THE COMMISSIONER OF INCOME T vs. M/S. ACCEL FRONTLINE LTD.,

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TCA/545/2021HC Madras17 December 2021Bench: THE HONOURABLE MR.JUSTICE R.MAHADEVAN6 pages
AI SummaryWithdrawn

What did the High Court hold?

The High Court dismissed the appeals as withdrawn. The Revenue's counsel brought to the court's notice Circular No. 17/2019 dated 08.08.2019 issued by the CBDT, which stipulates that appeals shall not be filed or pursued if the tax effect does not exceed Rs. 1,00,00,000/-. It was submitted that the tax effect in these appeals was below this threshold and there was no audit objection. Consequently, the appeals were dismissed as withdrawn, with the substantial questions of law left open for determination in appropriate cases. No costs were awarded. The operative direction was to dismiss the appeals as withdrawn.

What were the facts?

The appeals were filed by the Commissioner of Income Tax, Chennai, against the Income Tax Appellate Tribunal's order dated 27.11.2015. These appeals, concerning assessment years 2007-08 to 2009-10, challenged the Tribunal's rulings in ITA Nos. 2780 to 2782/Mds/2014. The assessee is M/s. Accel Frontline Ltd. The core of the dispute revolves around the applicability of Rule 8D and the apportionment of common expenses. The Revenue's appeals were filed under Section 260-A of the Income Tax Act, 1961.

What were the issues?

The Tribunal had to decide the following substantial questions of law: 1. Whether the Tribunal was right in holding that the provisions of Rule 8D, being prospective, cannot be applied for assessment year 2007-08, even though Section 14A was inserted retrospectively from 01.04.1961. 2. Whether the Tribunal was right in directing the Assessing Officer (AO) to apportion common expenses based on the turnover of the STPI Unit and non-STPI unit, when the AO had already reworked the apportionment considering 1/3rd audit fee and director's remuneration towards the STPI Unit. The Revenue contended that Rule 8D, despite being prospective, could be applied for AY 2007-08 because Section 14A had retrospective effect. The Revenue also questioned the Tribunal's direction on apportionment of common expenses. The judgment does not record specific arguments from the assessee's side regarding these issues.

Which sections of the Income-tax Act were involved?

Section 260-A,Section 14-A

AI-generated summary — verify with the full judgment below

T.C.A.Nos. 545 to 547 of 2021 IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED : 17.12.2021 CORAM THE HONOURABLE MR.JUSTICE R.MAHADEVAN and THE HONOURABLE MR.JUSTICE MOHAMMED SHAFFIQ T.C.A.Nos. 545 to 547 of 2021 and C.M.P. Nos. 19818 and 19863 of 2021 T.C.A. No. 545 of 2021:- The Commissioner of Income Tax Chennai. .. Appellant

Vs. M/s. Accel Frontline Ltd (formerly known as M/s. Accel ICIM Frontline Ltd) No.75, Nelson Manickam Road Chennai - 600 029. PAN AAA CA 5622 M .. Respondent

Tax Case Appeal filed under Section 260-A of the Income Tax Act, 1961 against the order of the Income Tax Appellate Tribunal 'B' Bench, Chennai dated 27.11.2015 in ITA No.2782/Mds/2014 for the assessment year 2009-10. T.C.A. No. 546 of 2021:- The Commissioner of Income Tax Chennai. .. Appellant 1/6 https://www.mhc.tn.gov.in/judis T.C.A.Nos. 545 to 547 of 2021

Vs. M/s. Accel Frontline Ltd (formerly known as M/s. Accel ICIM Frontline Ltd) No.75, Nelson Manickam Road Chennai - 600 029. PAN AAA CA 5622 M .. Respondent

Tax Case Appeal filed under Section 260-A of the Income Tax Act, 1961 against the order of the Income Tax Appellate Tribunal 'B' Bench, Chennai dated 27.11.2015 in ITA No.2780/Mds/2014 for the assessment year 2007-08. T.C.A. No. 547 of 2021:- The Commissioner of Income Tax Chennai. .. Appellant

Vs. M/s. Accel Frontline Ltd (formerly known as M/s. Accel ICIM Frontline Ltd) No.75, Nelson Manickam Road Chennai - 600 029. PAN AAA CA 5622 M .. Respondent

Tax Case Appeal filed under Section 260-A of the Income Tax Act, 1961 against the order of the Income Tax Appellate Tribunal 'B' Bench, Chennai dated 27.11.2015 in ITA No.2781/Mds/2014 for the assessment year 2008-09. 2/6 https://www.mhc.tn.gov.in/judis T.C.A.Nos. 545 to 547 of 2021 For Appellant : Mrs. R.Hemalatha (in all Tcs ) Senior Standing Counsel For Respondent : Mr. N.V.Balaji (in all Tcs ) C O M M O N J U D G M E N T (Judgment was delivered by R.MAHADEVAN, J.) These tax case appeals have been filed by the appellant /Revenue challenging the order dated 27.11.2015 passed by the Income Tax Appellate Tribunal, 'B' Bench, Chennai, in I.T.A. Nos. 2780 to 2782/Mds/2014, relating to the assessment years 2007-08 to 2009-10, by raising the following substantial questions of law: T.C.A. No. 545 of 2021 “ Whether on the facts and in the circumstances of the case, the Tribunal was right in holding that the provisions of Rule 8D being prospective in nature cannot be applied for the assessment year 2007-08 even though section 14-A was inserted with retrospective effect from 01.04.1961? 3/6 https://www.mhc.tn.gov.in/judis T.C.A.Nos. 545 to 547 of 2021 T.C.A. Nos. 546 and 547 of 2021 “1.Whether on the facts and in the circumstances of the case, the Tribunal was right in holding that the provisions of Rule 8D being prospective in nature cannot be applied for the assessment year 2007-08 even though section 14-A was inserted with retrospective effect from 01.04.1961? 2.Whether on the facts and in the circumstances of the case, the Tribunal was right in directing the AO to do the apportionment of common expenses on the basis of turnover of STPI Unit and non STPI unit which the AO himself had reworked the apportionment of common expenses considering 1/3rd audit fee and director's remuneration towards STPI Unit?”

2.

When the matters were 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 4/6 https://www.mhc.tn.gov.in/judis T.C.A.Nos. 545 to 547 of 2021 exceed Rs.1,00,00,000/- (Rupees One Crore). It is also submitted that the tax effect in these appeals are less than the threshold limit and there is no audit objection. 3. In the light of the aforesaid submissions made by the learned counsel for the appellant / Revenue, the present appeals, wherein, the tax effect is said to be less than the monetary limit imposed, are dismissed as withdrawn, keeping open the substantial questions of law for determination in appropriate cases. No costs. Consequently, connected miscellaneous petitions are closed. [R.M.D., J.] [M.S.Q., J.] 17.12.2021 Index : Yes/No Speaking/Non-Speaking Order Maya To 1. The Commissioner of Income Tax Chennai. 2. The Income Tax Appellate Tribunal 'B' Bench Chennai 5/6 https://www.mhc.tn.gov.in/judis T.C.A.Nos. 545 to 547 of 2021 R. MAHADEVAN, J. and MOHAMMED SHAFFIQ, J. Maya T.C.A.Nos. 545 to 547 of 2021

Dated : 17.12.2021 6/6 https://www.mhc.tn.gov.in/judis

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