R.LAKSHMINARAYANAMOORTHY vs. THE COMMISSIONER OF INCOME T

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TCA/628/2019HC Madras29 April 2021Bench: Hon`ble Mr Justice M.DURAISWAMY5 pages
AI SummaryWithdrawn

What did the High Court hold?

The High Court did not decide the substantial question of law framed for consideration. The Court was informed by the learned counsel for the appellant that the assessee had been issued Form-3 under the Direct Tax Vivad Se Vishwas Act, 2020. Consequently, the learned counsel for the appellant sought permission to withdraw the appeal. In view of this submission, the Tax Case Appeal was dismissed as withdrawn. No costs were awarded. The specific finding of the ITAT that the amounts were taxable as deemed dividend under Section 2(22)(e) was not adjudicated upon by the High Court.

What were the facts?

The assessee, R. Lakshminarayanamoorthy, filed an appeal before the High Court of Judicature at Madras against an order dated 03.07.2019 passed by the Income Tax Appellate Tribunal (ITAT), Madras "D" Bench. The appeal pertains to assessment year 2011-12. The dispute involves amounts received by the appellant from Chroma Print (India) Pvt. Ltd., for which the appellant had mortgaged his properties as collateral security and furnished a personal guarantee for credit limits from the bank. The ITAT had held these amounts to be taxable as "deemed dividend" under Section 2(22)(e) of the Income Tax Act, 1961. The High Court admitted the appeal on a substantial question of law.

What were the issues?

1. Whether the Appellate Tribunal is right in law in holding that the amounts received by the appellant from Chroma Print (India) Pvt. Ltd. are eligible to tax as “deemed dividend” within the meaning of Section 2(22)(e) of the Act, considering the appellant had mortgaged all his properties as collateral security and furnished a personal guarantee for the company's credit limits from the bank? Assessee's Contention: The assessee argued that the amounts received were not taxable as deemed dividend under Section 2(22)(e) of the Act, based on the circumstances of providing collateral security and personal guarantee for the company's bank credit limits. Revenue's Contention: The revenue contended that the amounts received by the assessee from the company were indeed taxable as deemed dividend under Section 2(22)(e) of the Act.

Which sections of the Income-tax Act were involved?

Section 260A,Section 2(22)(e)

AI-generated summary — verify with the full judgment below

Tax Case Appeal No.628 of 2019 IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED : 29.04.2021 CORAM THE HON'BLE MR.JUSTICE M. DURAISWAMY AND THE HON'BLE MRS.JUSTICE R. HEMALATHA Tax Case Appeal No.628 of 2019 R.Lakshminarayanamoorthy 9/66, Gandhi Nagar, G.M. Mills Post, Thudiyalur, Coimbatore – 641 029.

... Appellant Vs.

The Commissioner of Income Tax, Coimbatore. ... Respondent

Tax Case Appeal filed under Section 260A of the Income Tax Act, 1961 against the order of the Income Tax Appellate Tribunal, Madras "D" Bench, dated 03.07.2019 passed in I.T.A.No.2783/Chny/2018. For Appellant : Mr.R.Kumar For Respondent : Mr.T.R.Senthil Kumar

Senior Standing Counsel and Mrs.K.G.Usha Rani Standing Counsel Page 1/5 https://www.mhc.tn.gov.in/judis/ Tax Case Appeal No.628 of 2019 J U D G M E N T (Delivered by M.DURAISWAMY, J.) This appeal filed by the assessee under Section 260A of the Income Tax Act, 1961 ('the Act' for brevity), is directed against the order dated 03.07.2019 passed by the Income Tax Appellate Tribunal, Madras "D" Bench, ('the Tribunal' for brevity) in I.T.A.No.2783/Chny/2018 for the assessment year 2011-12. The above appeal has been admitted on 28.08.2019 on the following Substantial Question of Law: "Whether the Appellate Tribunal is right in law in holding that the amounts received by the appellant from the company Chroma Print (India) Pvt. Ltd. for whose credit limits from the Bank the appellant had mortgaged all his properties as collateral security and furnished a personal guarantee are eligible to tax as “deemed divided” within the meaning of Section 2(22)(e) of the Act?” 2. We have heard Mr.R.Kumar, learned counsel for the appellant/assessee and Mr.T.R.Senthil Kumar, learned Senior Standing Counsel and Mrs.K.G.Usha Rani, learned Standing Counsel for the respondent/Revenue. Page 2/5 https://www.mhc.tn.gov.in/judis/ Tax Case Appeal No.628 of 2019 3. It may not be necessary for this Court to decide the Substantial Question 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. 4. We are informed by the learned counsel for the appellant/ assessee that the assessee had already been issued with Form-3 on 21.12.2020 and the learned counsel for the appellant seeks permission of this Court to withdraw the appeal. 5. In view of the submission made by the learned counsel for the appellant, the Tax Case Appeal stands dismissed as withdrawn. No costs. [M.D., J.] [R.H., J.] 29.04.2021 mkn Page 3/5 https://www.mhc.tn.gov.in/judis/ Tax Case Appeal No.628 of 2019 Index : Yes/No

Internet : Yes

To 1. Income Tax Appellate Tribunal, Madras "D" Bench 2.The Commissioner of Income Tax, Coimbatore. Page 4/5 https://www.mhc.tn.gov.in/judis/ Tax Case Appeal No.628 of 2019 M. DURAISWAMY, J. and R. HEMALATHA, J. mkn Tax Case Appeal No.628 of 2019

29.04.2021 Page 5/5 https://www.mhc.tn.gov.in/judis/

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