PRINCIPAL COMMISSIONER OF vs. M/S. KWALITY SPINNING MILLS

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TCA/662/2017HC Madras23 October 2024Bench: Honourable Mr Justice R. SURESH KUMAR4 pages
AI SummaryDismissed

What did the High Court hold?

The High Court dismissed the Tax Case Appeal filed by the Revenue. The dismissal was based on a submission by the Revenue's learned Standing Counsel, citing CBDT's Circular No.9 of 2024. This circular states that if the tax effect is below a certain monetary limit, the appeal can be disposed of without adjudicating the substantial questions of law. Consequently, the court recorded the submission and dismissed the appeal for low tax effect. The substantial questions of law were expressly kept open for adjudication at an appropriate stage. No costs were awarded. The specific findings or reasoning on the merits of the two substantial questions of law were not addressed due to the dismissal on procedural grounds.

What were the facts?

The Revenue, represented by the Principal Commissioner of Income Tax, filed a Tax Case Appeal before the High Court of Judicature at Madras, challenging an order of the Income Tax Appellate Tribunal (ITAT), Chennai. The appeal pertains to the assessment year(s) not explicitly stated but relates to the ITAT's order in ITA.No.1837/Mds/2016 dated 29/03/2017. The dispute involves the assessment of capital gains and the allowance of cost of improvement. The Revenue's appeal was filed under Section 260A of the Income Tax Act, 1961. During the proceedings, the Revenue's counsel brought to the court's notice a CBDT Circular No.9 of 2024 dated 17.09.2024, indicating that the tax effect in this case was below the monetary limit for appeals.

What were the issues?

The Tribunal had to decide two substantial questions of law raised by the Revenue: 1. Whether the ITAT was correct in not considering Section 2(47) of the Income Tax Act, 1961, and Section 53A of the Transfer of Property Act, 1882, to deem a transfer and assess capital gains in the financial year 2008-09, given the assessee's admission of receiving full consideration and handing over property documents in that year. 2. Whether the ITAT was correct in directing the Assessing Officer (AO) to allow Rs.3,00,000/- towards the cost of improvement on an estimated basis, despite the assessee not providing supporting evidence. The Revenue argued that the ITAT erred by not applying the provisions related to deemed transfer and capital gains assessment. The Revenue also contended that the ITAT's direction to allow the cost of improvement without evidence was incorrect. The judgment does not record specific arguments from the assessee on these points.

Which sections of the Income-tax Act were involved?

Section 260A,Section 2(47),Section 53A

AI-generated summary — verify with the full judgment below

T.C.A.No.662 of 2017 IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 23.10.2024 CORAM THE HON'BLE MR.JUSTICE R.SURESH KUMAR AND THE HON'BLE MR.JUSTICE C.SARAVANAN Tax Case Appeal No.662 of 2017 Principal Commissioner of Income Tax No.63, Race Course Road, Coimbatore. .... Appellant Vs. M/s.Kwality Spinning Mills Ltd Udumalpet Road, Pollachi. .... Respondent ----- Tax Case Appeal filed under Section 260A of the Income Tax Act, 1961 against the order of the Income Tax Appellate Tribunal, 'B' Bench Chennai, dated 29/03/2017 in ITA.No.1837/Mds/2016. For Appellant : Mr.Karthik Ranganathan Senior Standing Counsel J U D G M E N T (Delivered by R.SURESH KUMAR, J.) 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, Chennai by raising the following substantial questions of law: 1 of 4 https://www.mhc.tn.gov.in/judis T.C.A.No.662 of 2017 1. Whether the ITAT was right in not considering the provisions of Section 2(47) of the Income Tax Act 1961 according to which, once the assessee admits of having received the entire consideration and handed over the property documents in the Financial Year 2008-09 itself, the doctrine as per Section 53A of the Transfer of Property Act comes into play and it is a deemed transfer and capital gains is assessable that year itself? 2. Whether the ITAT was right in directing the AO to allow Rs.3,00,000/- towards cost of improvement on an estimate basis, when the assessee has not substituted any evidence in support of its claim? 2. It is brought to our notice by the learned Standing Counsel for the appellant Revenue that in the instant case, as per the CBDT's Circular No.9 of 2024 dated 17.09.2024 the tax effect is said to be less than the monetary limit imposed and therefore, the appeal can be disposed of, keeping the substantial questions of law raised in this appeal open for adjudication at a later point of time. 2 of 4 https://www.mhc.tn.gov.in/judis T.C.A.No.662 of 2017 3. Recording the aforesaid submission made by the learned Standing Counsel for the appellant Revenue, this Tax Case Appeal is dismissed for low tax effect, keeping open the substantial questions of law for adjudication at appropriate stage. No costs. (R.S.K.,J.) (C.S.N.,J.) 23.10.2024 NCS : Yes/No

KST To The Income Tax Appellate Tribunal 'B' Bench, Chennai. 3 of 4 https://www.mhc.tn.gov.in/judis T.C.A.No.662 of 2017 R.SURESH KUMAR, J. AND C.SARAVANAN, J. KST T.C.A.No.662 of 2017 23.10.2024 4 of 4 https://www.mhc.tn.gov.in/judis

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