COMMISSIONER OF INCOME TAX C vs. Shri P.V. Gopalakrishna

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TCA/69/2022HC Madras22 February 2022Bench: Hon`ble Mr Justice R. MAHADEVAN4 pages
AI SummaryWithdrawn

What did the High Court hold?

The High Court did not decide the substantial questions of law on their merits. Instead, the Revenue's counsel brought to the court's notice CBDT Circular No. 17/2019, which mandates that appeals shall not be filed or pursued if the tax effect does not exceed Rs. 1,00,00,000/-. The counsel submitted that the tax effect in the present appeal was less than this threshold limit. Consequently, the High Court, in light of this submission and the circular, dismissed the appeal as withdrawn. The court explicitly stated that the substantial questions of law were kept open for determination in an appropriate case. No costs were awarded.

What were the facts?

The Commissioner of Income Tax, Circle 1, Vellore (the Revenue) filed a Tax Case Appeal under Section 260A of the Income Tax Act, 1961, before the High Court of Judicature at Madras. The appeal challenged an order dated 04.05.2016 passed by the Income Tax Appellate Tribunal (ITAT), 'C' Bench, Chennai, concerning the assessment year 2011-2012. The dispute involved the deductibility of Rs. 1 Crore under Section 54EC, the clubbing of income under Section 64(1A), and the ITAT's adherence to a jurisdictional High Court ruling. During the hearing, the Revenue's counsel brought to the court's attention CBDT Circular No. 17/2019, which stipulates that appeals with a tax effect not exceeding Rs. 1 Crore should not be filed or pursued.

What were the issues?

The Tribunal had to decide three substantial questions of law: 1. Whether the Tribunal was justified in allowing a deduction of Rs. 1 Crore under Section 54EC when the maximum deduction allowable in an assessment year is only Rs. 50 Lakhs? 2. Whether the Tribunal was right in holding that income after allowing deduction, and not gross income, should be clubbed under Section 64(1A)? 3. Whether the Tribunal erred in not following the rationale laid down by the jurisdictional High Court in K.M. Vijayan & Ors. Vs. Union of India (215 ITR 371)? The Revenue argued that the deduction under Section 54EC was wrongly allowed beyond the statutory limit and that the clubbing of income under Section 64(1A) should have been based on gross income. The Revenue also contended that the ITAT failed to follow the precedent set by the jurisdictional High Court. The judgment does not record specific arguments from the respondent assessee, P.V. Gopalakrishna.

Which sections of the Income-tax Act were involved?

Section 260A,Section 54EC,Section 64(1A)

AI-generated summary — verify with the full judgment below

Tax Case Appeal No. 69 of 2022 IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED : 22.02.2022 CORAM THE HONOURABLE MR. JUSTICE R. MAHADEVAN AND THE HONOURABLE MR. JUSTICE J.SATHYA NARAYANA PRASAD Tax Case Appeal No. 69 of 2022 The Commissioner of Income Tax Circle 1, Vellore .. Appellant Versus P.V. Gopalakrishna .. Respondent Tax Case Appeal filed under Section 260A of the Income Tax Act, 1961 against the order dated 04.05.2016 passed by the Income Tax Appellate Tribunal, “C” Bench, Chennai in I.T.A.No.2254/Mds/2015. For Appellant : Mrs.V.Pushpa Junior Standing Counsel JUDGMENT (Judgment was delivered by R. MAHADEVAN, J.) This tax case appeal has been filed by the appellant / Revenue, calling in question the correctness of the order dated 04.05.2016 passed by the Income Tax 1/4 https://www.mhc.tn.gov.in/judis Tax Case Appeal No. 69 of 2022 Appellate Tribunal, 'C' Bench, Chennai, in I.T.A.No.2254/Mds/2015, relating to the assessment year 2011-2012, by raising the following substantial questions of law:- “1. Whether on the facts and circumstances of the case and in law, Tribunal was right and justified in allowing Rs.1 Crore as deduction u/s 54EC when maximum deduction allowable in an assessment year is only Rs.50 Lakhs? 2. Whether on the facts and in the circumstances of the case, the Tribunal was right and justified in holding that income after allowing the deduction and not to gross income to be clubbed u/s 64(1A) 3. Whether on the facts and circumstances of the case and in law, Tribunal erred in not following the rationale laid down by the jurisdictional High Court in K.M.Vijayan & Ors. Vs.Union of India (215 ITR 371)” 2. When this matter was taken up for consideration, the learned counsel for the appellant / Revenue brought to the notice of this court the Circular No.17/2019 dated 08.08.2019 issued by the Central Board Direct Taxes, wherein, it is stipulated that appeals shall not be filed/pursued by the Department before the High Court in cases where the tax effect does not exceed Rs.1,00,00,000/- (Rupees One Crore). It is also submitted that the tax effect in this appeal is less than the threshold limit. 3. In the light of the aforesaid submissions made by the learned counsel for the appellant / Revenue, the present appeal, wherein, the tax effect is said to be 2/4 https://www.mhc.tn.gov.in/judis Tax Case Appeal No. 69 of 2022 less than the monetary limit imposed, is dismissed as withdrawn, keeping open the substantial question of law for determination in an appropriate case. No costs.

[R.M.D, J.] [J.S.N.P, J.] 22.02.2022

Internet : Yes

Index : Yes / No dhk To 1. The Income Tax Appellate Tribunal, Madras “C” Bench. 2.The Commissioner of Income Tax (Appeals) Chennai 3.Commissioner of Income Tax Circle 1, Vellore. 3/4 https://www.mhc.tn.gov.in/judis Tax Case Appeal No. 69 of 2022 R. MAHADEVAN, J. AND J.SATHYA NARAYANA PRASAD, J. dhk Tax Case Appeal No. 69 of 2022 22.02.2022 4/4 https://www.mhc.tn.gov.in/judis

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