PRINCIPAL COMMISSIONER OF IN vs. M/S.SAKTHI SUGARS LTD

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TCA/691/2019HC Madras02 September 2022Bench: Hon`ble Mr Justice R. MAHADEVAN4 pages
AI SummaryWithdrawn

What did the High Court hold?

The High Court noted the submission by the learned counsel for the appellant (Revenue) regarding CBDT Circular No. 17/2019, dated August 8, 2019. This circular stipulates that appeals shall not be filed or pursued by the Department before the High Court if the tax effect does not exceed Rs. 1,00,00,000/- (Rupees One Crore). The Revenue submitted that the tax effect in the present appeals was less than this threshold limit. In light of this submission, the High Court dismissed the present appeals as withdrawn, stating that the substantial questions of law were kept open for determination in appropriate cases. No costs were awarded.

What were the facts?

The appeal was filed by the Principal Commissioner of Income Tax, Coimbatore (Revenue) against an order of the Income Tax Appellate Tribunal (ITAT), Chennai, dated April 9, 2019. The ITAT's order pertained to Assessment Year 2011-12 and concerned M/s. Sakthi Sugars Ltd. (Assessee). The dispute involved the assessee's claim for depreciation on plant and machinery of its Sivagangai Beverages Unit. The Revenue challenged the ITAT's decision to allow depreciation on assets that were allegedly not put to commercial use. The amount in dispute was not explicitly stated, but the tax effect was mentioned as being below a certain threshold.

What were the issues?

1. Whether the Appellate Tribunal is right in allowing depreciation on the plant and machinery of the Sivagangai Beverages Unit of the assessee, when that unit never commenced commercial production and the assets were not 'put to use' for production? (Question of law/mixed law and fact, concerning Section 32 of the Income Tax Act, 1961). 2. Whether, on the facts and circumstances of the case, the Tribunal was right in law in holding that the assessee is entitled to depreciation on the assets of the Beverages division at Rs. 53,11,246/-, even though the assessee failed to establish that they were put to use for business activities in the period relevant to Assessment Year 2011-12? (Question of law/mixed law and fact, concerning Section 32 of the Income Tax Act, 1961). Assessee's Contentions: Not recorded in the judgment. Revenue's Contentions: The Revenue argued that the Sivagangai Beverages Unit had not commenced commercial production and the assets were not 'put to use' for production, thus disentitling the assessee to depreciation. The Revenue also highlighted that the tax effect in the appeal was less than the threshold limit stipulated by CBDT Circular No. 17/2019.

Which sections of the Income-tax Act were involved?

Section 32,Section 260-A

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED : 02.09.2022 CORAM

THE HONOURABLE MR. JUSTICE R. MAHADEVAN and THE HONOURABLE MR. JUSTICE MOHAMMED SHAFFIQ T.C.A.No. 691 of 2019 Principal Commissioner of Income Tax 1 No.63, Race Course Road, Coimbatore.

.. Appellant Versus M/s.Sakthi Sugars Ltd., 180, Course Road, Coimbatore – 641 018, PAN:AAD CS 0651 B

.. Respondent Tax Case Appeal filed under Section 260-A of the Income Tax Act, 1961 against the order of the Income Tax Appellate Tribunal Madras “C” Bench, Chennai, dated 09.04.2019 passed in ITA No.1457/Chny/2017 in respect of Assessment Year 2011-12. For Appellant : Mr. M.Swaminathan, Senior Standing Counsel & Mrs.V.Pushpa, Standing Counsel For Respondent : Mr.Venkata Narayanan for M/s.Subbaraya Aiyar 1/4 https://www.mhc.tn.gov.in/judis JUDGMENT (Judgment of the Court was delivered by R. MAHADEVAN, J.) This Tax Case Appeal has been filed by the appellant / revenue, questioning the correctness of the order dated 09.04.2019 passed by the Income Tax Appellate Tribunal Madras “C” Bench, Chennai in ITA Nos.1457/Chny/2017 for the Assessment Year 2011-12 raising the following substantial questions of law; ' i) Whether the Appellate Tribunal is right in allowing depreciation on the plant and Machinery of the Sivagangai Beverages Unit of the assessee, when that unit never commenced commercial production and the assests were not “put to use”for production? 2. Whether on the facts and circumstances of the case, the Tribunal was right in law in holding that the assessee is entitled for the depreciation on the assets of the Beverages division at Rs.53,11,246/- even though the assessee has failed to establish that they were put to use for business activities of the company in the period relevant to Assessment Year 2011-12?” 2/4 https://www.mhc.tn.gov.in/judis 2. When the matters were 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 these appeals 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 appeals, wherein, the tax effect is said to be less than the monetary limit imposed, are dismissed as withdrawn, keeping open the substantial questions of law for determination in appropriate cases. No costs. [R.M.D,J.] [M.S.Q., J.] 02.09.2022 msr

Index : Yes / No 3/4 https://www.mhc.tn.gov.in/judis R. MAHADEVAN, J. and MOHAMMED SHAFFIQ, J. msr To 1. The Deputy Commissioner of Income Tax, Company Circle – I(1), Coimbatore. 2. The Commissioner of Income Tax (Appeals)-1 Coimbatore. 3. The Income Tax Appellate Tribunal Madras “C” Bench, Chennai. T.C.A.No. 691 of 2019 02.09.2022 4/4 https://www.mhc.tn.gov.in/judis

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