THE COMMISSIONER OF INCOME T vs. M/S CHEMISE INDUS P LTD.,

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TCA/44/2016HC Madras12 March 2020Bench: Hon`ble Dr Justice VINEET KOTHARI4 pages
AI SummaryDismissed

What did the High Court hold?

The High Court noted that the Revenue's counsel brought to its attention CBDT Circular No. 17/2019, which mandates that appeals shall not be filed or pursued before the High Court if the tax effect does not exceed Rs. 1,00,00,000/-. In the present case, the tax effect was stated to be less than this monetary limit. Consequently, the High Court dismissed the appeal filed by the Revenue as not pressed. The court explicitly stated that the substantial questions of law were kept open for determination in an appropriate case, indicating no decision on the merits of the questions raised. No operative directions for remand or deletion were issued as the appeal was dismissed on procedural grounds.

What were the facts?

The Revenue, Commissioner of Income Tax, Chennai, filed a Tax Case Appeal under Section 260A of the Income Tax Act, 1961, challenging an order of the Income Tax Appellate Tribunal ('A' Bench, Chennai) dated June 27, 2014, in ITA.631/Mds/2014. The appeal pertains to M/s. Chemise Indus P Ltd. The substantial questions of law raised by the Revenue concerned the deletion of an addition made under Section 2(22)(e) of the Income Tax Act, the correct recipient of deemed dividend, and the locus of addition for registered shareholders. During the hearing, the Revenue's counsel brought to the court's attention a CBDT Circular No. 17/2019 dated August 8, 2019, which stipulated that appeals should not be filed or pursued if the tax effect does not exceed Rs. 1,00,00,000/-.

What were the issues?

The Tribunal was asked to decide the following substantial questions of law: 1. Whether, on the facts and in the circumstances of the case, the Tribunal was right in deleting the addition made under Section 2(22)(e) of the Income Tax Act? 2. Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in holding that the deemed dividend under Section 2(22)(e) arises in the hands of Smt. Radha Daga and not in the hands of the assessee M/s. Chemise Indus Private Limited? 3. Whether, on the facts and in circumstances of the case, the Tribunal was right in holding that the addition should be made only in the hands of the registered and beneficial shareholder and not in the hands of the concerns in which such shareholder is having substantial interest? The Revenue contended that the Tribunal erred in deleting the addition. The judgment does not record specific arguments from the assessee regarding these issues. However, the Revenue's decision to withdraw the appeal was based on a CBDT Circular regarding tax effect.

Which sections of the Income-tax Act were involved?

Section 260A,Section 2(22)(e)

AI-generated summary — verify with the full judgment below

Judgment in TCA No.44 of 2016 dated 12.03.2020 IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 12.03.2020 CORAM THE HON'BLE DR.JUSTICE VINEET KOTHARI AND THE HON'BLE MR.JUSTICE R.SURESH KUMAR Tax Case (Appeal) No.44 of 2016 The Commissioner of Income Tax Chennai. ... Appellant Vs. M/s.Chemise Indus P Ltd 65, Sivasakthi Vinayagar Nagar Thiruverkadu, Chennai-77. ... Respondent ----- Tax Case Appeal filed under Section 260A of the Income Tax Act, 1961 against the order of the Income Tax Appellate Tribunal 'A' Bench, Chennai dated 27.06.2014 in ITA.631/Mds/2014. ----- For Appellant : Mr.T.Ravi Kumar Senior Standing Counsel

For Respondent : Mr.R.Venkatnarayanan for M/s.Subbaraya Aiyer Padmanabhan Page 1 of 4 http://www.judis.nic.in Judgment in TCA No.44 of 2016 dated 12.03.2020 J U D G M E N T (Judgment of the Court was delivered by DR.VINEET KOTHARI,J) This Tax Case Appeal has been filed by the Revenue calling in question the correctness of the order passed by the Income Tax Appellate Tribunal, 'A' Bench, Chennai, by raising the following substantial questions of law: "1.Whether on the facts and in the circumstances of the case, the Tribunal was right in deleting the addition made u/s.2(22)9e) of the Income Tax Act? 2. Whether on the facts and in the circumstances of the case, the Appellate Tribunal was right in holding that the deemed dividend u/s.2(22)(e) arises in the hands of Smt.Radha Daga and not in the hands of the assessee M/s.Chemise Indus Private Limited? 3. Whether on the facts and in circumstances of the case, the Tribunal was right in holding that the addition should be made only in the hands of the registered and beneficial shareholder and not in the hands of the concerns in which such shareholder is having substantial interest?” 2. When the matter was taken up for hearing, the learned Standing Page 2 of 4 http://www.judis.nic.in Judgment in TCA No.44 of 2016 dated 12.03.2020 Counsel brought to our notice the Circular instruction issued by the Central Board of Direct Taxes vide Circular No.17/2019 dated 8th August 2019, wherein, it is stipulated that appeals 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). 3. In the instant case, the tax effect is said to be less than the monetary limit imposed and therefore, the appeal filed by the Revenue is dismissed as not pressed, keeping open the substantial questions of law for determination in an appropriate case. (V.K.,J.) (R.S.K.,J.) 12.03.2020 KST To Income Tax Appellate Tribunal 'A' Bench,Chennai. Page 3 of 4 http://www.judis.nic.in Judgment in TCA No.44 of 2016 dated 12.03.2020 DR.VINEET KOTHARI, J. AND R.SURESH KUMAR, J. KST T.C.(A) No.44 of 2016 12.03.2020 Page 4 of 4 http://www.judis.nic.in

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