COMMISSIONER OF INCOME TAX vs. CHERAN SPINNIN MILLS P LTD

Judgment dt. 21.10.2019 in TC(A) Nos.730, 731,732, 733, and 734 of 2019 CIT v. Cheran Spinning Mills (P) Ltd.,etc IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 21.10.2019 CORAM : THE HON'BLE DR.VINEET KOTHARI, ACTING CHIEF JUSTICE AND THE HON'BLE MR.JUSTICE C.SARAVANAN Tax Case (Appeal) Nos.730, 731, 732, 733 and 734 of 2019 The Commissioner of Income Tax Coimbatore. .. Appellant in all the appeals -vs- M/s.Cheran Spinning Mills P Ltd., 20, Dharapuram Road, Thillai Nagar, Tirupur. .. Respondent in TCA 730 / 2019 Meera Textile P Ltd 20, Dharapuram Road, Thillai Nagar, Tirupur. .. Respondent in TCA 731 / 2019 Pandian Textile Mills (P) Ltd., 21, Dharapuram Road Thillai Nagar, Tirupur. .. Respondent in TCA 732 / 2019 M/s.Ramraj Handloom 31-A, Thulasi Road Street Tirupur. .. Respondent in TCA 733 / 2019 M/s.Chola Textiles Pvt Ltd F20, Dharapuram Road Thillai Nagar, Tirupur. .. Respondent in TCA 734 / 2019 __________ Page 1 of 6 http://www.judis.nic.in Judgment dt. 21.10.2019 in TC(A) Nos.730, 731,732, 733, and 734 of 2019 CIT v. Cheran Spinning Mills (P) Ltd.,etc Prayer in TCA 730/2019: Tax Case Appeal filed under Section 260A of the Income Tax Act against the order of the Income Tax Appellate Tribunal, Madras 'C' Bench, Chennai dated 26.06.2013 passed in I.T.A.No.589/Mds/2013. Prayer in TCA 731/2019: Tax Case Appeal filed under Section 260A of the Income Tax Act against the order of the Income Tax Appellate Tribunal, Madras 'C' Bench, Chennai dated 26.06.2013 passed in I.T.A.No.592/Mds/2013. Prayer in TCA 732/2019:Tax Case Appeal filed under Section 260A of the Income Tax Act against the order of the Income Tax Appellate Tribunal, Madras 'C' Bench, Chennai dated 26.06.2013 passed in I.T.A.No.590/Mds/2013. Prayer in TCA 733/2019:Tax Case Appeal filed under Section 260A of the Income Tax Act against the order of the Income Tax Appellate Tribunal, Madras 'C' Bench, Chennai dated 26.06.2013 passed in I.T.A.No.585/Mds/2013. Prayer in TCA 734/2019:Tax Case Appeal filed under Section 260A of the Income Tax Act against the order of the Income Tax Appellate Tribunal, Madras 'C' Bench, Chennai dated 26.06.2013 passed in I.T.A.No.591/Mds/2013. For Appellant : Mr.T.R.Senthilkumar (in all appeals) Senior Standing Counsel Assisted by M/s.K.G.Usharani Junior Standing Counsel J U D G M E N T (Delivered by The Hon'ble Acting Chief Justice) These Tax Case Appeals have been filed by the Revenue, calling in question the correctness of the order passed by the Income Tax Appellate Tribunal, 'C' Bench, Chennai, dated 26.06.2013, in I.T.A.Nos.589, 592, 590, 585, and 591/Mds/2013. for the Assessment Year 2009-10. __________ Page 2 of 6 http://www.judis.nic.in Judgment dt. 21.10.2019 in TC(A) Nos.730, 731,732, 733, and 734 of 2019 CIT v. Cheran Spinning Mills (P) Ltd.,etc 2. The substantial questions of law raised in the above appeals are as follows:- T.C.A.Nos.730, 731, 732 and 734 /2019: "(i) Whether on the facts and in the circumstances of the case, the Income Tax Tribunal was right in law in holding that the assessee is entitled to deduction under Section 80IA without setting off the losses / unabsorbed depreciation pertaining to the windmill, which were set off in the earlier year against other business income of the assessee following the decision of the jurisdiction High Court in the case of M/s.Velayudhaswamy Spinning Mills (340 ITR 477) when the same is pending appeal before the Hon'ble Supreme Court in SLP Civil 1136/11? (ii) Whether on the facts and in the circumstances of the case, the Income Tax Tribunal was correct in holding that the initial Assessment year in Section 80IA(5) would only mean the year of claim of deduction under Section 80IA and not the year of commencement of eligible business? (iii) Whether on the facts and in the circumstances of the case, the Tribunal was right in holding that the assessee has the option to choose the first / initial assessment year of claim for deduction under Section 80IA? (iv) Whether on the facts and circumstances of the case, the Income Tax Appellate Tribunal was right in holding that Section 14A does apply to the deduction under Chapter VIA and __________ Page 3 of 6 http://www.judis.nic.in Judgment dt. 21.10.2019 in TC(A) Nos.730, 731,732, 733, and 734 of 2019 CIT v. Cheran Spinning Mills (P) Ltd.,etc accordingly the disallowance of interest in respect of windmills on which the assessee had claimed deduction under Section 80A is to be deleted? T.C.A.No.733 of 2019 "(i) Whether on the facts and in the circumstances of the case, the Income Tax Tribunal was right in law in holding that the assessee is entitled to deduction under Section 80IA without setting off the losses / unabsorbed depreciation pertaining to the windmill, which were set off in the earlier year against other business income of the assessee following the decision of the jurisdiction High Court in the case of M/s.Velayudhaswamy Spinning Mills (340 ITR 477) when the same is pending appeal before the Hon'ble Supreme Court in SLP Civil 1136/11? (ii) Whether on the facts and in the circumstances of the case, the Income Tax Tribunal was correct in holding that the initial Assessment year in Section 80IA(5) would only mean the year of claim of deduction under Section 80IA and not the year of commencement of eligible business? (iii) Whether on the facts and in the circumstances of the case, the Tribunal was right in holding that the assessee has the option to choose the first / initial assessment year of claim for deduction under Section 80IA? __________ Page 4 of 6 http://www.judis.nic.in Judgment dt. 21.10.2019 in TC(A) Nos.730, 731,732, 733, and 734 of 2019 CIT v. Cheran Spinning Mills (P) Ltd.,etc 3. When the matters were taken up for hearing, learned Senior Standing Counsel brought to our notice the Circular instruction issued by the Central Board of Direct Taxes vide Circular No.17/2019 dated 8th August 2019, 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). 4. In the instant cases, the tax effect is said to be less than the monetary limit imposed and therefore, the Appeals filed by the Revenue are dismissed, as withdrawn, keeping open the substantial questions of law for determination in appropriate cases. No costs.

(V.K.,ACJ.) (C.S.N.,J.) 21.10.2019 1/2 Index : Yes/No Internet : Yes/No KST Note : Copy of the order shall be sent to both the parties To: Income Tax Appellate Tribunal, Madras 'C' Bench, Chennai __________ Page 5 of 6 http://www.judis.nic.in Judgment dt. 21.10.2019 in TC(A) Nos.730, 731,732, 733, and 734 of 2019 CIT v. Cheran Spinning Mills (P) Ltd.,etc The Hon'ble Acting Chief Justice and C.Saravanan, J. KST T.C.(A) Nos.730,731,732 733 and 734 of 2019 21.10.2019 __________ Page 6 of 6 http://www.judis.nic.in