PRINCIPAL COMMISSIONER OF vs. R.S.ENTERPRISES

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TCA/621/2016HC Madras28 July 2021Bench: Hon`ble Mr Justice M.DURAISWAMY6 pages
AI SummaryWithdrawn

What did the High Court hold?

The High Court did not decide the substantial questions of law framed for consideration. This was due to subsequent developments, specifically the enactment of the Direct Tax Vivad Se Vishwas Act, 2020. The learned counsel for the respondent/assessee submitted that the assessee had availed the Vivad Se Vishwas Scheme and had been issued Form-3 on April 15, 2021. Recording this submission, the High Court held that nothing further survived for adjudication in the appeal. Therefore, the Tax Case Appeal was disposed of. No costs were awarded. The specific findings of the ITAT on the disallowance under Section 40(a)(ia) and the interpretation of 'payable' were not reviewed or affirmed by the High Court.

What were the facts?

The Revenue, Principal Commissioner of Income Tax - 7, Chennai, filed an appeal under Section 260A of the Income Tax Act, 1961, against the order dated January 20, 2016, passed by the Income Tax Appellate Tribunal (ITAT), Chennai "B" Bench. The appeal pertains to assessment year 2010-2011 and challenges the ITAT's deletion of a disallowance made under Section 40(a)(ia) of the Act. The amount in dispute is not explicitly stated. The procedural history involves the ITAT's decision which is now under challenge before the High Court.

What were the issues?

The Tribunal had to decide the following substantial questions of law: 1. Whether the ITAT was right in deleting the disallowance made under Section 40(a)(ia) of the Act, considering that the term 'payable' could include amounts paid during the previous year. 2. Whether the ITAT was correct in holding that Section 40(a)(ia) applies only to amounts payable as of March 31st of the relevant previous year, and not to amounts payable at any time during that year. 3. Whether the ITAT erred in ignoring the ratio of the decision in *Ryatar Sahakari Sakkare Karkhane Niyamit v. CIT* (2016) 67 taxmann.com 283 (Karnataka), which held that Section 40(a)(ia) applies to amounts 'payable' and not just those 'paid'. 4. Whether the ITAT was correct in not appreciating the ratio of decisions in *CIT vs. M/s. Crescent Export Syndicate* (216 Taxman 258 (Cal)) and *CIT vs. Sekander Khan N Turnvar* (33 Taxmann.com 133 (Gujarat)), as discussed in the Mumbai ITAT's order in *ACIT, Cir 4(2) Mumbai vs. Risti Strock & Shares (P) Ltd.* (ITA No.112/Mum/2012), and whether the ITAT's order was perverse in light of *Sudharshan Silk Sarees vs. CIT* (306 ITR 205 (SC)). The Revenue argued that the statutory provisions of Section 40(a)(ia) are clear and the term 'payable' includes amounts paid during the previous year. The Revenue also relied on the cited case law to support its contention that the ITAT erred in its interpretation. The assessee's arguments are not explicitly recorded in detail, but it is implied they supported the ITAT's order.

Which sections of the Income-tax Act were involved?

Section 260A,Section 40(a)(ia)

AI-generated summary — verify with the full judgment below

Tax Case Appeal No.621 of 2016 IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED : 28.07.2021 CORAM THE HON'BLE MR.JUSTICE M. DURAISWAMY AND THE HON'BLE MRS.JUSTICE R. HEMALATHA Tax Case Appeal No.621 of 2016 Principal Commissioner of Income Tax - 7, 121, Mahatma Gandhi Road, Chennai. ... Appellant v. M/s. R.S. Enterprises, 20, Alagesan Street, West Tambaram, Chennai - 600 045. PAN : AAH FR 8636 G

... Respondent

Tax Case Appeal filed under Section 260A of the Income Tax Act, 1961 against the order of the Income Tax Appellate Tribunal, Chennai "B" Bench, dated 20.01.2016 passed in I.T.A.No.87/Mds/2015. For Appellant : Mr.Karthik Ranganathan, Senior Standing Counsel Assisted by S.Rajesh

For Respondent : Mr.R.Kumar for M/s.T.N. Seetharaman Page 1/6 http://www.judis.nic.in Tax Case Appeal No.621 of 2016 J U D G M E N T (Delivered by M.DURAISWAMY, J.) This appeal filed by the Revenue under Section 260A of the Income Tax Act, 1961 ('the Act' for brevity), is directed against the order dated 20.01.2016 passed by the Income Tax Appellate Tribunal, Chennai "B" Bench, ('the Tribunal' for brevity) in I.T.A.No.87/Mds/2015 for the assessment year 2010-2011. 2. The appellant has raised the following substantial question of law in the above appeal:- " (i) Whether, on the facts and circumstances of the case, the ITAT was right in law in deleting the disallowance made u/s.40(a)(ia) in the year under consideration as the statutory provisions are amply clear and in the context of section 40(a)(ia) of the Act, the term 'payable' would include amounts which are paid during the previous year? (ii) Whether, on the facts and circumstances of the case, the ITAT was right in law in holding that the Page 2/6 http://www.judis.nic.in Tax Case Appeal No.621 of 2016 provisions of section 40(a)(ia) of the Act cover only the amounts which are payable as on 31st March of a previous year relevant to the assessment year under consideration and not amounts which are payable at any time during he relevant previous year? (iii) Whether, on the facts and circumstances of the case and in law, the ITAT erred in not appreciating and ignoring the ratio of decision in the case of Ryatar Sahakari Sakkare Karkhane Niyamit v. CIT (2016) 67 taxmann.com 283 (Karnataka) wherein it is held that section 40(a)(ia) cannot be interpreted to mean that it applies only to amounts "payable" and not to those which have been "paid"? (iv) Whether, on the facts and circumstances of the case and in law, the ITAT was correct in not appreciating and ignoring the ratio of decision in the case of CIT vs. M/s.Crescent Export Syndicate 216 Taxman 258 (Cal) and CIT vs. Sekander Khan N Turnvar 33 Taxmann.com 133 (Gujarat ) which constitutes ratio decidendi on the issue as discussed in order dated 02.08.2013 of Mumbai ITAT in the case of ACIT, Cir 4(2) Mumbai vs. Risti Strock & Shares (P) Ltd. - ITA No.112/Mum/2012 and further whether order of ITAT had turned perverse in view of ratio Page 3/6 http://www.judis.nic.in Tax Case Appeal No.621 of 2016 of decision in the case of Sudharshan Silk Sarees vs. CIT- 306 ITR 205(SC)?" 3. We have heard Mr.Karthik Ranganathan, learned Senior Standing Counsel for the appellant/Revenue and Mr.R.Kumar learned counsel for the respondent/assessee. 4. It may not be necessary for this Court to decide the Substantial Questions of Law framed for consideration on account of certain subsequent developments. The Government of India enacted the Direct Tax Vivad Se Vishwas Act, 2020 (Act 3 of 2020) to provide for resolution of disputed tax and for matters connected therewith or incidental thereto. The Act of the Parliament received the assent of the President on 17th March 2020 and published in the Gazette of India on 17th March 2020. 5. Learned counsel for the respondent/assessee submitted that the assessee had availed the Vivad Se Vishwas Scheme and that the respondent/assessee had already been issued with Form–3 on 15.04.2021. Page 4/6 http://www.judis.nic.in Tax Case Appeal No.621 of 2016

6.

.Since the respondent/assessee had been issued with Form-3, nothing survives for adjudication in the above appeal. Recording the submission made by the learned counsel for the respondent/assessee, the Tax Case Appeal stands disposed of. No costs. [M.D., J.] [R.H., J.] 28.07.2021 (1/2)

Index : Yes/No

Internet : Yes

Rj To 1. The Income Tax Appellate Tribunal, Chennai "B" Bench 2. The Principal Commissioner of Income Tax - 7, 121, Mahatma Gandhi Road, Chennai. Page 5/6 http://www.judis.nic.in Tax Case Appeal No.621 of 2016 M. DURAISWAMY, J. and R.HEMALATHA, J. Rj Tax Case Appeal No.621 of 2016

28.07.2021 (1/2) Page 6/6 http://www.judis.nic.in

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