COMMISSIONER OF INCOME TAX vs. SUNDARAM CLAYTON

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TCA/60/2016HC Madras13 July 2020Bench: THE HON'BLE DR.JUSTICE VINEET KOTHARI4 pages
AI SummaryWithdrawn

What did the High Court hold?

The High Court noted that the learned Senior Standing Counsel for the Revenue brought to its notice Circular No.17/2019 issued by the Central Board of Direct Taxes (CBDT). This circular mandates that appeals shall not be filed or pursued by the Department before the High Court in cases where the tax effect does not exceed Rs. 1,00,00,000/-. The Court was informed that in the present case, the tax effect was less than this monetary limit. Consequently, the High Court dismissed the appeal filed by the Revenue as withdrawn. 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, Chennai) filed a Tax Case Appeal before the High Court of Judicature at Madras, challenging an order dated 08.11.2004 passed by the Income Tax Appellate Tribunal (ITAT), B Bench, Chennai, in ITA No.696/MDS/1996. The appeal concerned the assessment year(s) not explicitly stated but related to the ITAT's decision. The core of the dispute involved whether a transaction was hit by Section 50 of the Income Tax Act, 1961, concerning the sale of depreciable assets as part of an undertaking. The High Court was informed of a CBDT Circular No.17/2019, dated 08.08.2019, which stipulated that appeals should not be filed or pursued if the tax effect does not exceed Rs. 1,00,00,000/-.

What were the issues?

1. Whether, on the facts and circumstances of the case, the Tribunal was right in holding that the transaction is not hit by the provision of Section 50 of the Income Tax Act, 1961, even though the assessee had clearly demarcated the depreciable assets sold during the year as part of the sale of the undertaking and the transfer price was also fixed after taking into account the value of the depreciable assets and immovable assets of the assessee company? Assessee's Contentions: Not recorded in the judgment. Revenue's Contentions: The revenue argued that the transaction was hit by Section 50 of the Income Tax Act, 1961, as the assessee had demarcated depreciable assets sold as part of the undertaking, and the transfer price was fixed considering these assets. The revenue sought to challenge the ITAT's finding on this point.

Which sections of the Income-tax Act were involved?

Section 50

AI-generated summary — verify with the full judgment below

Order dt.13.07.2020 in TCA No.60 of 2016 1/4 IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 13.07.2020 CORAM THE HON'BLE DR.JUSTICE VINEET KOTHARI AND THE HON'BLE MR.JUSTICE KRISHNAN RAMASAMY TCA Nos.60 and 61 of 2016 Commissioner of Income Tax, Chennai ... Appellant vs. M/s.Sundaram Clayton Ltd. No.24 (Old No.8) Haddows Road, Chennai 600 006 ... Respondent Prayer ::- TCA No.60/2016 filed against the order of the Income Tax Appellate Tribunal B Bench, Chennai dated 8.11.2004 in ITA No.696/MDS/1996 For appellant : Mr.J.Narayanasamy, Senior Standing counsel For respondent : Mr.R.Venkatnarayanan, for M/s.Subaraya Aiyar & Padmanabhan ORDER (Made by DR.VINEET KOTHARI, J.) The Court was held by Video Conference, as per the Resolution of the Full Court dated 3 July 2020, by Judges at their respective residence and the counsel, staff of the Court appearing from their respective residences. http://www.judis.nic.in Order dt.13.07.2020 in TCA No.60 of 2016 2/4 2. This Tax Case Appeal has been filed by the Revenue, calling in question the correctness of the order passed by the Income Tax Appellate Tribunal B Bench, Chennai dated 8.11.2004 in ITA No.696/MDS/1996, by raising the following substantial questions of law: "Whether on the facts and circumstances of the case, the Tribunal was right in holding that the transaction is not hit by the provision of Section 50, even though the assessee had clearly demarcated the depreciable assets sold during the year, as part of the sale of the undertaking and the transfer price was also fixed after taking into account the value of the depreciable assets and the immovable assets of the assessee company ?"” 3. When the matter is taken up for hearing, learned Senior Standing Counsel brought to our notice the Circular instruction issued by the Central Board of Direct Taxes vide Circular No.17/2019 dated 8th August 2019, 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). http://www.judis.nic.in Order dt.13.07.2020 in TCA No.60 of 2016 3/4 4. In the instant case, the tax effect is said to be less than the monetary limit imposed and therefore, the Appeal filed by the Revenue is dismissed as withdrawn, keeping open the substantial questions of law for determination in appropriate cases. No costs. (V.K.,J.) (K.R.,J.) 13.07.2020

kpl/tar To The Income Tax Appellate Tribunal “B” Bench, Chennai http://www.judis.nic.in Order dt.13.07.2020 in TCA No.60 of 2016 4/4 DR.VINEET KOTHARI, J. and

KRISHNAN RAMASAMY, J. (tar) TCA No.60 of 2016 13.07.2020 http://www.judis.nic.in

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