COMMISSIONER OF INCOME TAX vs. M/S.TAMILNADU FOOD GRAINS MA

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TCA/590/2021HC Madras17 December 2021Bench: 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. The learned counsel for the appellant/Revenue brought to the court's notice Circular No. 17/2019 dated August 8, 2019, issued by the Central Board of Direct Taxes (CBDT). This circular stipulates 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/- (Rupees One Crore). The Revenue submitted that the tax effect in the present appeal was less than this threshold limit. Consequently, the High Court dismissed the appeal as withdrawn, stating that the substantial questions of law were kept open for determination in appropriate cases. No costs were awarded.

What were the facts?

The Revenue, Commissioner of Income Tax, Circle-I, Madurai, filed a Tax Case Appeal (TCA) under Section 260A of the Income Tax Act, 1961, against an order dated May 31, 2016, passed by the Income Tax Appellate Tribunal (ITAT), Madras 'A' Bench. The appeal pertains to assessment year 2011-12 and concerns the assessee, M/s. Tamilnadu Food Grains Marketing Yard. The dispute revolves around the computation of depreciation, specifically whether grants-in-aid received towards asset acquisition should be deducted from the cost of assets. The ITAT's order was in favour of the assessee. The appeal was filed before the High Court of Judicature at Madras.

What were the issues?

The Tribunal had to decide the following substantial questions of law: 1. Whether, on the facts and in law, the Tribunal was right in holding that grants-in-aid received for asset acquisition should not be deducted from the cost of assets when computing depreciation under Section 32 read with Explanation 10 to Section 43(1) of the Income Tax Act, 1961. 2. Whether, on the facts and in law, the Tribunal was right in holding that incentive in the form of grants-in-aid cannot be considered as payment directly or indirectly to meet a portion of the actual cost of an asset, despite a letter from the Ministry of Commerce & Industry providing for it. The Revenue contended that grants-in-aid should be deducted from the cost of assets for depreciation calculation. The assessee's arguments are not explicitly detailed in the provided text, but the ITAT's decision implies they argued against such deduction. The Revenue also relied on Clause D of a letter dated November 7, 2004, issued by the Ministry of Commerce & Industry.

Which sections of the Income-tax Act were involved?

Section 260A,Section 32,Section 43(1)

AI-generated summary — verify with the full judgment below

T.C.A. No. 590 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. 590 of 2021 Commissioner of Income Tax Circle-I Madurai-625 002. ... Appellant Vs. M/s. Tamilnadu Food Grains Marketing Yard Madurai-Alanganallur Road Sikkandarachavadi Madurai – 625 018. PAN : AAB CT 1101 F ... Respondent Tax Case Appeal filed under Section 260A of the Income Tax Act, 1961 against the order dated 31.05.2016 passed by the Income Tax Appellate Tribunal, Madras “A” Bench, in I.T.A. No. 635/Mds/2016 for the assessment year 2011-12. For Appellant : Mrs. V.Pushpa Junior Standing Counsel For Mr. M.Swaminathan Senior Standing Counsel

JUDGMENT 1/4 https://www.mhc.tn.gov.in/judis T.C.A. No. 590 of 2021 (Judgment was delivered by R. MAHADEVAN, J.) This tax case appeal has been filed by the appellant / Revenue, calling in question the correctness of the order dated 31.05.2016 passed by the Income Tax Appellate Tribunal, 'A' Bench, Chennai, in I.T.A. No. 635/Mds/2016, relating to the assessment year 2011-12, by raising the following substantial questions of law:- (i) Whether on the facts and circumstances of the case and in law, Tribunal was right and justified in holding that grants-in- aid received towards acquisition of assets should not be deducted from cost of assets while computing depreciation under Section 32 read with explanation 10 to section 43(1)? (ii) Whether on the facts and circumstances of the case and in law, Tibunal was right and jusitifed in holding that incentive in the form of grants-in-aid cannot be considered as payment directly or indirectly to meet portion of actual cost of asset, whereas clause D. of letter No.5/28/62004 – DBA 1/07.11.2004 issued by Ministry of Commerce & Industry specifically provides for it?” 2/4 https://www.mhc.tn.gov.in/judis T.C.A. No. 590 of 2021 2. 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. 3. 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 cases. No costs. [R.M.D,J.] [M.S.Q, J.] 17.12.2021

Internet : Yes

Index : Yes / No Maya 3/4 https://www.mhc.tn.gov.in/judis T.C.A. No. 590 of 2021 R. MAHADEVAN, J. AND MOHAMMED SHAFFIQ, J. Maya To 1. The Commissioner of Income Tax Circle-I Madurai-625 002. 2. The Income Tax Appellate Tribunal, Chennai 'A' Bench. Tax Case Appeal No. 590 of 2021 Dated : 17.12.2021 4/4 https://www.mhc.tn.gov.in/judis

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