COMMISSIONER OF INCOME TAX vs. SENTHIL PAPAIN AND FOOD PRODUCTS PRIVATE LIMITED

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TCA/65/2023HC Madras15 October 2024Bench: Honourable Mr Justice R. SURESH KUMAR3 pages
AI SummaryDismissed

What did the High Court hold?

The High Court dismissed the appeals filed by the Revenue. The Court noted that the matters were covered under the Low Tax Effect as per Circular No.9/2024 dated 17.09.2024. Consequently, the appeals were dismissed on this procedural ground. The Court explicitly stated that the substantial question of law arising in these appeals is kept open to be decided at a later point of time. No order was made as to costs. The specific finding on the merits of the addition under Section 40(A)(2) by the ITAT, and the reasoning behind it, were not addressed by the High Court due to the dismissal on the ground of low tax effect. The operative direction was to dismiss the appeals.

What were the facts?

These are two tax case appeals filed by the Revenue against the order of the Income Tax Appellate Tribunal (ITAT), Chennai, dated 28.09.2022, passed in I.T.A.No.467/CHNY/2012 and I.T.A.No.465/CHNY/2012. The appeals were admitted by the High Court on 15.02.2023. The respondent assessee is Senthil Papain & Food Products Pvt. Ltd. The appeals challenge the ITAT's deletion of additions made under Section 40(A)(2) of the Income Tax Act, 1961. The amount in dispute is not specified. The procedural history involves the ITAT's order which is now under challenge before the High Court.

What were the issues?

1. Whether on the facts and circumstances of the case, the ITAT was right in deleting the additions made under Section 40(A)(2) without considering that the assessee has not produced any contemporaneous evidence or materials to prove that the payment made are reasonable and exclusively for the purpose of business? (Question of law/mixed law and fact, turning on Section 40(A)(2) of the Income Tax Act, 1961). Assessee's arguments: Not recorded in the judgment. Revenue's arguments: The Revenue contended that the ITAT erred in deleting the additions made under Section 40(A)(2) because the assessee failed to produce contemporaneous evidence or materials to substantiate that the payments were reasonable and exclusively for business purposes. The Revenue relied on the principles governing disallowances under Section 40(A)(2).

Which sections of the Income-tax Act were involved?

Section 40(A)(2),Section 260-A

AI-generated summary — verify with the full judgment below

T.C.A.Nos.65 & 66 of 2023 IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 15.10.2024 CORAM : THE HONOURABLE MR.JUSTICE R. SURESH KUMAR AND THE HONOURABLE MR.JUSTICE C. SARAVANAN T.C.A.Nos.65 & 66 of 2023 Commissioner of Income Tax Appellant Central Circle – 1, Coimbatore. .. in both T.C.As Vs. Senthil Papain & Food Products Pvt. Ltd. 107-A, Sengupta Road Ramnagar, Coimbatore 641 009 Respondent PAN: AACCS 7187 B .. in both T.C.As Prayer in T.C.A.No.65 of 2023: Appeal filed under Section 260-A of the Income Tax Act, 1961, against the order of Income Tax Appellate Tribunal, “B” Bench, Chennai dated 28.09.2022 passed in I.T.A.No.467/CHNY/2012; and Prayer in T.C.A.No.66 of 2023: Appeal filed under Section 260-A of the Income Tax Act, 1961, against the order of Income Tax Appellate Tribunal, “B” Bench, Chennai dated 28.09.2022 passed in I.T.A.No.465/CHNY/2012. For the Appellant : Mr.Karthik Ranganathan in both T.C.As Senior Standing Counsel For the Respondent in both T.C.As : Mr.A.S.Sriraman Page 1 of 3 https://www.mhc.tn.gov.in/judis T.C.A.Nos.65 & 66 of 2023 COMMON JUDGMENT (Order of the Court was made by R.SURESH KUMAR, J.) These tax case appeals were admitted on 15.02.2023 by this Court on the following substantial question of law:- "1. Whether on the facts and circumstances of the case the ITAT was right in deleting the additions made under Section 40(A)(2) without considering that the assessee has not produced any contemporaneous evidence or materials to prove that the payment made are reasonable and exclusively for the purpose of business?" 2. It is submitted by the learned Senior Standing Counsel appearing for the appellant Revenue that these matters are covered under the Low Tax Effect as per the recent Circular dated 17.09.2024, in Circular No.9/2024. 3. Hence, these appeals stand dismissed, as covered under the low tax effect and the substantial question of law arising in these appeals is kept open to be decided at the later point of time. There shall be no order as to costs. (R.S.K., J.) (C.S.N, J) 15.10.2024 Neutral Citation:Yes/No drm Page 2 of 3 https://www.mhc.tn.gov.in/judis T.C.A.Nos.65 & 66 of 2023 R. SURESH KUMAR, J. AND C. SARAVANAN

, J.

(drm) T.C.A.Nos.65 & 66 of 2023 15.10.2024 Page 3 of 3 https://www.mhc.tn.gov.in/judis

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