THE COMMISSIONER OF INCOME T vs. M/S DHARMSEE PARIPIA

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TCA/465/2015HC Madras22 April 2021Bench: Hon`ble Mr Justice M.DURAISWAMY5 pages
AI SummaryWithdrawn

What did the High Court hold?

The High Court decided not to adjudicate the substantial questions of law due to subsequent developments. The Court noted that the Government of India had enacted the Direct Tax Vivad Se Vishwas Act, 2020. The learned Senior Standing Counsel for the Revenue submitted that the assessee had availed the Vivad Se Vishwas Scheme and had been issued Form-3. Consequently, since the assessee had opted for the scheme, nothing further survived for adjudication in the appeal. The Tax Case Appeal was disposed of on this basis, with no costs awarded. The specific findings of the ITAT on the allowability of the short-term capital loss and the absence of a colourable device were not reviewed or overturned by the High Court.

What were the facts?

The Revenue, Commissioner of Income Tax, Chennai, filed an appeal under Section 260A of the Income Tax Act, 1961, against an order dated 13.02.2015 passed by the Income Tax Appellate Tribunal (ITAT), Chennai "C" Bench. The appeal pertained to assessment year 2010-11. The ITAT had ruled in favour of the assessee, M/s. Dharmsee Paripia, regarding the treatment of a short-term capital loss. The High Court admitted the appeal on substantial questions of law. During the pendency of the appeal, the Government of India enacted the Direct Tax Vivad Se Vishwas Act, 2020, for the resolution of disputed tax matters. The Revenue informed the High Court that the assessee had availed the Vivad Se Vishwas Scheme and had been issued Form-3.

What were the issues?

1. Whether, on the facts and circumstances of the case, the Tribunal was right in holding that the disallowance made by the Assessing Officer on account of short-term capital loss of Rs.17,63,12,240/- is to be allowed and treated as a genuine transaction, as per Section 45 of the Income Tax Act, 1961. 2. Whether the finding of the Tribunal is bad in law by holding that there was no colourable device involved in setting off the short-term capital loss against the long-term capital gains, especially when the assessee had invested Rs.18,13,50,000/- in the shares of a loss-making company and sold the same within 11 days of acquisition at a significantly reduced price. Assessee's Contentions: The judgment does not record specific contentions made by the assessee. The Tribunal had allowed the short-term capital loss and found no colourable device. Revenue's Contentions: The Revenue argued that the disallowance made by the Assessing Officer on account of short-term capital loss should be upheld and that the transaction involved a colourable device, as the assessee invested a large sum in shares of a loss-making company and sold them within 11 days at a fraction of the issue price.

Which sections of the Income-tax Act were involved?

Section 260A,Section 45

AI-generated summary — verify with the full judgment below

Tax Case Appeal No.465 of 2015 IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED : 22.04.2021 CORAM THE HON'BLE MR.JUSTICE M. DURAISWAMY AND THE HON'BLE MR.JUSTICE KRISHNAN RAMASAMY Tax Case Appeal No.465 of 2015 The Commissioner of Income Tax, Chennai. ... Appellant Vs.

M/s.Dharmsee Paripia, A-1, Hamra, No.1, Kothari Road, Nungambakkam, Chennai – 600 034.

... Respondent

Tax Case Appeal filed under Section 260A of the Income Tax Act, 1961 against the order of the Income Tax Appellate Tribunal, Chennai "C" Bench, dated 13.02.2015 passed in I.T.A.No.2309/Mds/2014. For Appellant : Mr.T.Ravikumar Senior Standing Counsel For Respondent : Mr.Rahul Unnikrishnan Page 1/5 https://www.mhc.tn.gov.in/judis/ Tax Case Appeal No.465 of 2015 J U D G M E N T (Delivered by M.DURAISWAMY, J.) This appeal filed by the Revenue under Section 260A of the Income Tax Act, 1961 ('the Act' for brevity), is directed against the order dated 13.02.2015 passed by the Income Tax Appellate Tribunal, Chennai "C" Bench, ('the Tribunal' for brevity) in I.T.A.No.2309/Mds/2014 for the assessment year 2010-11. The above appeal has been admitted on 22.07.2015 on the following Substantial Questions of Law: "1.Whether on the facts and circumstances of the case, the Tribunal was right in holding that the disallowance made by the Assessing Officer on account of short term capital loss of Rs.17,63,12,240/- is to be allowed and to be treated as a genuine transaction? 2.Is not the finding of the Tribunal bad by holding that there was no colourable device involved in setting off the short term capital loss against the long term capital gains especially when the assessee had invested Rs.18,13,50,000/- in the shares of a loss making company and sold the same within a period of 11 days after acquiring it at the rate of 1/40th of the issue price?” Page 2/5 https://www.mhc.tn.gov.in/judis/ Tax Case Appeal No.465 of 2015 2. We have heard Mr.T.Ravikumar, learned Senior Standing Counsel for the appellant/Revenue and Mr.Rahul Unnikrishnan, learned counsel appearing for the respondent/assessee. 3. It may not be necessary for this Court to decide the Substantial Questions of Law framed for consideration on account of certain subsequent developments. The Government of India enacted the Direct Tax Vivad Se Vishwas Act, 2020 (Act 3 of 2020) to provide for resolution of disputed tax and for matters connected therewith or incidental thereto. The Act of the Parliament received the assent of the President on 17th March 2020 and published in the Gazette of India on 17th March 2020. 4.Learned Senior Counsel appearing for the appellant/Revenue submitted that the respondent/assessee had availed the Vivad Se Vishwas Scheme and that the respondent/assessee had already been issued with Form–3 vide Reference No.973239070311220.

Page 3/5 https://www.mhc.tn.gov.in/judis/ Tax Case Appeal No.465 of 2015 5.Since the respondent/assessee had been issued with Form-3, nothing survives for adjudication in the above appeal. Recording the submission made by the learned Senior Counsel for the appellant/Revenue, the Tax Case Appeal stands disposed of. No costs. [M.D., J.] [K.R., J.] 22.04.2021

Index : Yes/No

Internet : Yes

mkn To 1. Income Tax Appellate Tribunal, Chennai "C" Bench 2.The Commissioner of Income Tax, Chennai. Page 4/5 https://www.mhc.tn.gov.in/judis/ Tax Case Appeal No.465 of 2015 M. DURAISWAMY, J. and KRISHNAN RAMASAMY, J. mkn Tax Case Appeal No.465 of 2015

22.04.2021 Page 5/5 https://www.mhc.tn.gov.in/judis/

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