THE COMMISSIONER INCOME TAX vs. CARBORANDUM UNIVERSAL LTD

PDF · subscribers
TCA/457/2021HC Madras16 September 2021Bench: Hon`ble Mr Justice T. S. SIVAGNANAM6 pages
AI SummaryRemanded

What did the High Court hold?

The High Court held that the substantial questions of law raised in the appeal were identical to those pending before the Supreme Court in Assistant Commissioner of Income Tax v. Micro Labs Ltd. Since the Supreme Court's decision on these identical issues was awaited, and a similar matter was also pending before a Full Bench of the Madras High Court, the High Court deemed it unnecessary to keep the appeal pending. Consequently, the appeal was allowed, and the orders of the Tribunal and the Commissioner of Income Tax (Appeals) were set aside. The matter was restored to the file of the Assessing Officer, who was directed to await the decision of the larger Bench of the Supreme Court. The substantial questions of law were left undecided.

What were the facts?

The Revenue, Commissioner of Income Tax, Chennai, filed a Tax Case Appeal against the order of the Income Tax Appellate Tribunal (ITAT), Chennai, dated 19.05.2016, pertaining to Assessment Year 2004-05. The appeal challenges the ITAT's decision regarding deductions under Sections 80IA and 80IB in relation to Section 80HHC. The assessee is M/s. Carborandum Universal Ltd. The High Court noted that the substantial questions of law raised by the Revenue were identical to those considered by the Supreme Court in Assistant Commissioner of Income Tax v. Micro Labs Ltd. The Supreme Court's decision in that case was pending before a larger bench. The High Court was also informed of a similar pending reference before a Full Bench of the Madras High Court.

What were the issues?

The Tribunal had to decide three substantial questions of law: 1. Whether the Tribunal was right in holding that deduction under Section 80IA should not be deducted from the profits and gains of business before computing deduction under Section 80HHC. 2. Whether the Tribunal was right in holding that business profits as per Explanation (baa) of Section 80HHC of the Act should include deduction already allowed under Section 80IB. 3. Whether, in view of Section 80IA(9), the Tribunal was justified in holding that the assessee is entitled to simultaneous deduction under Section 80HHC and 80IB on the same profits. The Revenue contended that the Tribunal erred in its findings on these issues. The Assessee's contentions are not explicitly recorded in the judgment, but it is implied they supported the Tribunal's order. The Court noted that the Supreme Court had considered identical issues in Assistant Commissioner of Income Tax v. Micro Labs Ltd., where a difference of opinion led to a reference to a larger bench, which was still pending.

Which sections of the Income-tax Act were involved?

Section 260A,Section 80IA,Section 80IB,Section 80HHC

AI-generated summary — verify with the full judgment below

Tax Case Appeal No.457 of 2021 IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED : 16.09.2021 CORAM : THE HON'BLE MR. JUSTICE T.S. SIVAGNANAM AND THE HON'BLE MR. JUSTICE SATHI KUMAR SUKUMARA KURUP Tax Case Appeal No.457 of 2021 The Commissioner of Income Tax, Chennai.

... Appellant Vs.

M/s.Carborandum Universal Ltd, Parry House, No.43, Moore Street, Chennai 600 001. ... Respondent Tax Case Appeal filed under Section 260A of the Income Tax Act, 1961 against the order of the Income Tax Appellate Tribunal, “D” Bench, Chennai dated 19.05.2016 in I.T.A.No.1742/Mds./2014. For Appellant : Mr.T.Ravikumar

Senior Standing Counsel For Respondent : Mr.R.Vijayaraghavan for M/s.Subbaraya Aiyar Padmanabhan

Page 1/6 https://www.mhc.tn.gov.in/judis/ Tax Case Appeal No.457 of 2021 J U D G M E N T (Judgment was delivered by T.S. SIVAGNANAM, J.) This Tax Case Appeal filed by the Revenue under Section 260A of the Income Tax Act, 1961, (“the Act” for brevity) is directed against the order dated 19.05.2016, passed by the Income Tax Appellate Tribunal, Madras “D” Bench, (“the Tribunal” for brevity), in I.T.A.No.1742/Mds/2014 for the Assessment Year 2004-05. 2.The Revenue has raised the following substantial questions of law for consideration : “1.Whether on the facts and circumstances of the case, the Tribunal was right in holding that deduction under Section 80IA should not be deducted from the profits and gains of business before computing deduction under Section 80HHC? 2.Whether on the facts and in the circumstances of the case, the Tribunal was right in holding that business profits as per Explanation (baa) of Section 80HHC of the Act is to include deduction already allowed under Section 80IB? Page 2/6 https://www.mhc.tn.gov.in/judis/ Tax Case Appeal No.457 of 2021 3.Whether on the facts and in the circumstances of the case, in view of Section 80IA(9), Tribunal was justified in holding that the assessee is entitled to simultaneous deduction under Section 80HHC and 80IB on the same profits?” 3.We have heard Mr.T.Ravikumar, learned Senior Standing Counsel, appearing for the appellant/Revenue and Mr.R.Vijayaraghavan, learned counsel for M/s.Subbaraya Aiyar Padmanabhan, learned counsel for the respondent/assessee. 4.It is not disputed before us that the above substantial questions of law were considered by the Hon'ble Supreme Court in the case of Assistant Commissioner of Income Tax v. Micro Labs Ltd. reported in (2016) 380 ITR 0001 (SC). In the light of the difference of opinion between the Hon'ble Judges, the matter has been directed to be placed before the Hon'ble Chief Justice of India, so that the matter can be referred to a larger Bench. Page 3/6 https://www.mhc.tn.gov.in/judis/ Tax Case Appeal No.457 of 2021 5.We are informed that till date, the matter has not been disposed of and is pending before the Hon'ble Supreme Court. We are also informed that, identical issue has been referred for consideration of the Hon'ble Full Bench of this Court in T.C.A.No.1195 of 2009, which was last listed before the Hon'ble Full Bench during March, 2015, and the matter is still pending. 6.In any event, the decision of the Hon'ble Supreme Court has to be awaited and therefore, we are of the view that it would be unnecessary to keep this appeal pending before this Court, instead of which, the matter can be restored to the file of the Assessing Officer, so as to enable him to await the decision of the larger Bench of the Hon'ble Supreme Court in the reference made in Micro Labs Ltd. (supra). 7.For such reason, this Tax Case Appeal is allowed and the order passed by the Tribunal, as well as the Commissioner of Income Tax (Appeals), Large Taxpayer Unit, Chennai, are set aside and the matter is restored to the file of the Assessing Officer, who shall await the decision of Page 4/6 https://www.mhc.tn.gov.in/judis/ Tax Case Appeal No.457 of 2021 the larger Bench of the Hon'ble Supreme Court, in the reference made in the case of Micro Labs Ltd. (supra). Consequently, the substantial questions of law are left open. No costs. (T.S.S., J.) (S.S.K., J.) 16.09.2021

(2/3)

mkn

Internet : Yes

Index : Yes / No To 1.The Income Tax Appellate Tribunal, “D” Bench, Chennai 2.The Commissioner of Income Tax, Chennai. Page 5/6 https://www.mhc.tn.gov.in/judis/ Tax Case Appeal No.457 of 2021 T.S. SIVAGNANAM, J. and SATHI KUMAR SUKUMARA KURUP, J. mkn Tax Case Appeal No.457 of 2021

16.09.2021 (2/3) Page 6/6 https://www.mhc.tn.gov.in/judis/

More judgments on Section 80IA

All 1,796 judgments and leading authorities on Section 80IA →

Recent GST High Court judgments

Search GST case law →