PRINCIPAL COMMISSIONER OF vs. M/S. KPR MILL LTD.,

T.C.A.No.749 of 2017 IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED : 24.08.2022 CORAM : THE HON'BLE MR. JUSTICE R. MAHADEVAN AND THE HON'BLE MR. JUSTICE MOHAMMED SHAFFIQ T.C.A.No.749 of 2017 The Principal Commissioner of Income Tax-I, No.63, Race Course Road, Coimbatore. ... Appellant Versus M/s.KPR Mill Limited, No.9, Gokul Building, ASK Nagar, Thadagam Road, Coimbatore - 641 001. ... Respondent (PAN No.AAC CK 0893 N) Appeal preferred under Section 260A of the Income Tax Act, 1961, against the order of the Income Tax Appellate Tribunal, Madras, “A” Bench, dated 28.10.2016 in M.P.No.146/Mds/2016 in I.TA.No.2865/Mds/2014. For Appellant : M/s.M.Swaminathan &

V. Pushpa Standing Counsel For Respondent : Mr.Sridhar Page 1/5 https://www.mhc.tn.gov.in/judis T.C.A.No.749 of 2017 J U D G M E N T (Judgment was delivered by R.MAHADEVAN, J.) This tax case appeal has been filed by the appellant / Revenue, challenging the order dated 28.10.2016 passed by the Income Tax Appellate Tribunal, Madras 'A' Bench in M.P.No.146/Mds/2016 in I.T.A.No.2865/Mds/2014, relating to the assessment year 2011-12, by raising the following substantial questions of law:- " (i) Whether on the facts and in the circumstances of the case, the Appellate Tribunal is correct in rectifying its earlier order when there is no mistake apparent on record thereby the Appellate Tribunal has exceeded its jurisdiction in passing these impugned orders, when the Tribunal has no power to Review its own orders? (ii) Whether on the facts and in the circumstances of the case, the Appellate Tribunal is correct in deleting the disallowance of forex derivative loss arising on account of loss on forex derivative transactions by treating it as a business loss? (iii) Whether on the facts and in the circumstances of the case, the Tribunal is justified in law in holding that the loss on derivative transactions in business loss thereby over viewing the fact that when no actual delivery has taken place, the transactions in question fall within the definition of speculative transaction as per Section 43(5) of the Income Tax Act? Page 2/5 https://www.mhc.tn.gov.in/judis T.C.A.No.749 of 2017 (iv) Whether on the facts and in the circumstances of the case, the Tribunal is justified in law in holding that the forex derivative transactions of the assessee have proximity to the export turnover thereby impliedly ruling the issue is covered by proviso (a) to Section 43(5), when the proviso clearly mandates that to be categorised as hedge, the transactions should only be in respect of goods or merchandise manufactured or traded by the assessee? (v) Whether, on the facts and in the circumstances of the case, the Tribunal is legally correct by holding that the forex derivative transactions carried on by the assessee through a Banker as Over the Counter Transaction (OTC) and not through a recognized stock exchange are also covered by proviso (d) to Section 43(5) when the pre-conditions laid by the Explanation to the said proviso is not satisfied to constitute it as an eligible transaction?” 2. 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 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. Page 3/5 https://www.mhc.tn.gov.in/judis T.C.A.No.749 of 2017 3. 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.) 24.08.2022 r n s

Internet : Yes.

Index : Yes / No. Page 4/5 https://www.mhc.tn.gov.in/judis T.C.A.No.749 of 2017 R. MAHADEVAN, J. and MOHAMMED SHAFFIQ, J. r n s To 1. The Income Tax Appellate Tribunal Madras 'A' Bench, Chennai. 2. The Commissioner of Income Tax, (Appeals)-I, Coimbatore. 3. The Deputy Commissioner of Income Tax, Company Circle-I(3), Coimbatore. T.C.A.No.749 of 2017 24.08.2022 Page 5/5 https://www.mhc.tn.gov.in/judis