M/S.SREE AYYANAR SPINNING AN vs. THE DEPUTY COMMISSIONER OF

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TCA/583/2021HC Madras17 December 2021Bench: Hon`ble Mr Justice R. MAHADEVAN5 pages
AI SummaryDismissed

What did the High Court hold?

The High Court dismissed the Tax Case Appeal as having become infructuous. The Court recorded the submission of the appellant/assessee that the relief sought in the appeal had become infructuous because the impugned order no longer survived for consideration in view of subsequent judgments. Specifically, the assessee's counsel referred to the High Court's judgment in CIT v. Sree Ayyanar Spinning and Weaving Mills Ltd. reported in (2008) 296 ITR 53 (Madras) and the Supreme Court's judgment in the assessee's own case reported in (2008) 301 ITR 434 (SC). The assessee had also filed a memo detailing the procedural history, including the ITAT's recall of its original order, the Revenue's appeal against the recall, the High Court's initial decision, the Supreme Court's intervention upholding the recall, and the subsequent dismissal of the Revenue's appeal by the High Court. Based on these submissions and the memo, the Court concluded that the impugned order no longer survived due to the finality of the Miscellaneous Proceedings before the ITAT, which had recalled the impugned order for fresh adjudication. Therefore, the appeal was dismissed as infructuous, with no costs.

What were the facts?

The assessee, M/s. Sree Ayyanar Spinning & Weaving Mills Ltd., filed a Tax Case Appeal (TCA) before the High Court of Judicature at Madras, challenging an order dated 21.06.2003 passed by the Income Tax Appellate Tribunal (ITAT), Chennai, concerning Assessment Year 1989-90. The appeal was filed under Section 260-A of the Income Tax Act, 1961. The ITAT's order was a subsequent one, following a recall of an earlier order dated 09.12.1996 by the ITAT itself on 31.01.2003. The Revenue had filed an appeal against the recall order, and the High Court had initially allowed the Revenue's appeal, nullifying the recall. However, the Supreme Court, in the assessee's own case, upheld the ITAT's action of recalling its order and set aside the matter for fresh adjudication. Subsequently, the High Court dismissed the Revenue's appeal against the recall order.

What were the issues?

1. Whether on the facts and in the circumstances of the case, the Tribunal was right in sustaining the order of the lower authorities in reworking the book profits under Section 115J of the Income Tax Act for the relevant Assessment Year, by ignoring/excluding the depreciation charged to the profit and loss account consequent to a permissible change in the method of calculating such depreciation, with a view to impose tax on the same? 2. Whether on the facts and in the circumstances of the case, the Tribunal was right in their action in sustaining the said reworking of the computation as envisaged under Section 115J of the Act by removing/excluding the depreciation debited in the Profit and Loss account, which represented the difference arising on account of a change in the method of providing depreciation in the books of account, as permitted under Schedule VI to the Companies Act, 1956? Assessee's Contention: The learned counsel for the assessee submitted that the relief sought in the appeal had become infructuous because the impugned order no longer survived due to subsequent judgments. Specifically, the assessee relied on the High Court's judgment in CIT v. Sree Ayyanar Spinning and Weaving Mills Ltd. reported in (2008) 296 ITR 53 (Madras) and the Supreme Court's judgment in the assessee's own case reported in (2008) 301 ITR 434 (SC). The assessee filed a memo stating that the ITAT's order of recall had attained finality, rendering the impugned order non-existent. Revenue's Contention: The judgment records no specific arguments from the Revenue regarding the substantial questions of law. However, the procedural history indicates the Revenue had appealed against the ITAT's order recalling its earlier order.

Which sections of the Income-tax Act were involved?

Section 115J,Section 260-A,Section 254(2)

AI-generated summary — verify with the full judgment below

TCA No. 583 of 2021 IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED : 17.12.2021 CORAM : THE HON'BLE MR. JUSTICE R. MAHADEVAN and THE HON'BLE MR. JUSTICE MOHAMMED SHAFFIQ T.C.A. No. 583 of 2021 M/s. Sree Ayyanar Spinning & Weaving Mills Ltd. Mallanginar 626 109.

.. Appellant Versus The Deputy Commissioner of Income Tax Madurai.

.. Respondent

Tax Case Appeal filed under Section 260-A of the Income Tax Act, 1961 against the order of the Income Tax Appellate Tribunal, Madras 'A' Bench, Chennai dated 21.06.2003 passed in ITA No.719/Mds/1994 for the Assessment Year 1989-90. For Appellant : Mr. S.Sridhar For Respondent : Mrs. V.Pushpa

Junior Standing Counsel JUDGMENT (Judgment of the Court was delivered by R. MAHADEVAN, J.) This tax case appeal is filed by the appellant-assessee, assailing the order dated 21.06.2003 passed in ITA No.719/Mds/1994 by the Income Tax Appellate Tribunal, "A" Bench, Chennai relating to the Assessment Year 1989-90. 1/5 https://www.mhc.tn.gov.in/judis TCA No. 583 of 2021 2. This Appeal is filed by the Appellate-Assessee by raising the following substantial questions of law:- "1. Whether on the facts and in the circumstances of the case the Tribunal was right in sustaining the order of the Lower authorities in reworking the book profits under Section 115J of the Income Tax Act for the relevant Assessment year in ignoring/excluding the depreciation charged to the profit and loss account consequent to the permissible change in the method of calculating such depreciation with a view to impose tax on the same? 2. Whether on the facts and in the circumstances of the case the Tribunal was right in their action in sustaining the said reworking of the computation as envisaged under Section 115J of the Act by removing/excluding the depreciation debited in the Profit and Loss account which represented the difference arose on account of change in method of providing the said depreciation in the books of account, as permitted and provided in Part II and III of Schedule VI to the Companies Act, 1956?” 3. When this appeal is taken up for consideration, the learned counsel for the appellant/assessee fairly submitted that the relief sought in this appeal has become infructuous, since the order, which is impugned herein no longer survives for consideration in view of the subsequent judgment rendered passed by this Court in CIT v. Sree Ayyanar Spinning and Weaving Mills Ltd reported in (2008) 296 ITR 53 (Madras) as well as the judgment dated 01.05.2018 of the supreme court in C.A. No. 3246 of 2008 in the case of the Appellant /Assessee's own case reported in (2008) 301 ITR 434 (SC). Stating 2/5 https://www.mhc.tn.gov.in/judis TCA No. 583 of 2021 so, the learned counsel has also filed a memo dated 17.12.2021, the relevant paragraphs of which, are usefully extracted below: “2. The impugned order in the present appeal is preferred against the order of the ITAT dated 09.12.1996 in I.T.A. No. 719/Mds/1994. The Appellant subsequently preferred a miscellaneous application in terms of section 254(2) of the Income Tax Act. In the said application, the original order of the ITAT dated 9.12.1996 was recalled for fresh adjudication vide order dated 31.01.2003 in M.P. No. 40/Mds/2000. 3. The Department has filed appeal in terms of section 260-A of the Act against the order of the ITAT recalling their original order in T.C.A. No. 2 of 2004. In order to protect the interest of the Appellant, the present appeal was filed belatedly against the original order of the ITAT dated 09.12.1996. 4. Subsequently, this Hon'ble Court vide its judgment dated 11.12.2006 reported in [296-ITR-53] allowed the appeal of the department nullifying the order of recall. 5. The said judgment was a subject matter of appeal before the Apex Court in C.A. No. 3246/2008. The Hon'ble Apex Court vide judgment dated 01.05.2008 reported in 301-ITR-434 had upheld the action of the ITAT in recalling its order while setting aside the appeal back to file of this Hon'ble Court for fresh adjudication on merits. 6. In consequence to the directions issued by the Apex Court, this Hon'ble Court vide judgment dated 12.08.2014 in T.C.A. No. 2 of 2004 reported in 54 taxmann.com 73 dismissed the appeal of the department preferred against the order of the ITAT in MP proceedings recalling its earlier order. 7. Therefore, it is submitted that the impugned order in the present appeal no longer survives in view of the finality obtained to the MP proceedings before 3/5 https://www.mhc.tn.gov.in/judis TCA No. 583 of 2021 ITAT, Chennai which recalled the impugned order for fresh adjudication. 8. In light of the facts and circumstances, it is prayed that this Hon'ble Bench may dispose off the present appeal as infructuous in view of the non- existence of the impugned order and thus render justice.” 4. Recording the above submission and the memo dated 17.12.2021 filed on behalf of the appellant /assessee, this tax case appeal is dismissed as having become infructuous. No costs. [R.M.D., J.] [M.S.Q., J.] 17.12.2021 Internet : Yes / No

Index : Yes / No Maya/rsh To 1.The Income Tax Appellate Tribunal Chennai 'A' Bench. 2.The Deputy Commissioner of Income Tax Madurai. 4/5 https://www.mhc.tn.gov.in/judis TCA No. 583 of 2021 R. MAHADEVAN, J and MOHAMMED SHAFFIQ, J Maya/rsh T.C.A. No. 583 of 2021 17.12.2021 5/5 https://www.mhc.tn.gov.in/judis

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