COMMISSIONER OF INCOME TAX II vs. M/S LIFE CELL INTERNATIONAL P

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TCA/782/2015HC Madras22 April 2021Bench: Hon`ble Mr Justice M.DURAISWAMY5 pages
AI SummaryWithdrawn

What did the High Court hold?

The High Court did not decide the substantial questions of law framed for consideration. This was due to subsequent developments, specifically the enactment of the Direct Tax Vivad Se Vishwas Act, 2020. The learned counsel for the respondent/assessee submitted that the assessee had availed the Vivad Se Vishwas Scheme and had been issued with Form-3 on December 30, 2020. Recording this submission, the Court found that nothing further survived for adjudication in the appeal. Consequently, the Tax Case Appeal was disposed of. No costs were awarded. The specific findings of the ITAT on the storage fee and its taxability on a pro rata basis were not reviewed or affirmed by the High Court.

What were the facts?

The Revenue, Commissioner of Income Tax II, appealed against an order of the Income Tax Appellate Tribunal (ITAT), Chennai 'C' Bench, dated March 11, 2015, concerning assessment year 2010-11. The appeal was filed under Section 260A of the Income Tax Act, 1961. The ITAT's order was challenged by the Revenue. The assessee is M/s. Life Cell International P. Ltd. The appeal was admitted on September 21, 2015, on substantial questions of law. The dispute pertains to the taxability of a storage fee collected by the assessee.

What were the issues?

1. Whether, on the facts and in the circumstances of the case, the Appellate Tribunal is correct in holding that the storage fee collected by the assessee in lumpsum cannot be treated as income of the year of receipt, which is contrary to Section 5(1) of the Income Tax Act? 2. Whether, on the facts and in the circumstances of the case and in law, the Tribunal is correct in holding that the lumpsum fee collected for 21 years is to be taxed on pro rata basis when the assessee is following Mercantile system of accounting? Assessee's arguments: The assessee contended that they had availed the Direct Tax Vivad Se Vishwas Act, 2020, and had been issued Form-3 on December 30, 2020. Based on this, the assessee argued that nothing further survived for adjudication in the appeal. Revenue's arguments: The Revenue argued that the ITAT's order was incorrect in treating the lumpsum storage fee as income not of the year of receipt and in taxing it on a pro rata basis, contrary to Section 5(1) of the Income Tax Act and the mercantile system of accounting followed by the assessee.

Which sections of the Income-tax Act were involved?

Section 260A,Section 5(1)

AI-generated summary — verify with the full judgment below

Tax Case Appeal No.782 of 2015 IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED : 22.04.2021 CORAM THE HON'BLE MR.JUSTICE M. DURAISWAMY AND THE HON'BLE MR.JUSTICE KRISHNAN RAMASAMY Tax Case Appeal No.782 of 2015 Commissioner of Income Tax II, 121, Nungambakkam High Road, Chennai – 600 034. ... Appellant Vs.

M/s.Life Cell International P. Ltd., No.26, Vandalur Kelambakkam Road, Keelkottaiyur, Chennai – 600 048.

... Respondent

Tax Case Appeal filed under Section 260A of the Income Tax Act, 1961 against the order of the Income Tax Appellate Tribunal, Chennai "C" Bench, dated 11.03.2015 passed in I.T.A.No.2142/Mds/2014, Assessment year 2010-11. For Appellant : Mr.Karthik Ranganathan Senior Standing Counsel For Respondent : Mr.N.V.Balaji Page 1/5 https://www.mhc.tn.gov.in/judis/ Tax Case Appeal No.782 of 2015 J U D G M E N T (Delivered by M.DURAISWAMY, J.) This appeal filed by the Revenue under Section 260A of the Income Tax Act, 1961 ('the Act' for brevity), is directed against the order dated 11.03.2015 passed by the Income Tax Appellate Tribunal, Chennai "C" Bench, ('the Tribunal' for brevity) in I.T.A.No.2142/Mds/2014 for the assessment year 2010-11. The above appeal has been admitted on 21.09.2015 on the following Substantial Questions of Law: "1.Whether, on the facts and in the circumstances of the case, the Appellate Tribunal is correct in holding that the storage fee collected by the assessee in lumpsum cannot be treated as income of the year of receipt, which is contrary to Section 5(1) of the Income Tax Act? 2.Whether, on the facts and in the circumstances of the case and in law, the Tribunal is correct in holding that the lumpsum fee collected for 21 years is to be taxed on pro rata basis when the assessee is following Mercantile system of accounting?” Page 2/5 https://www.mhc.tn.gov.in/judis/ Tax Case Appeal No.782 of 2015 2. We have heard Mr.Karthik Ranganathan, learned Senior Standing Counsel for the appellant/Revenue and Mr.N.V.Balaji, learned counsel for the respondent/assessee. 3. It may not be necessary for this Court to decide the Substantial Questions of Law framed for consideration on account of certain subsequent developments. The Government of India enacted the Direct Tax Vivad Se Vishwas Act, 2020 (Act 3 of 2020) to provide for resolution of disputed tax and for matters connected therewith or incidental thereto. The Act of the Parliament received the assent of the President on 17th March 2020 and published in the Gazette of India on 17th March 2020. 4.Learned counsel for the respondent/assessee submitted that the assessee had availed the Vivad Se Vishwas Scheme and that the respondent/assessee had already been issued with Form–3 on 30.12.2020.

Page 3/5 https://www.mhc.tn.gov.in/judis/ Tax Case Appeal No.782 of 2015 5.Since the respondent/assessee had been issued with Form-3, nothing survives for adjudication in the above appeal. Recording the submission made by the learned counsel for the respondent/assessee, the Tax Case Appeal stands disposed of. No costs. [M.D., J.] [K.R., J.] 22.04.2021

Index : Yes/No

Internet : Yes

mkn To 1. Income Tax Appellate Tribunal, Chennai "C" Bench 2.The Commissioner of Income Tax II, 121, Nungambakkam High Road, Chennai – 600 034. Page 4/5 https://www.mhc.tn.gov.in/judis/ Tax Case Appeal No.782 of 2015 M. DURAISWAMY, J. and KRISHNAN RAMASAMY, J. mkn Tax Case Appeal No.782 of 2015

22.04.2021 Page 5/5 https://www.mhc.tn.gov.in/judis/

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