PRINCIPAL COMMISSIONER OF vs. M/S.K.P.S.OIL MILLS

TCA/66/2017HC Madras29 August 2019Bench: Hon`ble Mr Justice T. S. SIVAGNANAM4 pages

AI SummaryDismissed

What did the High Court hold?

The High Court dismissed the appeal filed by the Revenue. The dismissal was based on the submission by the Revenue that the appeal was not being pursued due to low tax effect, as per CBDT Circular No. 17/2019. The Court noted that the tax effect was below the threshold limit fixed by the circular. Consequently, the appeal was dismissed on this ground. The substantial question of law framed at the time of admission was left open. Liberty was granted to the Revenue to seek restoration of the appeal if the tax effect was found to be above the threshold limit, to be heard and decided on merits. No costs were awarded.

What were the facts?

The Revenue, Principal Commissioner of Income Tax 2, Coimbatore, filed an appeal under Section 260A of the Income-tax Act, 1961, against an order dated 09.06.2016 passed by the Income Tax Appellate Tribunal (ITAT), Chennai. The appeal pertains to the assessment year 2012-13 and challenges the ITAT's decision in ITA No. 2326/Mds/2015. The assessee is M/s. K.P.S. Oil Mills, Erode. The High Court admitted the appeal on a substantial question of law on 13.02.2017. The dispute involves the disallowance of losses arising from local sales, as opposed to high seas transactions, and the deductibility of LC charges related to oil imports.

What were the issues?

1. Whether on the facts and circumstances of the case, the Appellate Tribunal rendered a perverse order by observing that the Assessing Officer felt that the entire transaction was only an accommodation entry, and disallowed the entire claim of loss without appreciating that the Assessing Officer only disallowed losses arising out of local sales and not those from high seas transactions by LC receipts, as LC charges relating to import of oil were not disallowable? (Question of law and fact, concerning disallowance of losses and deductibility of LC charges). Assessee's Contention: Not recorded in the judgment. Revenue's Contention: The Revenue argued that the appeal was not being pursued due to low tax effect, citing CBDT Circular No. 17/2019, which increased the monetary limit for appeals to the High Court to Rs. 1 Crore. The tax effect in this case was stated to be below this threshold.

Which sections of the Income-tax Act were involved?

Section 260A

AI-generated summary — verify with the full judgment below

T.C.A.No.66 of 2017 IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED : 29.08.2019 CORAM THE HONOURABLE MR.JUSTICE T.S.SIVAGNANAM and THE HONOURABLE MRS.JUSTICE V.BHAVANI SUBBAROYAN Tax Case Appeal No.66 of 2017 Principal Commissioner of Income Tax 2, No.63, Race Course Road, Coimbatore. .. Appellant -vs- M/s.K.P.S.Oil Mills, No.117, Bhavani Road, Erode-638 004. PAN: AAF FK 2695 A .. Respondent Appeal under Section 260A of the Income-tax Act, 1961, against the order dated 09.06.2016, made in I.T.A.No.2326/Mds/2015 on the file of the Income Tax Appellate Tribunal 'B' Bench, Chennai for the assessment year 2012-13. For Appellant : Mr.T.R.Senthil Kumar, Senior Standing Counsel : assisted by Ms.K.G.Usharani, Standing Counsel

****** 1/4 http://www.judis.nic.in T.C.A.No.66 of 2017 JUDGMENT (Delivered by T.S.Sivagnanam, J.) This appeal filed by the Revenue under Section 260A of the Income-tax Act, 1961 is directed against the order dated 09.06.2016, made in I.T.A.No.2326/Mds/2015 on the file of the Income Tax Appellate Tribunal 'B' Bench, Chennai for the assessment year 2012-13. 2.The appeal has been admitted on 13.02.2017, on the following substantial question of law:- “Whether on the facts and circumstances of the case, the Appellate Tribunal rendered a perverse order by observing that the Assessing Officer felt that the entire transaction was only an accommodation entry he have disallowed the entire claim of loss without appreciating the fact that the Assessing Officer only disallowed the losses arising out of local sales and not that of high seas transaction by the LC receipts as the LC charges relating to import of oil was not a disallowable one?” 3.Heard Mr.T.R.Senthil Kumar, learned Senior Standing Counsel assisted by Ms.K.G.Usharani, learned Standing Counsel for the appellant. 2/4 http://www.judis.nic.in T.C.A.No.66 of 2017 4.The learned Senior Standing Counsel for the appellant submits that the above appeal is not pursued by the Revenue on account of the low tax effect in terms of Circular No.17/2019, dated 08.08.2019 issued by the Central Board of Direct Taxes. By the said Circular, the monetary limit for filing or pursuing an appeal before the High Court has been increased to Rs.1 Crore. It is further submitted that the tax effect in this case is less than the threshold limit. 5.In the light of the said submissions, the above tax case appeal is dismissed on account of the low tax effect. The substantial question of law framed is left open. In the event the tax effect is above the threshold limit fixed in the said circular, liberty is granted to the Revenue to make a mention to this Court to restore the appeal to be heard and decided on merits. No costs. (T.S.S., J.) (V.B.S., J.) 29.08.2019 Index : Yes/No Speaking/Non-Speaking Order abr 3/4 http://www.judis.nic.in T.C.A.No.66 of 2017 T.S.Sivagnanam, J. and V.Bhavani Subbaroyan, J. (abr) To 1.M/s.K.P.S.Oil Mills, No.117, Bhavani Road, Erode-638 004. 2.The Income Tax Appellate Tribunal 'B' Bench, Chennai. T.C.A.No.66 of 2017 29.08.2019 4/4 http://www.judis.nic.in

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