COMMISSIONER OF INCOME TAX vs. M/S COIMBATORE ENTERPRISES AND

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TCA/735/2019HC Madras03 October 2019Bench: Hon`ble Mr Justice N. KIRUBAKARAN6 pages
AI SummaryDismissed

What did the High Court hold?

The High Court dismissed the Tax Case Appeal on the grounds of tax effect, citing Circular No.17/2019 dated 08.08.2019. The Court noted that the monetary limit for filing appeals before the High Court is Rs.1 crore, and the tax effect in this case was less than that amount. Therefore, the appeal was dismissed without deciding the substantial question of law. The Court explicitly stated that the substantial question of law framed is left open. Liberty was granted to the Revenue to mention the case for restoration if the tax effect is found to be above the limit fixed in the circular, to be heard and decided on merits. No costs were awarded.

What were the facts?

The assessee, M/s. Coimbatore Enterprises and Holding Limited, a company registered under Section 25 of the Act, engaged in share market business, declared 'Nil' income for assessment year 2010-2011. During scrutiny, the assessing officer found its activities to be in the nature of trade and exceeding the limits specified in Section 2(15) of the Income Tax Act, 1961. Consequently, the exemption under Section 11 was denied, and income was assessed at Rs.90,03,029/-. This order was upheld by the Commissioner of Income Tax. The Income Tax Appellate Tribunal, however, allowed the assessee's appeal, relying on its own previous order, and held the assessee eligible for benefits under Sections 2(15) and 11. The Revenue has appealed this decision.

What were the issues?

1. Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the activity of renting out the assessee's property commercially is in the nature of charitable purpose under Section 2(15) and consequently entitled for exemption under Section 11 of the Income Tax Act, 1961? Assessee's Arguments: The judgment does not record any specific arguments made by the assessee before the High Court. However, the Tribunal had previously allowed the appeal, holding the assessee eligible for benefits under Sections 2(15) and 11, relying on the assessee's own case in a prior order. Revenue's Arguments: The Revenue contended that the tax effect in this appeal is less than Rs.1 crore and is therefore covered by Circular No.17/2019 dated 08.08.2019 issued by the CBDT. According to this circular, the monetary limit for filing an appeal before the High Court is Rs.1 crore, and thus, the appeal should be dismissed.

Which sections of the Income-tax Act were involved?

Section 2(15),Section 11,Section 260A

AI-generated summary — verify with the full judgment below

T.C.A.No.735 of 2019 IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED : 14.11.2019 CORAM : THE HONOURABLE MR.JUSTICE N.KIRUBAKARAN and THE HONOURABLE MR.JUSTICE P.VELMURUGAN T.C.A.No.735 of 2019 Commissioner of Income Tax, Coimbatore.

... Appellant Vs M/s.Coimbatore Enterprises and Holding Limited (formerly M/s. Coimbatore Stock Exchange Limited) No.683-686, Stock Exchange Building, Trichy Road, Coimbatore - 641 005. [PAN: AAACC8424H]

...Respondent PRAYER: Tax Case Appeal filed under Section 260A of Income Tax Act, 1961 against the order dated 04.02.2015 in ITA No.2690/Mds/2014 on the file of the Income Tax Appellate Tribunal Madras 'A' Bench for the assessment year 2010-2011. For Appellant : Mr.J.Narayasamy, Senior Standing Counsel. 1/6 http://www.judis.nic.in T.C.A.No.735 of 2019

J U D G M E N T (Order of the Court was delivered by N.KIRUBAKARAN, J)

This Tax Case Appeal has been preferred by the Department of Revenue against the order of the Income Tax Appellate Tribunal, by which the order of the Commissioner of Income Tax confirming the order of the assessing officer in allowing the benefit under Section 2 (15) of the Act has been set aside. 2.The assessee company is a company registered under Section 25 of the Act as Trust doing share market business for the assessment year 2010 - 2011. The assessee declared 'Nil' income and filed the case and the case was selected for scrutiny during assessment proceedings and it was noticed from the books of accounts that the activities of the assessee are in the nature of trade and exceeds the limit stated in Section 2 (15) of the Act. Therefore, the assessing officer denied the exemption under Section 11 of the Act and assessed the income at Rs.90,03,029/-. 2/6 http://www.judis.nic.in T.C.A.No.735 of 2019 3.The said order was confirmed in the appeal filed by the assessee before the Commissioner of Income Tax. Hence, the order of the Commissioner was challenged before the Appellate Tribunal. The appellate Tribunal relying upon the assessee's own case in the previous order allowed the appeal and held that the assessee is eligible to claim the benefit under Section 2 (15) of the Act and under Section 11 of the Act. The said order is being challenged before this Court. 4.This appeal is admitted on the following substantial question of law; “Whether on the facts and in the circumstances of the case the tribunal was right in holding that the activity of renting out of the property of the assessee commercially is in the nature of charitable purpose under Section 2 (15) and consequently entitled for exemption under Section 11 of the Act.?"

5.Mr.J.Narayanasamy, learned Senior Standing Counsel for the appellant would submit that the tax effect in this case is less than Rs.1 crore and is covered by Circular No.17/2019 dated 08.08.2019 3/6 http://www.judis.nic.in T.C.A.No.735 of 2019 issued by the Director, Central Board of Direct Taxes, Department of Revenue, Ministry of Finance, Government of India, Delhi. As per the said circular, the monetary limit to file an appeal before the High Court is fixed at Rs.1 crore. In this case, tax effect is less than Rs.1 crore and therefore, the case has to be dismissed. 6.This Court perused the circular dated 08.08.2019 and Paragraph No.2 of the Circular, which prescribes monetary limit for filing appeal. Paragraph No.2 is usefully extracted as follows: "2.As a step towards further management of litigation, it has been decided by the Board that monetary limits for filing of appeals in income-tax cases be enhanced further through amendment in Para 3 of the Circular mentioned above and accordingly, the table for monetary limits specified in Para 3 of the Circular shall read as follows: S.No. Appeals / SLPs in Income-tax matters Monetary Limit (Rs.) 1. Before Appeallate Tribunal 50,00,000 2. Before High Court 1,00,00,000 3. Before Supreme Court 2,00,00,000" 4/6 http://www.judis.nic.in T.C.A.No.735 of 2019 7.In view of the submissions made by the learned counsel appearing on behalf of the appellant and also in view of the Circular No.17/2019 dated 08.08.2019 issued by the Director, Central Board of Direct Taxes, Delhi, the Tax Case Appeal is dismissed on account of tax effect. However, the substantial questions of law framed is left open. In the event the tax effect is above the limit fixed in the said circular, liberty is granted to the Revenue to make a mention to this Court to restore the appeal to be heard and decided on merits. No costs. (N.K.K.,J.) (P.V.,J.) 14.11.2019 ay To Commissioner of Income Tax, Coimbatore. 5/6 http://www.judis.nic.in T.C.A.No.735 of 2019 N.KIRUBAKARAN, J. and P.VELMURUGAN, J. ay

T.C.A.No.735 of 2019 Dated:14.11.2019 6/6 http://www.judis.nic.in

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