PRINCIPAL COMMISSIONER OF IN vs. M/S.ST.XAVIER EDUCATIONAL AN

PDF · subscribers
TCA/527/2021HC Madras06 December 2021Bench: Hon`ble Mr Justice R. MAHADEVAN4 pages
AI SummaryWithdrawn

What did the High Court hold?

The High Court, upon considering the submissions made by the learned counsel for the appellant/Revenue, noted the CBDT Circular No. 17/2019. This circular stipulates that appeals shall not be filed or pursued by the Department before the High Court if the tax effect does not exceed Rs. 1,00,00,000/-. The Revenue submitted that the tax effect in the present appeal was less than this threshold limit. Consequently, the High Court dismissed the appeal as withdrawn, stating that the substantial questions of law were kept open for determination in an appropriate case. No costs were awarded. The judgment did not decide the substantial questions of law on merits.

What were the facts?

The Revenue, Principal Commissioner of Income Tax (Exemptions), Chennai, filed an appeal under Section 260A of the Income Tax Act, 1961, against the order dated 03.05.2018 passed by the Income Tax Appellate Tribunal (ITAT), Chennai. The ITAT's order related to assessment year 2013-14 and concerned the respondent assessee, M/s. St. Xavier Educational & Charitable Trust. The appeal challenged the ITAT's decision to allow exemption under Section 11 of the Income Tax Act, holding that there was no violation of Section 13(1)(c) and that Explanation 3 below Section 13(9) was not attracted. The tax effect in the appeal was stated to be less than the threshold limit stipulated by CBDT Circular No. 17/2019.

What were the issues?

The Tribunal had to decide two substantial questions of law: 1. Whether the ITAT was justified in holding that there was no violation of Section 13(1)(c) of the Income Tax Act, 1961, when the Assessing Officer (AO) had invoked the said provision and denied exemption under Section 11. 2. Whether the ITAT was right in holding that the provisions of Explanation 3 below Section 13(9) of the Income Tax Act, 1961, were not attracted, despite two trustees having substantial interest with voting power and shareholding of more than 20% as per Explanation 3(i) below Section 13(9). The Revenue contended that the AO had rightly invoked Section 13(1)(c) and denied exemption under Section 11. The Revenue also argued that Explanation 3(i) below Section 13(9) was attracted as two trustees had substantial interest. The judgment does not record specific arguments from the assessee's side, other than their representation through counsel.

Which sections of the Income-tax Act were involved?

Section 260A,Section 13(1)(c),Section 11,Section 13(9)

AI-generated summary — verify with the full judgment below

Tax Case Appeal No.527 of 2021 IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED : 06.12.2021 CORAM : THE HON'BLE MR. JUSTICE R. MAHADEVAN AND THE HON'BLE MR. JUSTICE MOHAMMED SHAFFIQ Tax Case Appeal No.527 of 2021 Principal Commissioner of Income Tax (Exemptions), Corporate Cricle-2(1), Chennai 600 034

...Appellant -vs- M/s. St. Xavier Educational & Charitable Trust, No.103/G2, Bye Pass Road, Vanarapettai, Tirunelveli 627 003

...Respondent Tax Case Appeal filed under Section 260A of the Income Tax Act, 1961 against the order dated 3.5.2018 passed by the Income Tax Appellate Tribunal, Madras “A” Bench, Chennai in I.T.A.No.1192/CHNY/2017. For Appellant : Mr.J. Narayanasamy Sr. Standing Counsel For Respondent : Mrs. Sri Niranjani for Mr. Baskar 1/4 https://www.mhc.tn.gov.in/judis Tax Case Appeal No.527 of 2021 JUDGMENT (Judgment was delivered by R. MAHADEVAN, J.) This tax case appeal has been filed by the appellant / Revenue, calling in question the correctness of the order dated 03.05.2018 passed by the Income Tax Appellate Tribunal, 'A' Bench, Chennai, in I.T.A.No.1192/CHNY/2017 relating to the assessment year 2013-14 by raising the following substantial questions of law:- '(i) Whether in the facts and in the circumstances of the case and in law, the Hon'ble ITAT is justified and right in law holding that there is no violation of the section 13(1)(c) of the Income Tax Act, 1961 when the AO has rightly invoked the provisions of section 13(1)(c) and denied the exemption under section 11 of the Income Tax Act? (ii) Whether in the facts and in the circumstances of the case and in law, the ITAT was right in law in holding that the provisions of Explanation 3 below Sec 13(9) of the Income Tax Act, 1961 are not attracted when the two trustees are having substantial interest with voting power and share holding more than 20% within the meaning of Explanation 3(i) below section 13(9) of the Income Tax Act, 1961?” 2/4 https://www.mhc.tn.gov.in/judis Tax Case Appeal No.527 of 2021 2. 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 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). It is also submitted that the tax effect in this appeal is less than the threshold limit. 3. 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.] 06.12.2021

Internet : Yes

Index : Yes / No msr 3/4 https://www.mhc.tn.gov.in/judis Tax Case Appeal No.527 of 2021 R. MAHADEVAN, J. AND MOHAMMED SHAFFIQ, J. msr To Income Tax Appellate Tribunal, Madras “A” Bench, Chennai Tax Case Appeal No.527 of 2021 06.12.2021 4/4 https://www.mhc.tn.gov.in/judis

More judgments on Section 13(1)(c)

All 697 judgments and leading authorities on Section 13(1)(c) →

Recent GST High Court judgments

Search GST case law →