PRINCIPAL COMMISSIONER OF vs. S.P.NANDAKUMAR

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TCA/578/2017HC Madras13 June 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 merits. Instead, the Court took note of the CBDT Circular No. 17/2019, which sets a monetary threshold of Rs. 1,00,00,000/- for filing or pursuing appeals before the High Court. The Revenue submitted that the tax effect in the present appeal was less than this stipulated limit. Consequently, the High Court dismissed the appeal as withdrawn, in light of the Revenue's submission regarding the tax effect and the circular. The Court explicitly stated that the substantial questions of law were kept open for determination in an appropriate case. No costs were awarded.

What were the facts?

The Revenue, Principal Commissioner of Income Tax 2, Chennai, filed an appeal under Section 260A of the Income Tax Act, 1961, against an order dated 23.06.2016 passed by the Income Tax Appellate Tribunal, Chennai, 'C' Bench. The appeal pertained to assessment year 2011-12 and challenged the Tribunal's decision regarding the classification of land. The High Court admitted the appeal on substantial questions of law. Subsequently, during the hearing, the Revenue brought to the court's notice 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 High Court was to decide two substantial questions of law: 1. Whether the Appellate Tribunal was right in holding that land, on which a tea factory with its machinery is located and let out to a partnership firm for business, can be treated as agricultural land and claimed as exempt under Section 2(14)(iii)(a)(b) of the Income Tax Act? 2. Whether the Appellate Tribunal was right in holding the land as agricultural land, when Rule 8 of the Income Tax Rules provided for treating the income from sale of tea grown and manufactured by the seller as business income? The Revenue argued that the land, being used for a tea factory and let out for business, should not be considered agricultural land for exemption purposes. The Revenue also implicitly questioned the Tribunal's reliance on Rule 8 in this context. The judgment does not record specific arguments from the respondent (assessee) on these questions, other than their appearance through counsel.

Which sections of the Income-tax Act were involved?

Section 260A,Section 2(14)(iii)(a)(b)

AI-generated summary — verify with the full judgment below

T.C.A.No.578 of 2017 IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED : 13.06.2022 CORAM : THE HONOURABLE MR. JUSTICE R. MAHADEVAN AND THE HONOURABLE MR. JUSTICE MOHAMMED SHAFFIQ T.C.A.No.578 of 2017 Principal Commissioner of Income Tax 2, No.121, Mahatma Gandhi Road, Chennai 600 034. ... Appellant Versus S.P.Nandakumar ... Respondent Appeal preferred under Section 260A of the Income Tax Act, 1961, against the order of the Income Tax Appellate Tribunal, Chennai, “C” Bench, dated 23.06.2016 in I.TA.No.2137/Mds/2015. For Appellant : Mr.Karthik Ranganathan Standing Counsel For Respondent : Mr.S.Sridhar

Page 1/4 https://www.mhc.tn.gov.in/judis T.C.A.No.578 of 2017 J U D G M E N T (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 23.06.2016 passed by the Income Tax Appellate Tribunal, 'C' Bench, Chennai, in I.T.A.No.2137/Mds/2015, relating to the assessment year 2011-12. 2. By order dated 07.12.2017, this court admitted the aforesaid tax case appeal on the following substantial questions of law: “(i) Whether the Appellate Tribunal was right in holding that land, on which, the tea factory with its machinery is located and let out to a partnership firm for doing business can be treated as agricultural land and claimed exempt under Section 2(14)(iii)(a)(b) of the Income Tax Act? and (ii) Whether the Appellate Tribunal was right in holding the land as agricultural land, when Rule 8 of the Income Tax Rules provided for treating the income from sale of tea grown and manufactured by seller as business income?" Page 2/4 https://www.mhc.tn.gov.in/judis T.C.A.No.578 of 2017 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. 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 question of law for determination in an appropriate case. No costs. (R.M.D., J.) (M.S.Q., J.) 13.06.2022

Internet : Yes

Index : Yes / No psa/av Page 3/4 https://www.mhc.tn.gov.in/judis T.C.A.No.578 of 2017 R. MAHADEVAN, J. and MOHAMMED SHAFFIQ, J. psa/av To 1. The Income Tax Appellate Tribunal, “C” Bench, Chennai, 2. Principal Commissioner of Income Tax 2, No.121, Mahatma Gandhi Road, Chennai 600 034. 3. The Assistant Commissioner of Income Tax Business Ward XIV(4), Chennai. 4. The Commissioner of Income-tax (Appeals) - 7, Chennai. T.C.A.No.578 of 2017 13.06.2022 Page 4/4 https://www.mhc.tn.gov.in/judis

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