hearing, the Revenue's counsel brought to the court's attention CBDT Circular No. 17/2019, which stipulates that appeals should not be filed or pursued if the tax effect does not exceed Rs. 1,00,00,000/-. The Revenue acknowledged that the tax effect in this appeal was below the threshold limit.

What were the issues?

The Tribunal had to decide the following substantial questions of law: 1. Whether the Tribunal was right in bifurcating the applicability of Section 14A in respect of investments made in a sister concern and in respect of investments made in mutual funds, when the Section does not provide for such a distinction. The Revenue contended that Section 14A applies irrespective of the nature of investment. 2. Whether the Tribunal was right in granting balance additional depreciation under Section 32(1)(iia), especially when the Section provides for depreciation on new assets installed during the year and does not permit carrying forward balance depreciation to a succeeding year. The Revenue argued that additional depreciation is only for assets installed in the year of claim and cannot be allowed in a subsequent year. The assessee's contentions were not recorded in the judgment.

Which sections of the Income-tax Act were involved?

Section 14A,Section 32(1)(iia),Section 260A

AI-generated summary — verify with the full judgment below

T.C.A.No.371 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.371 of 2021 The Commissioner of Income Tax Chennai-LTU .. Appellant Vs. M/s.Simpson and Co. Ltd. 861/862, Anna Salai Chennai 600 002 PAN : AAA CS 4909 F .. Respondent Tax Case Appeal filed under Section 260A of the Income Tax Act, 1961 against the order dated 06.06.2016 passed by the Income Tax Appellate Tribunal, 'D' Bench, Chennai, in I.T.A.No.1444/Mds/2014. For Appellant : Mr.T.Ravikumar

Standing Counsel For Respondent : Mr.Venkatanarayanan for M/s.Subbaraya Aiyar J U D G M E N T 1/4 https://www.mhc.tn.gov.in/judis T.C.A.No.371 of 2021 (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 06.06.2016 passed by the Income Tax Appellate Tribunal, 'D' Bench, Chennai, in I.T.A.No.1444/Mds/2014, relating to the assessment year 2008-09, by raising the following substantial questions of law : “1. Whether the Tribunal was right in bifurcating the applicability of provision of Section 14A in respect of investments made in sister concern and in respect of investments made in mutual fund which the Section does not provide for ? 2. Whether the Tribunal was right in granting balance additional depreciation under Section 32(1)(iia) especially when the Section provides for the depreciation on the new assets installed during the year and there is no provision for permitting the balance depreciation to be allowed in the succeeding year?” 2. 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 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 2/4 https://www.mhc.tn.gov.in/judis T.C.A.No.371 of 2021 this appeal is less than the threshold limit. 3. 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 Large Taxpayer Unit, Chennai 2.The Commissioner of Income Tax (Appeals) Large Taxpayer Unit, Chennai 3.The Income Tax Appellate Tribunal 'D' Bench, Chennai R. MAHADEVAN, J. AND 3/4 https://www.mhc.tn.gov.in/judis T.C.A.No.371 of 2021 MOHAMMED SHAFFIQ, J. gya Tax Case Appeal No.371 of 2021 25.08.2022

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