THE COMMISSIONER OF INCOME T vs. PLY TECHNOLOGY PVT LTD.,

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TCA/751/2018HC Madras26 August 2022Bench: Hon`ble Mr Justice R. MAHADEVAN4 pages
AI SummaryWithdrawn

What did the High Court hold?

The High Court noted that the Revenue's counsel brought to its attention CBDT Circular No. 17/2019, which mandates that appeals shall not be filed or pursued before the High Court if the tax effect does not exceed Rs. 1,00,00,000/-. The counsel submitted that the tax effect in the present appeal was below this threshold limit. In light of this submission, the High Court dismissed the present appeal as withdrawn. The court explicitly stated that the substantial questions of law were kept open for determination in an appropriate case. No costs were awarded.

What were the facts?

The Revenue, represented by the Commissioner of Income Tax, Chennai, filed an appeal under Section 260A of the Income Tax Act, 1961, against an order dated 09.04.2018 passed by the Income Tax Appellate Tribunal (ITAT), Madras 'C' Bench. The appeal pertains to assessment year 2011-12 and challenges the ITAT's decision regarding the assessee, M/s. Ply Technology Pvt. Ltd. The ITAT had allowed the assessee's claim for deduction under Section 10B of the Act. The respondent assessee did not appear before the High Court. The Revenue's counsel brought to the court's attention a 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/-.

What were the issues?

1. Whether the claim of the assessee under Section 10B of the Income Tax Act, 1961, should be granted, particularly when Explanation (2) to Section 10B, requiring approval from the Board appointed under Section 14 of the Industries (Development and Regulation) Act, 1951, was not fulfilled by the assessee? (Question of law) 2. Whether the Tribunal was correct in allowing the deduction under Section 10B of the Income Tax Act, 1961, when the assessee was engaged in providing technical services of manpower consultancy to clients in the USA, which is not a manufacturing activity and therefore not eligible for the Section 10B benefit? (Question of mixed law and fact) Assessee's contentions: Not recorded. Revenue's contentions: The assessee failed to obtain the necessary approval as stipulated in Explanation (2) to Section 10B. The assessee's activity of manpower consultancy is not a manufacturing activity, thus disentitling it from the Section 10B deduction. The Revenue relied on CBDT Circular No. 17/2019 regarding the monetary limit for pursuing appeals.

Which sections of the Income-tax Act were involved?

Section 10B,Section 260A,Section 14

AI-generated summary — verify with the full judgment below

T.C.A.No.751 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.751 of 2018 The Commissioner of Income Tax, Chennai. ... Appellant Versus M/s.Ply Technology Pvt. Ltd., AA-9, N.N.83, 2nd Avenue, 2nd Floor, Anna Nagar, Chennai - 600 040. ... Respondent (PAN No.AAFCP1194C) Appeal preferred under Section 260A of the Income Tax Act, 1961, against the order of the Income Tax Appellate Tribunal, Madras “C” Bench, dated 09.04.2018 in I.TA.No.2792/Mds/2017. For Appellant : Mr.T.Ravi Kumar Senior Standing Counsel For Respondent : No appearance Page 1/4 https://www.mhc.tn.gov.in/judis T.C.A.No.751 of 2018 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 09.04.2018 passed by the Income Tax Appellate Tribunal, Madras 'C' Bench in I.T.A.No.2792/Mds/2017, relating to the assessment year 2011-12, by raising the following substantial questions of law:- "(i) Whether the claim of the assessee under Section 10B of the Act is to be granted especially when the provisions of Explanation (2) to Section 10B had not been fulfilled wherein it has been specifically stated that the Board appointed on behalf of the Central Government in exercise of the power conferred by Section 14 of the Industries (Development and Regulation) Act, 1951 and the rules made there under approval was to be obtained which the assessee failed to obtain? (ii) Whether the Tribunal was right in allowing the claim of deduction under Section 10B of the Income Tax Act especially when the assessee is only doing technical service of man power consultancy to its clients is USA which is not a manufacturing activity entitling for claiming the benefit of deduction under Section 10B of the Income Tax Act?" Page 2/4 https://www.mhc.tn.gov.in/judis T.C.A.No.751 of 2018 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. 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.) 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.751 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)-3, Chennai. 3. The Deputy Commissioner of Income Tax, Corporate Circle-5(2), Chennai. T.C.A.No.751 of 2018 26.08.2022 Page 4/4 https://www.mhc.tn.gov.in/judis

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