COMMISSIONER OF INCOME TAX vs. M/S.S.9787, K.KONDAPPANAICKE

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TCA/747/2019HC Madras20 September 2019Bench: HON'BLE DR. JUSTICE VINEET KOTHARI4 pages
AI SummaryWithdrawn

What did the High Court hold?

The High Court dismissed the appeal filed by the Revenue. The dismissal was based on a Circular Instruction issued by the Central Board of Direct Taxes (CBDT) vide 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). In the present case, the tax effect was stated to be less than this monetary limit. Therefore, the appeal was dismissed as withdrawn. The court explicitly stated that the substantial questions of law were kept open for determination in appropriate cases. No costs were awarded.

What were the facts?

The Revenue, Commissioner of Income Tax, Salem, filed a Tax Case Appeal under Section 260A of the Income Tax Act, 1961, challenging an order of the Income Tax Appellate Tribunal (ITAT), Chennai, dated March 16, 2016. The appeal pertained to Assessment Year 2012-13 and concerned the assessee, M/s. S.9787, K.Kondappanaickenpatty PACCS Ltd. The core dispute revolved around the assessee's eligibility for deduction under Section 80P(2)(a)(i) of the Income Tax Act, 1961, specifically concerning interest income from Class B members involved in non-agricultural activities. The ITAT had ruled in favor of the assessee.

What were the issues?

The Tribunal was asked to decide the following substantial questions of law: 1. Whether the Tribunal was correct in holding that the assessee is a primary agricultural society carrying on the business of banking or providing credit facilities to its members and is entitled to deduction under Section 80P(2)(a)(i) of the IT Act, 1961, with respect to interest received from Class B members involved in non-agricultural activity. 2. Whether the Tribunal was correct in holding that Class B members can be treated as members for the purpose of Section 80P(2)(a)(i) when they lack voting rights and cannot participate in board meetings. 3. Whether the Tribunal was correct in not considering that the assessee was lending monies for non-agricultural purposes and the provisions of Section 80P(4) and Section 2(24)(viia). 4. Whether the Tribunal was correct in not considering the ground raised with respect to Section 80P(2)(d), which was allowed by the CIT(A). The Revenue's contentions were implicitly raised through these questions. The judgment does not record specific arguments made by the assessee or the Revenue on each point, other than the Revenue's counsel bringing a CBDT circular to the court's attention.

Which sections of the Income-tax Act were involved?

Section 260A,Section 80P(2)(a)(i),Section 80P(4),Section 2(24)(viia),Section 80P(2)(d)

AI-generated summary — verify with the full judgment below

Judgment dt. 20.09.2019 in TC(A) No.747 of 2019 CIT v. S.9787, K.Kondappanaickenpatty PACCS Ltd. IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 20.09.2019 CORAM : THE HON'BLE DR. JUSTICE VINEET KOTHARI, AND THE HON'BLE MR.JUSTICE C.SARAVANAN Tax Case (Appeal) No.747 of 2019 Commissioner of Income Tax, Salem. .. Appellant -vs- M/s.S.9787, K.Kondappanaickenpatty PACCS Ltd., Yercaud Main Road Kannankurichi Post, Salem - 636 008. .. Respondent Tax Case Appeal filed under Section 260A of the Income Tax Act, 1961, against the order of the Income tax Appellate Tribunal, 'C' Bench, Chennai, dated 16.03.2016 made in ITA.No.2342/Mds/2015 For Appellant : Mr.M.Swaminathan Sr. Standing Counsel For Respondent : Mr.A.S.Sriram for Mr.Sridhar __________ Page 1 of 4 http://www.judis.nic.in Judgment dt. 20.09.2019 in TC(A) No.747 of 2019 CIT v. S.9787, K.Kondappanaickenpatty PACCS Ltd. JUDGMENT (Delivered by Dr. VINEET KOTHARI, J.) This Tax Case Appeal has been filed by the Revenue, calling in question the correctness of the order passed by the Income Tax Appellate Tribunal, 'C' Bench, Chennai, dated 16.03.2016, for the Assessment Year 2012-13, by raising the following substantial questions of law: “Whether on the facts and in the circumstances of the case, the Tribunal was right in holding that the assesse is to be treated as primary agricultural society and is carrying on the business of banking or providing credit facilities to its members and is entitled for deduction u/s 80P (2) (a) (i) of the IT Act, 1961 with respect to the interest received from Class B members who were involved in non-agricultural activity. Whether on the facts and in the circumstances of the case the Tribunal was right in holding that the Class B members of the assessee society can be treated as the member of the society for the purpose of Section 80P (2) (a) (i) when Class B members do not have the right to participate in the voting and meetings of the board of the society. Whether on the facts and in the circumstances of the case the Tribunal was right in not considering the, fact that the assesse was lending monies for non- agricultural __________ Page 2 of 4 http://www.judis.nic.in Judgment dt. 20.09.2019 in TC(A) No.747 of 2019 CIT v. S.9787, K.Kondappanaickenpatty PACCS Ltd. purpose and the provisions of Section 80P (4) and 2(24)(viia). Whether the Tribunal was right in not considering the ground raised with respect to issue relating to Section 80P(2)(d) which was allowed by the CIT (A). ” 2. When the matter is taken up for hearing, the 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). 3. In the instant case, the tax effect is said to be less than the monetary limit imposed and therefore, the Appeal filed by the Revenue is dismissed, as withdrawn, keeping open the substantial question of law for determination in appropriate cases. No costs.

(V.K.,J.) (C.S.N.,J.) 20.09.2019 Index : Yes/No vsm __________ Page 3 of 4 http://www.judis.nic.in Judgment dt. 20.09.2019 in TC(A) No.747 of 2019 CIT v. S.9787, K.Kondappanaickenpatty PACCS Ltd. Dr. VINEET KOTHARI, J

and C.SARAVANAN, J. vsm To: The Income Tax Appellate Tribunal, Madras "C" Bench, Chennai. T.C.(A) No.747 of 2019 20.09.2019 __________ Page 4 of 4 http://www.judis.nic.in

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