THE COMMISSIONER OF INCOME T vs. ALPUMP LTD.,

TCA/583/2018HC Madras11 July 2022Bench: Hon`ble Mr Justice R. MAHADEVAN4 pages

AI SummaryWithdrawn

What did the High Court hold?

The High Court did not decide the substantial question of law on merits. Instead, the appeals were dismissed as withdrawn. This decision was based on a Circular No.17/2019 dated 08.08.2019 issued by the Central Board of Direct Taxes (CBDT). This circular stipulated that the Department shall not file or pursue appeals before the High Court if the tax effect does not exceed Rs.1,00,00,000/- (Rupees One Crore). The learned counsel for the appellant/Revenue submitted that the tax effect in these appeals was less than this threshold limit. Consequently, the appeals were disposed of as withdrawn, with the substantial question of law being kept open for determination in appropriate cases. No costs were awarded.

What were the facts?

The Commissioner of Income Tax, Central Circle 1, Chennai (the Revenue) filed two Tax Case Appeals (T.C.A.Nos.583 & 584 of 2018) before the High Court of Judicature at Madras. These appeals challenged a common order dated 26.07.2017 passed by the Income Tax Appellate Tribunal (ITAT), 'B' Bench, Chennai. The appeals pertained to the assessment year 2012-13 and concerned M/s. RmKV Silks as the respondent. The High Court admitted these appeals on 06.06.2019, framing a substantial question of law.

What were the issues?

1. Whether the Tribunal was right in holding that hospitality expenses (bonus redemption expenses) is an accrued liability even though the incurring of liability is fully dependent upon the uncertain future visit of the customers, and there is no scientific method to estimate the future visit and purchase of customers to justify it as accrued liability? Assessee's Contention: The judgment does not record any specific contentions made by the assessee before the High Court. The issue framed by the High Court reflects the point of contention regarding the accrual of liability for hospitality expenses. Revenue's Contention: The Revenue's appeal is based on the substantial question of law framed by the High Court, questioning the ITAT's finding that the hospitality expenses constituted an accrued liability despite the uncertain future events on which it depended.

Which sections of the Income-tax Act were involved?

Section 260A

AI-generated summary — verify with the full judgment below

T.C.A.No.583 & 584 of 2018 IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED 11.07.2022 CORAM THE HON'BLE Mr. JUSTICE R. MAHADEVAN AND THE HON'BLE Mr. JUSTICE MOHAMMED SHAFFIQ Tax Case Appeal Nos.583 & 584 of 2018 The Commissioner of Income Tax Central Circle 1 Chennai .. Appellant in both T.C.As Vs. M/s.RmKV Silks No.176F Trivandrum Road Tirunelveli 627 003 PAN : AABFR 1307 C .. Respondent in T.C.A.No.583 of 2018 M/s.RmKV Silks No.176F Trivandrum Road Tirunelveli 627 003 PAN : AAHFB 7067 M .. Respondent in T.C.A.No.584 of 2018

Tax Case Appeals filed under Section 260A of the Income Tax Act, 1961 against the common order dated 26.07.2017 passed by the Income Tax Appellate Tribunal, 'B' Bench, Chennai, in respective I.T.A.Nos. 2705/Mds/2016 and 2704/Mds/2016. 1/4 https://www.mhc.tn.gov.in/judis T.C.A.No.583 & 584 of 2018 For Appellant : Mr.M.Swaminathan in both T.C.As For Respondent : Mr.R.Vijayaraghavan in both T.C.As for M/s.Subburaya Aiyar 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, calling in question the correctness of the common order dated 26.07.2017 passed by the Income Tax Appellate Tribunal, 'B' Bench, Chennai, in respective I.T.A.Nos. 2705/Mds/2016 and 2704/Mds/2016 for the assessment year 2012-13. 2. By order dated 06.06.2019, this Court admitted the aforesaid tax case appeals on the following substantial question of law : “Whether the Tribunal was right in holding that hospitality expenses (bonus redemption expenses) is an accrued liability even though the incurring of liability is fully depend up on the uncertain future visit of the customers, and there is no scientific method to estimate the future visit and purchase of customers to justify it as accrued liability ?” 3. When these matters were taken up for consideration, the learned 2/4 https://www.mhc.tn.gov.in/judis T.C.A.No.583 & 584 of 2018 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 these appeals are less than the threshold limit. 4. 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 question of law for determination in appropriate cases. No costs. [R.M.D,J.] [M.S.Q, J.] 11.07.2022

Index : Yes / No gya R. MAHADEVAN, J. AND 3/4 https://www.mhc.tn.gov.in/judis T.C.A.No.583 & 584 of 2018 MOHAMMED SHAFFIQ, J. gya To 1.The Commissioner of Income Tax Chennai 2.The Income Tax Appellate Tribunal Chennai Bench- 'B' Tax Case Appeal Nos.583 & 584 of 2018 11.07.2022

4/4 https://www.mhc.tn.gov.in/judis

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