PRINCIPAL COMMISSIONER OF IN vs. M/S.GEMINI COMMUNICATIONS LTD

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TCA/489/2020HC Madras18 December 2020Bench: Hon`ble Mr Justice T. S. SIVAGNANAM4 pages
AI SummaryDismissed

What did the High Court hold?

The High Court dismissed the appeal filed by the Revenue. The dismissal was based on the Revenue's submission that the appeal was not being pursued due to low tax effect, as per CBDT Circular No. 17/2019, which increased the monetary limit for filing appeals before the High Court to Rs. 1 Crore. The Court noted that the tax effect in this case was below this threshold. Consequently, the substantial questions of law framed for consideration were left open. The Revenue was granted liberty to mention the case for restoration if the tax effect was found to be above the threshold limit, allowing for a decision on merits.

What were the facts?

The Revenue, represented by the Principal Commissioner of Income Tax, Chennai, filed a Tax Case Appeal under Section 260A of the Income Tax Act, 1961, against an order dated 11.09.2018 passed by the Income Tax Appellate Tribunal (ITAT), Madras “A” Bench. The appeal pertains to the assessment year 2013-2014 and challenges the ITAT's deletion of an addition made under Section 14A of the Act. The amount in dispute is not explicitly stated but is implied to be below the threshold for appeal. The procedural history involves the ITAT's decision, which is now under challenge before the High Court.

What were the issues?

The Tribunal had to decide two substantial questions of law: 1. Whether, on the facts and in law, the ITAT was correct in deleting the addition made under Section 14A of the Act by holding that disallowances under Section 14A cannot exceed the exempt income, when the provisions of Section 14A and Rule 8D do not provide for such an exception? 2. Whether, on the facts and in law, the ITAT was correct in not appreciating CBDT Circular No. 5/2014, which clarifies that disallowance under Section 14A read with Rule 8D can be made even if the taxpayer has not earned any exempt income in a particular year? The Revenue argued that Section 14A and Rule 8D do not permit limiting disallowances to the extent of exempt income and that CBDT Circular No. 5/2014 supports making disallowances even without exempt income. The assessee's arguments are not recorded in the judgment.

Which sections of the Income-tax Act were involved?

Section 14A,Section 260A

AI-generated summary — verify with the full judgment below

T.C.A.No.489 of 2020 IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED : 18.12.2020 CORAM THE HON'BLE MR.JUSTICE T.S.SIVAGNANAM & THE HON'BLE MRS.JUSTICE V.BHAVANI SUBBAROYAN Tax Case Appeal No.489 of 2020 Principal Commissioner of Income Tax Corporate Circle - 2(1) Chennai - 600 034

... Appellant Vs. M/s Gemini Communications Ltd., No.1, Dr.Ranga Road, Alwarpet, Chennai - 600 018

... Respondent Tax Case Appeal is filed under Section 260A of the Income Tax Act 1961 against the order dated 11.09.2018 made in I.T.A.No.1441/Chny/2018 on the file of the Income Tax Appellate Tribunal, Madras “A” Bench, for the assessment year 2013 - 2014.

For Appellant : Mr.R.Karthik Ranganathan Senior Standing Counsel

1/4 https://www.mhc.tn.gov.in/judis/ T.C.A.No.489 of 2020 J U D G M E N T (Judgment of the Court was delivered by T.S.SIVAGNANAM.J) We have heard Mr.R.Karthik Ranganathan, learned senior standing counsel appearing for the appellant. 2. This appeal, filed by the Revenue under Section 260A of the Income Tax Act, 1961 is directed against the order dated 11.09.2018 made in I.T.A.No.1441/Chny/2018 on the file of the Income Tax Appellate Tribunal, Madras “A” Bench, for the assessment year 2013 - 2014. 3. The Substantial Questions of Law raised for consideration in this appeal is as follows : “1. Whether on the facts and circumstances of the case and in Law, the Hon'ble ITAT was correct in deleting the addition made u/s 14A of the Act by holding that disallowances made u/s 14A cannot exceed the exempt income, when the provisions of the said section as well as Rule 8D does not provide any such exception? 2. Whether on the facts and in circumstances of the case and in law, the ITAT was correct in not appreciating the CBDT circular No.5/2014 wherein it is clarified that, disallowance u/s 14A r.w.s. 8D has been made even if the tax payer in a particular year not earned any exempt income? " 2/4 https://www.mhc.tn.gov.in/judis/ T.C.A.No.489 of 2020 4. The learned counsel for the appellant submits that the above appeal is not pursued by the Revenue on account of the low tax effect in terms of Circular No.17/2019 dated 08.8.2019 issued by the Central Board of Direct Taxes. By the said Circular, the monetary limit for filing or pursuing an appeal before the High Court has been increased to Rs.1 Crore. It is further submitted that the tax effect in this case is less than the threshold limit. 5. In the light of the said submissions, the above tax case appeal is dismissed on account of the low tax effect. The substantial questions of law framed is left open. In the event the tax effect is above the threshold limit fixed in the said circular, liberty is granted to the Revenue to make a mention to this Court to restore the appeal to be heard and decided on merits.

(T.S.S.J.,) (V.B.S.J.,)

18.12.2020 Index : yes/no Internet : yes/no Speaking Judgment/Non-Speaking Judgment ssd 3/4 https://www.mhc.tn.gov.in/judis/ T.C.A.No.489 of 2020 T.S.SIVAGNANAM.J., and V.BHAVANI SUBBAROYAN.J., ssd To The Income Tax Appellate Tribunal, “A” Bench, Chennai. Tax Case Appeal No.489 of 2020 18.12.2020 4/4 https://www.mhc.tn.gov.in/judis/

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