THE COMMISSIONER OF INCOME T vs. M/S SUNDARAM BNP PARIBAS

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TCA/569/2018HC Madras24 August 2022Bench: Hon`ble Mr Justice R. MAHADEVAN4 pages
AI SummaryWithdrawn

What did the High Court hold?

The High Court did not decide the substantial questions of law on their merits. Instead, the appeal was dismissed as withdrawn by the Revenue. This decision was based on the submission by the Revenue that the tax effect in the appeal was less than the monetary limit stipulated in CBDT Circular No. 17/2019. The Court noted that the Circular mandates 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/-. Consequently, the appeal was disposed of as withdrawn, with the substantial questions of law left open for determination in an appropriate future case. No costs were awarded.

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 19.12.2016 passed by the Income Tax Appellate Tribunal (ITAT), Madras 'D' Bench. This order pertained to assessment year 2005-06 and concerned M/s. Sundaram BNP Paribas Home Finance. The High Court admitted the appeal on two substantial questions of law. During the hearing, the Revenue brought to the court's attention CBDT Circular No. 17/2019, which stipulates that appeals shall not be filed or pursued if the tax effect does not exceed Rs. 1,00,00,000/-. The Revenue submitted that the tax effect in this appeal was below this threshold.

What were the issues?

The Tribunal had to decide two substantial questions of law: 1. Whether the interest earned by the assessee company on Statutory Liquidity Ratio (SLR) investments is eligible for deduction under Section 36(1)(viii) of the Income Tax Act, 1961. 2. Whether the Tribunal was correct in directing the Assessing Officer to consider 'net interest' instead of 'gross interest' for the computation of deduction under Section 36(1)(viii). The Revenue's contentions were not recorded as they withdrew the appeal based on the tax effect. The assessee's contentions were not recorded as the appeal was dismissed before merits were argued.

Which sections of the Income-tax Act were involved?

Section 260A,Section 36(1)(viii)

AI-generated summary — verify with the full judgment below

T.C.A.No.569 of 2018 IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED : 24.08.2022 CORAM : THE HON'BLE MR. JUSTICE R. MAHADEVAN AND THE HON'BLE MR. JUSTICE MOHAMMED SHAFFIQ T.C.A.No.569 of 2018 The Commissioner of Income Tax, Chennai. ... Appellant Versus M/s.Sundaram BNP Paribas, Home Finance, Sundaram Towers, 46, Whites Road, Chennai - 600 014. ... Respondent (PAN No.AADCS4826J) Appeal preferred under Section 260A of the Income Tax Act, 1961, against the order of the Income Tax Appellate Tribunal, Madras “D” Bench, dated 19.12.2016 in I.TA.No.1895/Mds/2014. For Appellant : Mr.J.Narayanaswamy Senior Standing Counsel For Respondent : Mr.V.Vijayaraghavan For M/s.Subbaraya Aiyar J U D G M E N T Page 1/4 https://www.mhc.tn.gov.in/judis T.C.A.No.569 of 2018 (Judgment was delivered by R.MAHADEVAN, J.) This tax case appeal has been filed by the appellant / Revenue, challenging the order dated 19.12.2016 passed by the Income Tax Appellate Tribunal, Madras 'D' Bench, in I.TA.No.1895/Mds/2014, relating to the assessment year 2005-06. 2. By order dated 06.08.2018, 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 Income Tax Appellate Tribunal was right in holding that the interest earned by the assessee company for SLR investments is eligible for deduction under Section 36(i)(viii)? (ii) Whether on the facts and in the circumstances of the case, the Tribunal was correct in directing the Assessing Officer to 'net interest' as against 'gross interest' for the purpose of computation of deduction under Section 36 (1)(viii)?" 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 Page 2/4 https://www.mhc.tn.gov.in/judis T.C.A.No.569 of 2018 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. 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.) 24.08.2022 r n s

Internet : Yes.

Index : Yes / No. Page 3/4 https://www.mhc.tn.gov.in/judis T.C.A.No.569 of 2018 R. MAHADEVAN, J. and MOHAMMED SHAFFIQ, J. r n s To 1. The Income Tax Appellate Tribunal Madras 'C' Bench, Chennai. 2. The Commissioner of Income Tax, (Appeals-VI), Chennai. 3. The Assistant Commissioner of Income Tax, Company Circle- VI (4), Chennai, T.C.A.No.569 of 2018 24.08.2022 Page 4/4 https://www.mhc.tn.gov.in/judis

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