THE COMMISSIONER OF INCOME vs. M/S CITAL FINE PHARMACEUTICA

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TCA/698/2018HC Madras26 August 2022Bench: Hon`ble Mr Justice R. MAHADEVAN4 pages
AI SummaryWithdrawn

What did the High Court hold?

The High Court, in light of the submission by the Revenue regarding CBDT Circular No. 17/2019, noted that the tax effect in the appeal was less than the monetary limit of Rs. 1,00,00,000/-. Consequently, the appeal was dismissed as withdrawn. The Court explicitly stated that the substantial questions of law were kept open for determination in an appropriate case. No decision was made on the merits of the substantial questions of law. No costs were awarded.

What were the facts?

The Commissioner of Income Tax, Chennai (Revenue) filed an appeal under Section 260A of the Income Tax Act, 1961, against the order dated 08.02.2018 passed by the Income Tax Appellate Tribunal, Madras 'A' Bench. The appeal pertained to assessment year 2005-06 and concerned the respondent assessee, M/s. Cital Fine Pharmaceuticals Pvt. Ltd. The High Court admitted the appeal on two substantial questions of law. During the hearing, the Revenue brought to the court's notice CBDT Circular No. 17/2019, which stipulates that appeals shall not be filed or pursued if the tax effect does not exceed Rs. 1,00,00,000/-. The Revenue submitted that the tax effect in this appeal was below this threshold.

What were the issues?

The Tribunal had to decide the following substantial questions of law: 1. Whether the Tribunal was correct in law in holding that the expenditure of Rs. 1,18,23,353/- representing prior period expenditure and freebies given to Directors is allowable as a deduction under Section 37(1) of the Income Tax Act? 2. Whether the finding of the Tribunal that a sum of Rs. 39,90,797/- did not represent cessation of liability and therefore, cannot be assessed under Section 41(1) of the Income Tax Act is correct? Assessee's contentions: Not recorded in the judgment. Revenue's contentions: The Revenue relied on CBDT Circular No. 17/2019, stating that the tax effect in the present appeal is less than the monetary threshold of Rs. 1,00,00,000/- prescribed for filing or pursuing appeals before the High Court.

Which sections of the Income-tax Act were involved?

Section 37(1),Section 41(1),Section 260A

AI-generated summary — verify with the full judgment below

T.C.A.No.698 of 2018 IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED : 26.08.2022 CORAM : THE HON'BLE MR. JUSTICE R. MAHADEVAN AND THE HON'BLE MR. JUSTICE MOHAMMED SHAFFIQ T.C.A.No.698 of 2018 The Commissioner of Income Tax, Chennai. ... Appellant Versus M/s.Cital Fine Pharmaceuticals Pvt. Ltd., No.43, Main Road, Velacherry, Chennai - 600 042.

... Respondent (PAN No.AAACC1356N) Appeal preferred under Section 260A of the Income Tax Act, 1961, against the order of the Income Tax Appellate Tribunal, Madras “A” Bench, dated 08.02.2018 in I.TA.No.2027/Mds/2017. For Appellant : Mr.T.Ravi Kumar Senior Standing Counsel J U D G M E N T Page 1/4 https://www.mhc.tn.gov.in/judis T.C.A.No.698 of 2018 (Judgment was delivered by R.MAHADEVAN, J.) This tax case appeal has been filed by the appellant / Revenue, challenging the order dated 08.02.2018 passed by the Income Tax Appellate Tribunal, Madras 'A' Bench in I.T.A.No.2027/Mds/2017, relating to the assessment year 2005-06. 2. By order dated 18.09.2018, this court admitted the aforesaid tax case appeal on the following substantial questions of law: "(i) Whether, the Tribunal was correct in law in holding that the expenditure of Rs.1,18,23,353/- representing prior period expenditure and freebies given to Directors are allowable deduction under Section 37(1) of the Income Tax Act? (ii) Whether the finding of the Tribunal that a sum of Rs.39,90,797/- did not represent cessation of liability and therefore, cannot be assessed under Section 41(1) of the Income Tax Act is correct? " 3. When the 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 appeal shall not be filed/pursued by the Department before the High Court in cases where the tax effect does not Page 2/4 https://www.mhc.tn.gov.in/judis T.C.A.No.698 of 2018 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. 4. 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 less than the monetary limit imposed, is dismissed as withdrawn, keeping open the substantial questions of law for determination in an appropriate case. No costs. (R.M.D., J.) (M.S.Q., J.) 26.08.2022 r n s

Internet : Yes.

Index : Yes / No. Page 3/4 https://www.mhc.tn.gov.in/judis T.C.A.No.698 of 2018 R. MAHADEVAN, J. and MOHAMMED SHAFFIQ, J. r n s To 1. The Income Tax Appellate Tribunal Madras 'C' Bench, Chennai. 2. The Commissioner of Income Tax, (Appeals)-5, Chennai. 3. The Assistant Commissioner of Income Tax, Circle-I(3), Chennai - 34. T.C.A.No.698 of 2018 26.08.2022 Page 4/4 https://www.mhc.tn.gov.in/judis

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