PRINCIPAL COMMISSIONER OF vs. M/S JUPITER KNITTING COMPANY

T.C.A.No.475 of 2016 IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED : 23.08.2022 CORAM : THE HONOURABLE MR. JUSTICE R. MAHADEVAN AND THE HONOURABLE MR. JUSTICE MOHAMMED SHAFFIQ T.C.A.No.475 of 2016 Principal Commissioner of Income Tax 3, No.63, Race Course Road, Coimbatore. ... Appellant

Versus M/s. Jupiter Knitting Company, 1-J-24, Jupiter Avenue, Ammapalaym, Tiruppur, PAN: AAC FJ 3024 D ... Respondent Appeal preferred under Section 260A of the Income Tax Act, 1961, against the order dated 27.11.2015 passed by the Income Tax Appellate Tribunal, “D” Bench, Chennai, in I.T.A.No.3073/Mds/2014. For Appellant : Mr.M.Swaminathan, Senior Standing Counsel Mrs.V.Pushpa, Standing Counsel Page 1/5 https://www.mhc.tn.gov.in/judis T.C.A.No.475 of 2016 For Respondent : Mr.R.Sivaraman

JUDGMENT (Judgment of the Court was delivered by R.MAHADEVAN, J.) This tax case appeal has been filed by the appellant / Revenue, challenging the order dated 27.11.2015 passed by the Income Tax Appellate Tribunal, “D” Bench, Chennai, in I.T.A.No.3073/Mds/2014, relating to the assessment year 2011-12.

2.By order dated 29.07.2016, this court admitted the aforesaid tax case appeal on the following substantial questions of law: “(i) Whether on the facts and in the circumstances of the case, the Tribunal is justified in law in holding that the loss on derivative transactions is trading loss thereby over viewing the fact that when no actual delivery has taken place, the transactions in question fall within the definition of speculative transaction as per Section 43 (5) of the Income Tax Act? (ii) Whether on the facts and in the circumstances of the case, the Tribunal is justified in law in holding that the forex derivative transactions of the assessee have proximity to the Page 2/5 https://www.mhc.tn.gov.in/judis T.C.A.No.475 of 2016 export turnover thereby impliedly ruling that the issue is covered by proviso (a) to Section 43(5), when the proviso clearly mandates that to be categorised as hedge, the transactions should only be in respect of goods or merchandise manufactured or traded by the assessee? (iii) Whether on the facts and in the circumstances of the case, the Tribunal is right in directing the Assessing officer to redo the assessments in the light of the decision rendered in the case of M/s.SCM Garments Pvt.Ltd., especially when the Tribunal was unable to reach to a conclusion as to whether the assesee has been indulging in speculative transactions ignoring the foreign exchange exposures or whether the transactions are made in order to provide adequate cover on the foreign currency exposures?" 3.When the matter was taken up for consideration, the learned 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 this appeal is less than the threshold limit. Page 3/5 https://www.mhc.tn.gov.in/judis T.C.A.No.475 of 2016 4.In the light of the aforesaid submissions made by the learned 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.) 23.08.2022

Internet : Yes

Index : Yes / No av To 1. The Income Tax Appellate Tribunal, “D” Bench, Chennai. 2. The Principal Commissioner of Income Tax 3, No.63, Race Course Road, Coimbatore. 3. The Income Tax Officer, Ward 1(4), Tiruppur. 4. The Commissioner of Income Tax (Appeals)- II , Chennai. Page 4/5 https://www.mhc.tn.gov.in/judis T.C.A.No.475 of 2016 R. MAHADEVAN, J. and MOHAMMED SHAFFIQ, J. av T.C.A.No.475 of 2016 23.08.2022 Page 5/5 https://www.mhc.tn.gov.in/judis